Retirement 
29
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Start Retirement Savings Early

Nest EggsYou’ve probably heard that your most valuable asset is time. For new graduates, that line actually refers to two different ideas, both of which are critically important to understand. The first idea is that with few entanglements and draws on your time (mainly no kids), you can devote more of it to your career and engineer the largest advancements in your career.

The second refers to the power of compounding interest and that’s important to understand with regards to your retirement in forty+ years.
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 Personal Finance 
9
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A Money Rebuilding Year

Construction WorkerIn every professional sport, there’s a concept of a “rebuilding year.” These are the years where the team is working on drafting good prospects, building up their young talent, and crafting a competitive championship-caliber team piece by piece. It’s difficult to field a championship team every year for more than a few years, with free agency and everything, so it’s expected that after a few years of stellar performance, you’re bound to have a few leaner years where you’re rebuilding your talent. The good teams do this well, with strong performing rebuilding years, and others do it poorly.

How does this apply to you? It’s a little downside psychology. With the recent economic crisis, a lot of folks are forced into their rebuilding years. You may have lost your job. Your investments may have lost value. Your money doesn’t seem to get you as far as it used to… you’re down, but not out. So turn this year into a money rebuilding year.

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 Investing 
33
comments

Vanguard Mutual Funds vs. ETFs: Which Are Better?

Vanguard LogoWhen Vanguard lowered its stock and ETF trading fees this week, I received an email from Eric, one of the long time readers of Bargaineering. He wondered if this made Vanguard ETFs superior to their mutual funds, to which I was pretty sure the answer was “Yes.”

You have to make the assumption that the mutual fund and the ETF will track the underlying index in the same way. If they’re run by the same company, in this case Vanguard, I think this is a fairly safe assumption to make. If there is no tracking error, then it comes down to costs. Whichever investment is cheaper, wins.

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 Personal Finance 
29
comments

Growing Your Tax Refund

Growing RefundsThe average tax refund for 2009 is around $3036, up over 10% on 2008 returns. It’s a pretty sizable sum when you think about it. It’s a really nice vacation, a good bit of a mortgage payment, and your credit card debt’s worst nightmare. If, however, you’re more of a saver than a spender, you might be curious how large that amount can really be.

Ever wonder how much $3036 would be in 5 years if it were in a certificate of deposit? A Treasury bond? How about invested in stocks? What if you just left it in cash? What about ten years? Twenty? Forty? Let’s find out.

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 Reviews 
11
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The Little Book of Big Dividends Review

The Little Book of Big Dividends by Charles B. CarlsonIf you’ve been interested in dividend investing and unsure where to begin, I recommend reading The Little Book of Big Dividends by Charles B. Carlson. I’ve had a healthy interest in the subject for the last six months, ever since the credit crisis offered a great opportunity to start picking up fantastic companies on the cheap, and this book covers just about every major topic in dividend investing.

One of the most important lessons in the book was the importance of establishing your investing goals. All too often we do things without really considering our goals and that’s dangerous in dividend investing. When it comes to dividend investing, there are two camps of investors – those looking for income today, such as retirees, and those looking for longer term returns, like myself.

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 Retirement 
10
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High Yield IRAs

Nest Eggs!All throughout tax season, from about mid-February to early-April, I received letters from my banks telling me it that I was running out of time to contribute to an IRA. This happens every year because brokers and banks want your business. They want you to open your IRA with them. The letters pitch various products and the most intriguing one I saw this year was a letter from Everbank advertising a high yield IRA.

Everyone likes a high yield IRA, right? Reminds me a little of this insight into retirement wealth:

  1. Open high yield IRA.
  2. ???
  3. Profit!


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 Investing 
10
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What To Do With Old Stock & Bond Certificates

AIG Stock CertificateBetween buying single shares of stock and money trivia about the $500 bill, I’ve been on a “fun money” kick lately. All too often personal finance blogs talk about boring, but important, topics like Roth IRA conversions and the best CD rates, and not enough about fun stuff like coin collecting and old stock certificates.

Well today we’re going to talk about what you should do if you find yourself in possession of some old stock or bond certificates. As we learned when we looked at buying single shares of stock, they used to issue certificates back in the day. The paper certificate in your name was soon replaced with a certificate in street name, which helped facilitate the transfer of ownership. But, like we do with paper money in winter coats, sometimes we forget where we put things… so this is what you should do if you find an old certificate.

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 Retirement 
23
comments

Best Investments for Retirement Accounts

Nest EggsWhen I started working after college, it was a bit of a stretch to contribute to both my 401(k), to get my employer match, fully fund my Roth IRA, and build up a small cash cushion (I would later learn these are called emergency funds). I pushed to do it because my parents drilled this lesson into my brain as a young adult – save money today because you never know what will happen tomorrow. (I thought I dodged a bullet by avoiding the dot com boom and bust but I was later rewarded for my diligence with the largest recession since the Great Depression!)

So… what do I do with the money in my Roth IRA or my 401(k)? You will never be able to predict the future with certainty so you will never know beforehand which investments will perform the best. You will, however, know the cost of owning those investments and the cost of taxes if you pick correctly. The best we can do is have a good plan, execute that plan, and pick investments that provide the most value for the price that you pay in fees and taxes.

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