I’m not sure why Uncle Sam waited so long to publish his tax guide for the newly unemployed. The US unemployment has been above 5% for over a year. We really could have used this last winter when the rate of new claims was at its peak.
And a note about manners, Uncle Sam. I don’t expect you to be overly touchy-feely, but after all, the people reading this document will have just suffered a traumatic life event. Couldn’t you have started a little gently? Perhaps, something like “the economy is going through difficult times, and many individuals like yourself have temporarily lost employment.” But nooooh. Your opening line is: “Severance pay and unemployment compensation are taxable.” Ouch. Harsh. Continue Reading »
Madison at My Dollar Plan wrote about a calculator at Vanguard.com that compares the cost of an ETF vs. a mutual fund. It’s a particularly thorough calculator that includes, for example, the bid-ask spread on the ETF purchase. Now if only the calculator was available at a more general site that included more than just Vanguard’s funds. (Hint: Are you listening Google?)
The Canadian Finance Blog had a solid post with financial tips for soon-to-be-parents. As the Mom of a young son, the best suggestion I have to expectant parents is to not go overboard in buying stuff (Canadian’s tip #5). When in doubt, resist the urge to buy. Babies need a lot less than you might think — a few clothes and toys, but mostly your bountiful love and attention. They grow out of the baby stage quickly, so thoughtful friends and family might consider buying books or toys that will be useful in 6 or 12 months. Continue Reading »
Back in July, I announced the start of a new series of posts on Sustainable Energy, but I haven’t had a chance to actually write about the topic until today. No time like the present, then, to launch into my favorite diatribe: Solar Heresy.
My concern about solar cells — specifically silicon photovoltaic cells — is that it takes a great deal of energy to make silicon. Continue Reading »
Dollar cost averaging is the practice of investing the same amount of money at regular periodic intervals. For example, a person might invest $300 every month. It’s generally thought to be a good practice, but some call it a marketing gimmick, and others call it a losing proposition. Which is true? As with most debates, each viewpoint has some truth to it. Let’s look at each.
Why it’s a Useful Tool
The benefit of dollar cost averaging is this: by investing periodically, you’re more likely to buy shares when prices are low. The low-priced shares give you the greatest return.
As an example, let’s look at investing in a stock for which the price was $10 in month #1, rose to $15 in month #2, fell to $5 in month #3, and returned to $10 in month #4. A graph of the stock prices is shown below.
I was reading an article enticingly entitled “Boost Your Returns” in the latest issue of SmartMoney magazine. My eyes skimmed down to a section on certificates of deposit. I like CD’s. They’re FDIC insured and provide a small but certain return.
CD’s as derivatives
But, whoa, not these CD’s. The SmartMoney article is about CD’s that are indexed to various assets. One highlighted CD is pegged to the value of BRIC currencies. If the value of the foreign currencies rise, I receive an interest rate that is a portion of this growth. If the currencies fall, relative to the dollar, then I receive no interest, but I do get the principal back at the end of the term. Huh? Why would I want to do this? What does the average person know about the Brazilian real, Russian ruble, Indian rupee, or Chinese renminbi? And by average, of course, I mean me. Continue Reading »
Tomorrow evening is the semiannual town meeting where I live, North Reading, Massachusetts. Everyone gathers in the high school auditorium to vote on matters of local governance.
We recently bought a ten-year old house. After moving in, we hired a carpenter to replace a warped window. Upon removing it, he discovered that the surrounding wood was rotten. Further investigation revealed that during the original construction, the flashing at the roofline had been installed improperly. When it rained, instead of running down the outside of the clapboards, water ran down between the clapboards and the foam insulation, rotting the wood. In addition, one rotted post in the attic had become home to a family of carpenter ants. The total cost of repairs raised the price of an expected $1500 job into over $10,000!
Our home insurance won’t cover the damage, since the only coverage for rot is when it is caused by a single event and not gradually over time.
Is there any other way to recoup some of this unplanned expense!?”
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