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Archive for March, 2009

Five great investment books for these troubled times

Monday, March 23rd, 2009

I thought I would branch out and give the readers some of my favorite investing books – ones that I have read that you probably havent heard of recently.  These are especially important now that the market is so low….its the time to invest.

Many books and their authors claim to have all the answers but rarely do they meet your expectations. These authors are sure to provide the insight necessary to be successful. The list is in no specific order except for the first book. It should be read upfront to give novice investors an excellent overview although its content is helpful to all levels. After that you’re on your own to pick and choose the order in which you read them. Just make sure that you finish them all before getting too far into the investment process. It will make a difference.

1. The first book is The Neatest Little Guide To Stock Market Investing. It’s extremely focused and written by a guy who used to work in the technology industry and now spends his time living in Japan investing in the markets. Amazon readers give it five stars. Check out his web site and you’ll see why his book is listed first. It’s very readable, easy to understand and available at your local public library.
2. In 1994 Peter Lynch, the legendary portfolio manager, wrote Beating The Street, a book about his investment style and how the average person could do the same to beat the markets. It is extremely well written and well received. To date no other money manager has written something nearly as compelling.
3. Four years later, another money manager by the name of David Dreman wrote the book on value investing entitled Contrarian Investment Strategies: The Next Generation. While not nearly as readable as Peter Lynch’s book, it is an excellent examination of value investing and everything it entails. Light on brevity and heavy on statistics but informative nonetheless.
4. The last two are investment classics. The first was originally published in 1958 by Phil Fisher, one of the pioneers of growth investing, and it is still a bestselling book. Common Stocks and Uncommon Profits was a reference to his belief that you bought growth stocks and held them for the long term. One example of this was Motorola. Fisher bought it in 1955 and still owned it when he died in 2004. How many people do you know that have held a stock nonstop for 49 years.
5. The final choice is the ultimate book about investing: The Intelligent Investor. None other than Warren Buffett has declared it the finest book ever written on the subject. It just so happens that its author, Benjamin Graham, was Buffett’s teacher and mentor at Columbia Business School. I think Buffett turned out pretty well, don’t you? Originally published in 1949, it is the bible for serious investors. You must read this book if you can only read one. It’s that good.

How to make a money management plan

Wednesday, March 4th, 2009

Everyone has good intentions when it comes to a money management plan.  Unfortunately the road to hell is paved with…ok you get the picture.  We’ve put together a set of guidelines to help you on your way.  These guidelines will assure you of a money management plan to fit your special needs. If you follow each step, It will also save you a complicated job of bookkeeping. This guide won’t be able to work miracles for you but will help show you the way to get the most out of your money.

To make a sustainable plan:

1. Add up your total income, including any funds you receive in addition to your earnings.
2. Figure out your total fixed expenses such as rent or mortgage, insurance premiums or car payments.
3. Provide for a savings fund adequate to meet emergencies and achieve special goals.
4. Estimate how much you need for day to day living expenses.

While these steps are listed in sequence, it’s likely you will arrive at your final estimates by considering them as a group. You may need to do some adjusting of the amount in each step until you have what you feel is a satisfactory plan. After going through each step and filling out the worksheet, you will have a better idea of where your money is going and how much you have left over to work with.

Before you begin to work out your plan, it is important to remember good money management starts long before you begin keeping track of dollars and cents. As we have discussed in previous lessons, your plan is a personal or family matter. You need to take a long hard look at your values. Your goals will reflect your values. No one can tell you what your lifestyle ought to be. Only you can decide how your income is spent. Effective money management will depend on the way you choose to live and the goals you plan to achieve.

So where do you cut expenses to keep the budget balanced? Travel? Clothes? Entertainment? Education? That’s up to you. Think about where you are now and where you want to be in five or ten years. Your long-term plan should reflect those goals you and your family have decided are most important.

Plan For Savings
When making out your budget, plan for savings first. You can grow richer each month if you pay yourself first. Here’s an idea you might want to try. Before paying any bills, decide on an amount, to pay yourself first–say five or ten percent–or whatever you decide– of your paycheck. Then, deposit the amount into a savings account before paying any bills. When you do this at the beginning of the month, your entire paycheck will not slip through your fingers. If you wait until the end of the month, there may be nothing left to save.

Paying yourself first gives you a systematic way to make your money grow. Regardless of the kind of job you have or your income, this system works!

Another technique you might try for saving money is to empty your change into a coffee can or jar each day. At the end of the month, roll the coins and put them into your savings account. You may be able to save up to $30 a month this way.

Remember, good money management is more than a mathematical formula. It’s too closely tied with the ups and downs of living for that. Your money management plan is always subject to change if your life situation changes. The object of a good budget is to make your money help you reach your goals, not to force you to conform to rigid rules. Don’t be discouraged if this budget plan doesn’t work out right away. You may have to revise it several times until it fits your wants and needs. Then, review it from time to time; to be sure it continues to help you use your income in the best way.