Economy update and some questions

I have been super busy recently.  Much has happened since we last talked and here are a few things on my mind about what is going on in the economy.

Gas prices each week continue to go up.  For the last three weeks when I have been filling up I have paid $33, $37, and today $45.  Wow! When I was filling up today I saw way more motorcycles recently in the valley.  I can only imagine that more and more people will be getting bikes.  Since I sold my car recently maybe I will get a scooter.  Probably not!  The point is Gas prices need to go down and I really can’t imagine people will keep paying these high prices.  When I am driving places now I even think of getting the most out of my drives.  If all consumers can cut down on Gas usage could we drive the price at the pumps down?  How do we get cheaper prices?  Oil keeps going up and so does my credit card bill.  If you can try to carpool.  If you need to go down the street to the store to pick up a few items, get some exercise and walk.  A final thought on Gas for all of you who are getting money back on the stimulus package from the government it looks like they gave it to us to pay for gas for a few months. I hope gas prices get better.

The stock market continues to roll like a coaster.  I hope all of you are sticking in it for the long run.  Keep funding, this will not last forever.  If you are a day trader good luck to you. 

The housing market is still tanking.  I saw a news story the other day and realized that more and more people are walking away from houses even thought they now can afford the payment.  People were saying why pay for a house that has dropped 100k?  I wonder if there will be any enforcement on all these people who are walking away.  I have a big post on this matter coming up soon.

Global Warming is getting on my nerves.  I hear so many people talking about it everywhere.  Many out there who think they know all, keep telling us to worry about this Global Warming and that we really need to take care of our environment.  My one question on this whole matter is that how can we for sure be experiencing global warming if local news professional can’t even predict rain, temperatures in the weekly forecast?

Okay that is all that is on my mind.  Looking forward to every ones thoughts. 

Investments double every…

Want to know how often you will double your money?  Check out the list below and keep saving!

Rate of Return/ Investment doubles every…
2% / 36 years
4%/ 18 years
6%/ 12 years
8%/ 9 years
10%/ 7 years
12%/ 6 years

The big question is where can we put our money to get a 8-12% return?

If you are starting to save young, the advantages are in your court versus people who are older and waited longer to save.  Enjoy!

2008 investing

I am in no way an investing guru but here are my two cents on how young people getting started out should invest. First and foremost if your employer is giving away free money take advantage of it.  If a company is willing to match on a 401k make sure you contribute the amount that they match up to.  For example let’s  say they match up to the dollar on 3%.  If 3% of your contribution from your salary is $50 that means your company will throw in $50 as well.  Each 401k and profit sharing plans are different but make sure you get the free money from your employer if they offer it. On top of getting the free money from your current company, set a goal of contributing to your Roth IRA. Max it out! 

If you company does not have a profit sharing program then fund your Roth IRA before the basic 401k.  If you have plenty of money leftover after your fund your Roth then you can fund your 401k or other investments such as paying down your mortgage.  I think 401k’s are a waste without some sort of profit sharing or company match from employers.  

So here are some things to plan for investing in 2008: 
Does your company have a profit sharing plan? If so, take advantage of it.
Are you funding your Roth IRA always? Max it out!

Index funds

Looking for a quick way to diversify your investments? Invest in index funds! Index funds are mutual funds that are designed to match the performance of an index in a specific market. Most funds try to do better than the index, but index funds try to match the performance of the index. 

Here are two examples of Vanguard index funds:

500-index fund- Included in this fund are several different sectors – Energy, Health Care, Industrials, Utilities and others. Some of the funds largest holdings are Exxon Mobile Corp, AT&T, Proctor & Gamble and Microsoft. Not only is the 500-index fund tracking the performance of hundreds of individual companies, the companies come from several different sectors in the economy. This means that if the energy sector goes belly-up, your investment will be okay because you were only 11% vested in energy with this fund. Or if Microsoft goes bankrupt, it won’t be a huge problem because Microsoft made up only 2-3% of your entire fund.

Pacific Stock Index Fund- This fund is interesting because it is made up of corporations in Asia and Australia. Some of the companies that are held by this index fund are Toyota, Mitsubishi, Canon and Nintendo. Although those companies are huge, they only make up about 7% of the entire fund. The fund is also diversified as far as where the companies are located. This fund is comprised only of corporations from Japan, Australia, Hong Kong, Singapore and New Zealand.

As you can see, index funds allow your investments to be extremely diversified. They are also great because they do not require much managing which means you pay hardly any management fee.  If you are still interested in investing some money in the stock market, I highly recommend that you call a company such as Vanguard, Fidelity, or Charles Schwab and have them set up an account for you and advise you on your investment options.