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| Wednesday, May 30, 2007 |
| How much income paid for rent? |
Intrigued by an MSNBC's article titled Americans becoming increasingly house poor, Golbguru recently write an post inquiring people's expense on housing. The MSNBC article only revealed that an average homeowner spends nearly 21% of their household income on housing, up from under 19% in 1999. Percentage-wise, Californian spend the most, 25.4% in 2005. The data includes many homeowners who bought their houses before the boom, thus, the 2 to 3% increase does not seem very dramatic. For more recent buyers, I do not know any friends who spend less than 25% (one couple bought earlier with 200K annual income) of their income on housing, most between 30 to 40%!
However, I did not find any percentage for renters. My further research found that the ratio really depends on the locality. In Golbguru's case, he was able to pay only 11% of his gross household income (mainly two graduate students' stipends) on rent, likely around $500 in a University subsidized apartment. Yes, an excellent job of Golbguru!
New York City is likely the other extreme, high rent and low vacancy. People not only need to get in line to rent an apartment, but also need to hire a professional broker for apartment hunt. According to New York City's Economic Snapshot July 2006, the average monthly contractor and increased by 25% after adjusting for inflation, from $767 in 1991 to $956 in 2005. From the following picture, we can see average rent as % of average renter's household income has also swelled from 34.4% in 1991 to 36.7% in 2005. It seems that not only the housing price soared, the rent was raised significantly too! I hope no one pay so much to stay in NYC. Of course, if you're earning more than average renter's household income and live under your means, you can beat those ratios.
I attended graduate school on the west coast, where rents are high. University housings are both cheaper and more convenient compared to local rental market. I was earning 23K annual stipend, but paid about 28% of my gross income for one room in a 2-bedroom university dorm. Despite the small annual raise of 1-3% of my stipends, when I finally graduated, I was paying 39% of my gross for the same room. A very good strategy to move out PhD students faster!
Right now, with 2 full-time job income, Jacqui and I are paying about 7% gross including cell phones and utilities, not much better than Golbguru, but way better than people in NYC and myself before. However, we’re looking for a reasonable upgrade in the next few months to have more space.Labels: budgeting, Commentary, Housing, personal finance |
posted by Yannick @ 2:39 PM | Add to del.icio.us
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| Tuesday, May 29, 2007 |
| What is the gas mileage of your car? |
Just came about an article on hypermiling: wringing every last ounce of fuel efficiency out of a car. The story starts with Wayne Gerdes' going 2,254 miles driving a Honda Insight on a single 13.7-gallon tank of gas. When I bought my SUV, $600 a year on gas is maximum. Right now, I'm looking at north of $3000 a year (longer commute as well). This is indeed a large chunk of ongoing expense.
Here are the tips offered by the article:
- Brake sparingly.
Time the stoplights on your commute route, and avoid red lights by adjusting your speed.
- To idle is to sin.
If you're going to be at a standstill for 10 seconds or more, cut off the engine.
- Speed kills.
Follow the speed limit, or go at a slightly slower speed. The optimal speed seems to be ranging from 45 to 55 miles per hour.
- Avoid the big chill.
"Today's cars can't kick into their most efficient mode -- called "closed-loop operation" -- until the engine is sufficiently warm." Invest in an engine-block heater or always go the longest segment of a multi-segments trip.
- Beware of drag.
Closed windows and no A/C are best.
- Lose the weight.
- Pay attention to load.
Try to keep gas consumption at a constant level instead of trying to maintain a constant speed, why you and not be honked by drivers after you.
- Be not a hare.
Inflating tires to their maximum allowable pressure- Set up for success.
Inflate tires to their maximum allowable pressure and use synthetic engine oil.
Using the tips, I got 28mpg out of a SUV rated at 24 mpg at an average speed of 65mph. How about you? If you want more hypermiling tips, visit GasSavers.org or Gerdes' own Web site, CleanMPG.com.Labels: budgeting, car, personal finance |
| posted by Yannick @ 5:27 PM | Add to del.icio.us
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| Monday, May 28, 2007 |
| Who can contribute to an IRA? |
We are looking into the possibility of letting Jacqui stay at home as a housewife. However, we're concerned that if it will impact our plan to catch up on retirement savings. So I studied IRS Publication 590, Individual Retirement Arrangements and found the following excerpts:
Traditional IRA:
- You (or, if you file a joint return, your spouse) received taxable compensation during the year, and
You were not age 701/2 by the end of the year.
Roth IRA:
Generally, you can contribute to a Roth IRA if you have taxable compensation (defined later) and your modified AGI (defined later) is less than:
- $160,000 ($166,000 for 2007) for married filing jointly or qualifying widow(er),
- $10,000 for married filing separately and you lived with your spouse at any time during the year, and
- $110,000 ($114,000 for 2007) for single, head of household, or married filing separately and you did not live with your spouse at any time during the year.
Besides the age restriction for traditional IRA and the income restriction for Roth IRA, a person need to have taxable compensation to contribute to an IRA. The taxable compensation includes salaries, tips, bonuses, commissions, self-employment income, alimony and separate maintenance, nontaxable combat pay but does not include passive income derived from property and investment (Table 1-1, Page 9). However, a non-working spouse (aka a housewife) can contribute to either IRA with the same maximums given the working spouse qualifies for the above criteria (Refer to spousal IRA in the above document).
So the good news is that if Jacqui stay at home, both of us will be able to contribute to IRA though it's not necessarily Roth.Labels: IRA, personal finance, Retirement, Tax |
| posted by Yannick @ 5:21 PM | Add to del.icio.us
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| How to better measure home prices? |
As shown in the previous post, the median price is far from an ideal measure of home prices. In this softened housing market, a change in the types of houses sold may give people a deceiving picture of increasing prices. Here is an article titled The Follies of Measuring Home Prices from Rich Toscano.
In short, the median house is really a moving target, and the "median price" does not account for the difference in these houses and is therefore subject to the following follies:
- Changes in who's doing the buying
. If only the rich are still buying the beachfront properties, we may see the median price increasing sharply in a declining housing market.
- Changes in what buyers are getting for the money
. "During the boom, as buyers reached the upper limit of what they could spend, they compensated for the lack of affordability by lowering their standards and buying less desirable homes. So for a couple of years, there, changes to the median price actually understated the extent to which individual home prices were increasing. Since the boom ended, the opposite has happened. Now, the extent to which buyers have been able to get more and more bang for their homebuying buck has not been entirely reflected in changes to the Median purchase price."
- Home improvements
- Seller concessions
. The above two have been covered well in the Media, which may value tens of thousands of dollars but not included in the median price.
One of the best solutions lies in the Case-Shiller Home Price Index (HPI), which measures market price changes based on repeat sales of individual homes. Here is a graph featuring a comparison between Median Price and Case-Shiller HPI on San Diego's housing market.
Looking at the Median Price (the red bars), you may think that San Diego's Housing market hit the bottom b/w 09/2006 -11/2006 and rebounded back this year. However, CS HPI (the blue bars) shows a consistent decline throughout. Which one is correct? Correlating with sales volumn, we known the latter is the true picture.
For more metro areas and longer periods, you can plot graphs on the http://macromarkets.com.
To get individual home value and neighborhood demographics, I found http://www.cyberhomes.com/ very useful.Labels: Economics, Housing, Investment, personal finance |
| posted by Yannick @ 7:06 AM | Add to del.icio.us
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| Saturday, May 26, 2007 |
| Housing Market Is On The Move In Southern California II |
Nice excerpt from Ben's Housing Bubble Blog:
The California realtors report on April sales. “Home sales decreased 27.8 percent in April in California compared with the same period a year ago, while the median price of an existing home increased 6.2 percent, CAR reported today. ‘April sales fell in part because of tighter credit standards and growing concerns about the impact of subprime loans on the market,’ said C.A.R. President Colleen Badagliacco. ‘Throughout the state inventory levels have increased to their highest levels in recent years, giving buyers more time to view a greater variety of homes and sellers who set realistic prices an edge in the market.’”
“‘Although the median price of a home in California continues to rise, this reflects the fall-off in sales in the lower-priced markets of the state where new home inventories and foreclosures are competing with the existing home market,’ said C.A.R. Chief Economist Leslie Appleton-Young. ‘Fewer sales from these regions coupled with modest gains in some of the stronger coastal markets are pushing the median price for the state up slightly.’”
This supports the analysis that this latest drop is worse for low-end markets suffered from the woes of sub-prime loans. A change in the mix of houses sold really skewed the median price data.Labels: Economy, Housing, personal finance |
| posted by Yannick @ 1:24 PM | Add to del.icio.us
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| Friday, May 25, 2007 |
| Housing Market Is On The Move In Southern California |
According to Union Tribune “DataQuick expects to report today that the six-county Southern California region saw defaults rise nearly 159 percent last month to more than 9,200, compared with 3,562 in April 2006, and that foreclosures skyrocketed from 311 to more than 2,800 over the same period. San Diego’s defaults rose from 554 to 1,346, and foreclosures increased from 85 to 525, April to April."
"But San Diego was painted as an area less vulnerable to any further major downturns, contingent on the health of the general economy. Reasons include relatively few unsold, newly built homes and new projects; steady if not improving job growth; and an earlier end to the housing boom than other markets where sales and prices are now in decline. ... Prices, which had peaked at $517,500 in November 2005 and lately dropped to as low as $472,000 in January, have recovered somewhat to stand at a median $490,000. But they remain 10 percent or more below where they stood a year ago in many neighborhoods".
As I remember, the housing market in San Diego headed south earlier than Los Angeles and San Francisco. The current slide was only from the drain of cheap money, which means that the market is vulnerable to further slides resulting from rising foreclosures and the weakening of local job market. Unfortunately, with depreciating housing value, foreclosures are rising really fast. With economy growth significantly slowed down, the job market is unlikely to absorb the loss in housing related jobs. So there are certainly more drops to come.Labels: Economy, Housing, personal finance |
| posted by Yannick @ 3:32 PM | Add to del.icio.us
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| Friday, May 18, 2007 |
| Tips on finding a competent real-estate agent |
With a burst of U.S. housing bubble, affordable housing may finally come in a few years. I started to learn some knowledge on real estate investment a while ago. From what I learn, a competent real-estate agent is invaluable. Here is one interesting article from MSN titled Find a superstar real-estate agent.
Besides referral, the article listed eight questions to ask your candidate agents:
- May I see your resume? This is an interesting one. I have been interviewed by many people, and didn't expect that I can interview agents this way. I'll take this advice.
- What's your commission? Only relevance to a seller?
- What makes you special?
- How often will I hear from you?
- What's your plan for marketing my home? Seller only.
- How many transactions did you complete last year?
- What do you know about the neighborhoods where I want to live? I'm surprised that information on crime and school performance are not allowed to be disclosed by real estate agents. Again, asking for information sources such as Sperling's Best Places may come in handy.
- Are you a solo agent or part of a team? This may impact how you evaluate the performance of this agent.
Labels: Housing, How to, Investment, personal finance, Real Estate |
| posted by Yannick @ 7:04 AM | Add to del.icio.us
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| Thursday, April 12, 2007 |
| Where to put my savings, house, IRA, 401K or regular trading accounts? |
When I finally earned more than what I spent, I asked myself this question. Due to the time I already squandered, there are so many places need my money badly:
Emergency fund and cash savings
Individual retirement accounts (IRA) such as Roth and traditional IRA
Employer sponsored retirement accounts 401k, 403b (non-profit organization and education institutions)
A house
A regular brokerage account to invest in the stock market
My order is the following:
1. Roth IRA
You may be surprised that I put to Roth before emergency fund. The reason was not only that Roth is one of the best places for young professionals and graduate students’ money, but also that you can withdraw your contributions (the money you put into such an account) any time without incurring any penalty or taxes. So your contributions can serve as your EF. It is so nice that no wonder you can only contribute $4000 a year.
2. 401k or 403b and a lull with employer matching
Many people have this on the top of their lists. The argument was simple, you can get free money. Many people contributed to their 401K and got those employer matchings. However, because they do not have enough liquid asset (contributions in Roth or emergency fund), they were forced to get the money out in case of urgent financial needs, which leads to taxes and penalty.
3. Emergency Fund
The contributions in Roth is not a perfect emergency fund, because you will not be able to put contributions back after withdraws, which leads to the loss of opportunity for tax-free earning growth. I have shared my experience in a recent post. The good news is that you do not need to constantly put new money there. After you find out how much to put in, and fund it, then you are mostly done. Also as Moomin Valley commented, after you accumulate more assets, you can get away without a real emergency fund since it’s very likely you’ll have very liquid assets because of asset diversification.
4. 401k or 403b remaining portion
You can decide for a self how much you want to put into your retirement account, because this portion is not liquid-able. However, if you want to invest in the stock market, the advantage of text deferment cannot be understated. As two late-starters, Jacqui and I are maximizing this part. Another late starter moom shared his experience.
5. Savings as in savings account, CD or regular brokerage:
You do want to enjoy your life before retirement also, right? However, I do not over-save for this part as I think my future income is good enough to cover my future expenses.
6. House:
We do not own a house yet and are saving for a down payment. Normally, it should be listed as 5. However, the more I learn about the housing market and the unprecedented housing boom, the more I realized that how over-valued the current housing market is. I guess it will be number 6 for the next two years at least.
What's your list like?Labels: Housing, IRA, personal finance, Retirement, Roth |
| posted by Yannick @ 5:01 PM | Add to del.icio.us
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| Wednesday, April 11, 2007 |
| Emergency fund comes before investment?! |
I shared my view on emergency fund in general earlier. At the end that post, I said that EF was a necessary step to start retirement savings and investments, without explaining it. This may seem to be a naïve question. However, I struggled with it when I got started and would like to share my experience here.
Emergency fund gives you a peace of mind which enables you to make better investment decisions. When I started to invest, I got several individual stocks, whose prices vary a lot. I intended to buy-and-hold, which was only possible when you are able to leave the money untouched even in emergency. It was quite tempting to use the emergency fund to buy more stocks. However, without an emergency fund, I realized that I might be forced to sell the stocks at the wrong time. So I need my emergency fund to take that risky investing strategy with individual stocks.
It became clear to me that it’s very important to separate your long-term investment and your cash reserve. When I first worked on my investment strategy, I had so many things in my mind, emergency cash, down-payment for the first house, regular investment, and retirement reinvestment. All these goals have different timeline, thus have different risk tolerance. Without separating them explicitly, I was really making the task much more difficult and even intractable. The good thing was that I was not paralyzed by the complexity, I started anyway; the bad thing was that I got a messy strategy which was not optimal and I had trouble sticking to it. In the end, I ended up selling all my holdings and reshuffled my portfolio in less than two years. I was lucky that I was a graduate student, thus, was not hurt that much in tax.Labels: Investment, personal finance |
| posted by Yannick @ 10:55 AM | Add to del.icio.us
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| Tuesday, April 10, 2007 |
| Lower tax with Qualified Dividends and Capital Gain Worksheet |
Today I was about to mail out my state tax return and saw a blank space in my schedule D line 22. It asked if I had any qualified dividend, which we did have. I was surprised Taxcut didn’t fill in this blank for me. So I decided to follow the instruction and take a look at the worksheet myself.
Dividends are usually taxed at the marginal tax rate of your ordinary income. However, take a look at the form 1099-DIV and you may find some of them are qualified dividends, which are taxed at the tax rate of long-term capital gain (15%).
Now the good news is that some people may qualify for an even lower tax rate at 5%. Please take a look at the following to see if you qualify:
1. If you have qualified dividends or long-term capital gains;
AND
2. If your adjusted gross income (AGI) is
less than $30,650 if single or married filing separately;
or less than$61,300 if married filing jointly or qualifying widow(er);
or less than $41,050 if head of household
Then you could lower your tax with the Qualified Dividends and Capital Gain Worksheet (Page 38 of 1040 instructions) on line 44 of Federal tax form 1040.
I believe many graduate students and young fellows with lower income qualify for this. I used to be quite skeptical about usefulness of all kinds of the worksheets in 1040. This time, it really saved us hundreds of dollars in tax!Labels: 1040, federal tax, income tax, Investment, personal finance |
| posted by Yannick @ 5:26 PM | Add to del.icio.us
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| Gone are the good days for credit card balance transfer arbitrage? |
Although I have known credit card arbitrage for quite a while, I did not really engage in it actively till last year. In my eyes, the gain of several hundred dollars a year is not enough to compensate for the potential damage to my credit score. So, I am not a big fan of this AOR thing either.
However, last month, I got a credit card invitation that I can not resist--it was from the alumni association of the second university I studied in. I have a card from my first university. I do not use it, but keep it as a souvenir. I want to have one for the second university too.
So I got the card, issued by Bank of America, MBNA card. It came with 0% APR till 03/2008. Given that I am not using it for purchases, I am tempted to do the credit card balance transfer arbitrage.
Lucky for me, I found this website. My return will be a mere $159 due to the BT fees, and minus the taxes, it will be tiny...
Definitely not worth it. And for anyone who is still looking for credit card arbitrage opportunities, please be careful with the BOA world points cards. IMO, it is not worth it.
The best credit card deal I got was in 2003. I applied for a AT&T universal card, with 300 cash back points. And at that time, I-bond could be purchased using credit cards. So I bought $30K I-bond with 1.6% fixed rate and got $300 cash back in 3 month. In fact, at that time, I was not that financially "savvy" -- I purchased the I-bonds only to get the $300 cash back. I did not do any research to find out whether I-bond was a good investment or not. I was thinking of redeeming them after the 6 month limit and put them back to savings account.
Last year, I got some free time and started to review my portfolio. If I recall correctly, the APY for the I-bond was around 7% for 6 month last year. Plus the initial $300 cash back, it was a decent, low-risk investment for 3 years!
I cashed all my I-bonds once the rates went back to something around 2.5%. I was thinking of getting new ones since the fixed rate got a little up. But now, we can not buy I-bond with credit cards, and the BT fees are not capped any more, the overall return is decreased dramatically. I guess that the good days for credit card BT arbitrage are gone... Dear PF bloggers, we need some "financial innovation"!Labels: Arbitrage, Balance Transfer, Credit Card, Investment, personal finance |
| posted by Jacqui @ 2:40 PM | Add to del.icio.us
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| Thursday, March 29, 2007 |
| Emergency fund? How much? |
Moom started his Asset Allocation Series. So I guess it is not surprising for him to write about Emergency Fund (EF), and introduced us to English Major Money's (EMM) post. This was also our first time to participate in Carnival with a post on getting more tax returns for international students. I happened to find a controversial post by "Broke Now, Rick Later" (BNRL) in the Carnival. So I will share my thoughts here.
First, no emergency fund needed? I have to say that I admire BNRL's courage. For a single-income household with 2 kids and a mortgage to pay, he has extremely low liquidity of $282. And he was advocating NO emergency fund needed. Make no mistake, he is stacking away 20% of his income in retirement savings, which is unlikely to be ready available for emergency. So he is trading his emergency fund as extra investments in retirement account. Before reading his post, I thought there were few people as described in moom's comment. Now I think that there might be quite a few.
BNRL has 50% income to cover monthly necessities and 20% for retirement account. Considering tax withholdings and other expenses, the remaining 30% is unlikely to have any significant portion left. BNRL argued that you can always count on 0% APR installment payment combined with a delay in payment to pull the cash you need from either your salary or disability income. However, he maybe forgot that sometimes, "when it rains, it pours". What if there were two or three unexpected on his list on going at the same time?
Second, how much emergency fund do you need? I stand by the standard recommendation of 3-6 month expense and suggest everyone to look at his/her own situation like EMM did. The amount will depend on both your needs and your risk attitude.
Needs (expenses): take a look at the monthly necessary expense. For renters like Jacqui and I, ours is less than 20% of our gross income. Two months' salary gets us covered for a year.
Risk attitude (or personal preference): remember, everyone get unlucky some day in life. That's why we're paying for health and car insurance. I am very conservative, thus, may want to insure for situations of very small probability, say three or four unfortunate incidents happening at the same time; you may be more optimistic and want to just insure up to two. However, you really do not want to have no or poor preparations for them as they do happen.
Last, I think having an EF is one necessary step for anyone to get started on investment and retirement savings. I will share my experience later.Labels: insurance, Investment, personal finance, Retirement |
| posted by Yannick @ 2:45 PM | Add to del.icio.us
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| Wednesday, March 28, 2007 |
| Cooking skills and personal finance. |
Just read my money blog (MMB) expenses. As a housewife, the first thing I noticed is grocery spending. MMB's budget for grocery is $300, dining out is $250. Last year, our budget for grocery was a poor $250. I hit budget several times, which made me very unhappy. I consider myself a deal shopper, which is one of the attributes of a "good" housewife (my definition). When MS Money showed that I always hit budget for grocery shopping, I felt… hurt!!!
So I negotiated with Yannick to increase the grocery budget to $300 this year. I know this is a little like "cheating", but at that time, psychologically, I really need it.
Now, reading MMB, I just found a new solution to solve the budget problem. Our dining out expense is almost zero! I am attributing this to my successful grocery shopping --- I do not just shop for deals, I shop for deals of good quality products. I feed Yannick with premium food from organic food store, so he does not want to dine out any more!
I presented this argument to Yannick immediately, and got an instant budget re-allocation approval-- we will allocate $100 out of our $150 dining out budget to my grocery shopping! Now, I will always spend below budget. "Exceed expectation", that's the review I want to get for my work!
My next mission--improve my cooking skills. I heard that many famous chefs actually used very common ingredients -- such as Heinz ketchup, Morton salt…Why can't I? Someday, I want to hear Yannick saying: "I would rather have Jacqui's cabbage soup than Arby's roasted beef burger" (he sometimes indicates that he wants to go to Wendy's, but dismissed by me for "health" reasons. :-)
Improving cooking is one of the most rewarding investments a housewife can make: it keeps the family stay at home, it keeps the family healthy, it keeps the family money in the investment account grow... it keeps the whole family happy!Labels: budgeting, Commentary, personal finance, shopping |
| posted by Jacqui @ 6:17 PM | Add to del.icio.us
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| Sunday, March 25, 2007 |
| What investments to hold in your IRA? |
I wrote a post to recommend Roth IRA earlier. Another article The Best Investments for Your IRA let me recall a class I took.
I took a PhD level tax class cross-listed in the finance department two years ago. I've forgotten most things learned in the class, since it's pretty theoretical. However, sometimes the professor discussed some very practical questions at the request of the students. Think finance or economics PhD students are all financially savvy? Some students didn't know what IRA was and asked this question to the professor.
There is no absolute answer. The common wisdom is to hold bonds and CDs in tax sheltered account since dividends and interests are usually not deferrable and taxed as ordinary income's higher marginal rate. On the other hand, a buy-and-hold strategy for stock investments could defer the capital gain from price appreciation almost forever, which is much more tax efficient (same effect as a 401K type of tax deferment without employer matching). As a famous example, Warren Buffet argues that dividend is much worse to a shareholder than stock price appreciation, thus Berkshire Hathaway does not distribute any dividends despite being one the most profitable companies in the world.
However, some people argue that stocks should be kept in tax sheltered account because the expected annualized return for stocks is much higher than savings and bonds over the long term (>20 years). Given same contributions, stocks grow much faster. Therefore, this strategy gives more assets the tax benefit. This strategy makes even better sense for Roth IRA, since its future earning is tax-free, not tax deferred.
Assuming you have a portfolio of $10,000 bonds and $10,000 stocks, with a marginal tax bracket of 33% (including both Federal and state income tax). The long term annualized return of bonds and stocks are 6% and 9% respectively. Compare strategy 1 of holding bonds in Roth, and stocks in regular account, and strategy 2 the opposite, what's the outcome in 30 years? To simplify, let's assume a passive stock investment using a highly tax-efficient ETF on market index, with 0.5% taxed on capital gain and dividends annually. Capital gains and dividends are reinvested.
Strategy 1 = 10000*1.06^30+10000*((1.085^30-1)*0.67+1) = 57.4K+80.7K=138.1K
Strategy 2 = 10000*1.09^30+10000*1.04^30 = 132.6K+32.4K = 165.1K
So keeping stocks in Roth IRA will win (Strategy 2). There are a few caveats on this conclusion:
This conclusion relies upon the 3% difference in annualized return between stocks and bonds. If as some authors have argued in their books that the future rates of return of stocks and bonds are about the same at 6-7%, you should hold bonds in Roth, and use a buy-and-hold strategy to defer taxes on capital gains from stock price appreciations.
The stock investment strategy is also critical. If we assume that the difference in the rates of return of the two are not that large, however, if you really trade your stocks frequently, then it's still advantageous to keep your stocks in Roth.
I also learned both in class and from my experience how tax policy exerted distortion in your trading decision. I had hold stocks just to get the long-term capital-gain tax rate even though the market condition for that stock had turned south. If you want pure undistorted trading decision for yourself, hold stocks in Roth. On the other hand, you lose the leverage on claiming loss on your trades as well.
I hold stocks in my Roth and have done some trading. I really love the tax-free capital gains. Roth IRA is really a very powerful tool for us to catch up.
I only discussed bonds versus stocks. People have used IRA holding to buy futures, options, land contracts etc., which enable them to have larger leverage and gain larger tax-free earnings. However, if you are old enough to believe no free lunch, you will probably want to think about the risk carefully before shooting for the "big gain"?.
Any questions and comments?Labels: Asset Allocation, Investment, IRA, personal finance, Portfolio, Retirement, Tax |
| posted by Yannick @ 4:31 PM | Add to del.icio.us
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| Saturday, March 3, 2007 |
| Our Financial Goal - I |
We all have heard of the stories on how writing down your goals may help you achieve them. I don't know if it's true for others, but for someone forgetful like me, you bet it's going to help. Our immediate goal is to have enough income to relieve Jacqui from her job. And you know who is going to earn that income right? Probably not our future kids.
I am now in the job market for my first real job. I am good at math and coding and can try my luck in the financial industry. However, I really feel that my life is too short to waste in the quant's position. I believe in doing things I love. If I'm really good, money (not necessarily big money) will come, or I should be able to make a living.
That being said, I am now probably interested in too many career paths: entrepreneur, university professor, consulting, research scientist, and so on. I am interested in the quant job even, just not its life style. However, all the above are meaningless without a happy Jacqui. I want to have enough time at home to be with her, while at the same time, bring home enough income (good pay). Does such a job exist, with good pay and allowing a good life style?
If not, I probably will accept a lower pay, since both Jacqui and I are pretty frugal. More importantly, move to an inexpensive area and enjoy our life.Labels: Career, Goals, personal finance |
| posted by Yannick @ 2:13 PM | Add to del.icio.us
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| Sunday, February 11, 2007 |
| My comment on paying for Grad School |
I started reading more and more on personal finance blogs, and found this "Moomin Valley: Personal Finance, Investing and Trading" really interesting. And since I had such a long, bitter experience in graduate school, I can't help commenting. I got emotional there. But I just can't help. And I can't help posting here in my own blog too.
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At 6:43 PM, Jacqui said... My husband and I share similar experience with you, and I agree with you that paying for graduate school is not a very good idea.
As you can see from our blog http://latestarters.blogspot.com, we started everything late (including blogging), partially due to the graduate student life. Going for PhD was a bad investment particularly for me, becuase I ended up with 3 masters:(
Even though I got full funding for all my 6 years in graduate school (in fact, I had 50K in saving by living frugally and saving every penny from the stipend and RAship), thinking of the opportunity cost, it is definitely a terrible investment.
I think that the worst thing of being in a PhD program, particularly in top school, is that I was "brain-washed". I felt that nothing was worthwhile other than writing a paper. I will get an A in financial economics, and put all my money in savings account, because I do not really have time to study the real financial market.
Now I am back to real life, and the things I learned in graduate school are not of much use on the job market. I thought I could look for a job in finance, but found out that I am too old. Those I-bankings or hedge fund would rather have a fresh BA with good math "intuitions" than hire an old "ABD" who can only derive some "trembling hand perfection" equilibrium (what a wired name!)
I hope it will be better for my husband. At least he got his PhD. But he is in a different filed. He has to go through postdoc, which means minimum wage for another year or two :(
Maybe I should encourage my husband to work in Industry. But then we get our visa problem. It might be easier to get green card if he stays in acadmia. He could have applied long ago, but...... he was brain-washed too.....
Yes, overall, I agree that it is not a good investment to get a PhD, unless you really feel passionate about it, or you feel that you can get Nobel Prize, or it is in Finance, law, medicine....
I do not really regret coming for the PhD program. That was the only way I could get funding. I just regret that I did not realize that I was not the academia type. I regret that I did not wake up early when I was suffering.
I guess that I get a little emotional here. Hopefully time will eat my bitterness away soon. Labels: Economics, personal finance, PhD |
| posted by Jacqui @ 3:48 PM | Add to del.icio.us
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