Personal Finance: 20 Dos & Don’ts for 2009

With the economic storm raging outside, how do you keep your financial house safe and sound? BusinessWeek has rounded up 20 savvy ideas from financial pros

By Ben Steverman

 

During the worst economic crisis in a lifetime, the right financial decisions are crucial.

BusinessWeek asked financial planners for some advice on what to do—or not to do—with your money in the New Year. As we bid farewell to a dreadful 2008, these “resolutions” may help keep your finances on the right track in 2009:

1. Don’t try to predict the future.

“We are currently in the midst of unprecedented and complex challenges,” says Femi Shote of Asset Harvest Group in McLean, Va. Anyone who thinks he or she can predict what’s going to happen is “delusional,” Shote says.

Financial advisers often hear from clients who would like to sell stocks now and then buy again when the market hits bottom. “My response is, ‘How do you know when that will be?’” says Trent Porter of Priority Financial Planning in Fort Collins, Colo.

2. Do keep enough cash available.

Even if you’re not worried about losing your job, a rainy-day fund can provide peace of mind.

There are different guidelines for how much cash to keep on hand. Some say $12,000 or more per adult; others say it should be six to nine months of living expenses. With extra cash available, you can avoid selling investments to pay for expenses in an emergency.

3. Do invest internationally.

Though the financial crisis started in the U.S., the past year has been worse for investments in the rest of the world. The MSCI EAFE, an index of international stocks, is down 43% this year, and stocks in emerging economies fared far worse. American investors who diversified abroad have also been pummeled by the rise in the U.S. dollar.

Even after a year like that, advisers say it’s not wise to abandon international investments entirely. For one thing, though some key overseas economies, like China’s, have been hit hard lately, their long-term economic fundamentals look better than those of the U.S.

4. Don’t try to pick one winning investment. Diversify.

Putting all your money in one stock is dangerous at a time when a company’s bankruptcy can completely wipe out the value of its shares.

Robert Siegmann of Financial Management Group in Cincinnati advises clients to balance their portfolios between fixed income and stocks, with shares in various types of companies — small and large, U.S. and international. “Don’t try to pick the winning stock, or the winning idea. Just diversify across all investments and markets,” he says.

5. Do think about energy efficiency.

Russell Francis of Portland Financial Advisors in Beaverton, Ore., recommends that investors take advantage of a $500 federal residential energy tax credit that was rescinded in 2008 but returns in 2009. The credit can help cover the costs of adding insulation or replacing doors, windows, or furnaces—home repairs that should also save you on heating and cooling costs.

6. Don’t stop contributing to 401(k) and other retirement accounts.

Says Sidney Blum of GreenLight Fee Only Advisors in Evanston, Ill.: “Everyone loves to invest in their 401(k) when the markets are flying high, but they should keep putting money in while the markets are down.” He adds: “More money is made at the bottom of a market than at the top.”

Even more pessimistic planners say you should be taking advantage of any match your employer offers for retirement fund contributions.

Click here to read the full article:

Starting Retirement Account Allocations for Someone Under 40

I read a great article tonight and I thought I would share it.

 

Curious Cat Blog

One of the most important financial moves you can make is to start investing for your retirement early. This post is directed at those in the USA (but you can adjust the ideas for your particular situation). Retirement accounts with tax free growth, tax deferred growth and/or even tax deductible contributions can add to the benefits of such an investment. And matching by your company can give you an immediate return or 100% or 50% or some other amount. With 100% matching if you invest $2,000 your company adds $2,000 to your retirement account. For 50% they would add $1,000 in the event you added $2,000.

In other posts I will cover some of the other details involved but some people can be confused just by what investment options to chose. Normally you will have a limited choice of mutual funds. Hopefully you will have a good family of funds to choose from such as Vanguard, TIAA-CREF, American, Franklin-Templeton, T.Rowe Price etc.). If so, the most important thing is really just to get started adding money. The details of how you allocate the investment is secondary to that.

So once you have made the decision to save for your retirement what allocation makes sense? Well diversification is a valuable strategy. Some options you will likely have include S&P 500 index fund, Russel 5000 (total market index – or some such), small cap growth, international stocks, money market fund, bond fund and perhaps international bonds, short term bonds, specialty funds (health care, natural resources) long term bonds, real estate trusts…

Just to get a simple idea of what might make sense when you are starting out and under 40 and don’t have other substantial assets in any of these areas (large mutual fund holdings, your own house, investment real estate…) this is an allocation I think is reasonable (but don’t take my word for it go read what other say and then make your own decisions):

25% Total stock market index (~Wilshire 5000)
25% international stocks
20% small cap stocks
10% real estate
10% high quality short term bonds in a Euros, Yen…
10% short term bonds (or money market)

Another option:
25% international stocks
20% S&P 500 index
20% small cap stocks
15% real estate
10% emerging market fund (China, India, Mexico, Singapore, Brazil…)
10% money market

Read more

 

 

“Not he who has little, but he who wishes more, is poor.”
Seneca

Smith and Wesson stocks drop 21%

Smith and Wesson stocks dropped 21% Tuesday after S&W released their earnings report Monday after the close. 

With earnings missing what analysts expected, the company said the write offs were contributed to a $76.2 million, or $1.62 a share loss, in the period ended Oct. 31 They also said that they had a $76.5 million impairment charge, which is net of a $21.8 million adjustment to deferred tax credit to reflect the impairment of goodwill on its purchase of Thompson/Center Arms in 2007.

Thompson Center is the company that S&W bought last year in 2007.  In today’s economy, hunting related businesses are having a hard time.  And with S&W being sort-of new in the hunting long gun game, they felt the weakness also.  S&W/TC rifle sales fell 41 percent because hunting guns are considered discretionary in this ruff economy.   But on the other hand, with the anti-gun Obama taking over the White House, there is some good news for gun makers.  Anything AR-15 related and semi-auto carry guns, the sales have actually risen in those segments.  In fact S&W’s line of M&P and Sigma pistols had strong sales numbers.  They said pistol sales rose 40 percent on continued consumer demand, law enforcement adoption of the M&P polymer pistol line and strong consumer sales of the Sigma pistol line.

To find out all the details, do your homework!  The stock symbol is “SWHC”

 

 

 

GunBroker.com Charity Auction Raises Funds To Fight Breast Cancer

A Month for the Record Books

 

BACKGROUND CHECKS ON GUN SALES MOST EVER IN NOVEMBER . . . Background checks on the sale of firearms reached record levels during the month of November, pointing to a spike in sales for the month. Data from the FBI’s National Instant Criminal Background Check System (NICS) show a 42 percent increase in November firearm purchaser background checks. A total of 1,529,635 checks — the highest monthly total ever — were reported for the month, up from 1,079,923 in November 2007. Federal law requires FBI background checks on individuals purchasing firearms from federally licensed retailers. The NICS increase coincides with an increase in federal excise taxes reported by firearms and ammunition manufacturers, another key economic indicator for the firearms industry. Trends such as excise taxes and NICS data are strong indicators of sales patterns; however, they are not actual sales. There is no data source that captures firearms sales by month. View full chart.

Coming up with a retirement plan

Time for a plan.

Well dont know where to start but its time to start putting a plan on paper.  What do I really want to happen when I retire?  Where am I going to live?  How much will I have to live on?

I could go on and on with the questions.  So this week, I will be trying to answer some of these questions and posting some links to the places I find some answers and hopefully you can gain a little more knowledge about coming up with a retirement plan.

A guy I communicated with through a hunting web site, is in the financial/retirement planning buisness. He says this:

  I actually don’t start with investing. There are 4 parts to financial planning…Estate planning, business planning, retirement planning and wealth accumulation(investing). Some clients don’t need help in all areas. I typically ask them a whole lot of questions and try to find the most pressing or important issues and deal with them first. I approach the investing aspect of it as well. There has to be a reason to make a particular investment and to me, it needs to coincide with a plan.

 

So now what do I need to do?  Estate planning, whats that?  Well I guess Im going to find out and the next few posting will list what I can come up with.

Ruger Directors Authorize Share Repurchase