Money safety

With some recent issues in banking and the mortgage lending business (IndyMac - taken over by the FDIC) some may wonder whether their financial institution is okay?  Well it depends!  I know, kind of a weak answer to the question, but just like many other things, you need to understand the situation.  Banks, savings & loans, and credit unions all fall under and regulatory body.  Each of these institutions has insurance coverage required by law in that industry.  For the most part you are looking at protection of $100,000 per account (checking, savings, etc.) for that individual.  Beyond that things are potentially at risk.  Now this amount does not apply to an investment-type of account which bears risk and has no guarantees on just about anything!  SO the moral of the story boys & girls is to understand the rules.  This is always a good idea, but when you are talking about your money, it is critically important.

Retirement planning --- focus on your time horizon

Each day the financial markets ride the roller coaster ride which would lead you to believe everything from the sky is falling to we are out of the woods.  Are we in a recession?  Or, yes we are, so when will it end?

Today, oil prices dip below $130 a barrel after spending time above $143 recently.  The stock market, measured by various indexes are up almost 2.5% in the last couple of days.  So, are we out of the woods or are these gains short-lived?  I haven't a clue.  What I can tell you is it pays to diversify, carefully, within your time horizon and risk tolerance.

It is never too early to think about retirement and this requires a savings and investment plan.  You can check with Kiplinger's to determine if you savings in on course.  This will allow you to check your age, the amount currently have in a nest egg and how much you need to save from now until 65 to get to your goal.

When you are working through this process there are a lot of "formulas" for savings and investing that you will run across, however, these are guides and you are the only one who can determine what level of risk you are comfortable with and how close to retirement you are.  Some "formulas" relate to how much of your portfolio should be subject to the fluctuations of the stock markets (so stocks versus bonds/cash balance).  The common rule of thumb is to take 100 and subtract your age to get the percentage of your portfolio which should be invested in stocks (equity) and the remainder in cash/bonds (fixed income).  This is a start, and again just a guide.  You also need to determine if you want to put that stock and/or bond percentage in domestic or international or both, how risky (small cap versus large cap for stock; short-term versus long-term debt instruments for bonds).

Some % model portfolios using mutual funds could be like this:

10 years + before retirement (moderately aggressive)

20% International Large Cap stocks

15%  Large Cap Growth - domestic

15% Mid Cap Growth - domestic

15% Small Cap Growth - domestic

10% Emerging markets

20% Domestic bonds

5%  International bonds or commodities

10 years + before retirement ( moderately conservative)

20% Treasury Bond fund

40% Balanced Fund

10% Large Cap Growth Fund

10% Large Cap Value Fund

10% International Large Cap Fund

10% Cash Equivalents

Again, these are ideas and you need to determine your risk tolerance, time horizon, and total funding goal to determine if you are on track or need to invest more!

Apple iPhone it is about the software!

As Apple continues to reinvent itself with the PCs, the entertainment, and the iPhone it is not hurting the stock price or future revenue growth. I think the talk about the iPhone (spend some time on the discussion boards - Macworld, etc.) revolves around the polar opposites, either people love the phone or they hate it as they feel it is missing this feature. Many of these features are part of the hardware of the unit (camera, etc.), others are part of the software. I do think the important innovation from Apple related to this phone is not the hardware but the software. The App store will have about 800 third party applications for use with the iPhone (a large portion of these at no additional cost!). I think this is the area of growth for the future related to this product.

On a related note, there seems to be a shortage of phones (I was supposed to go to a store to get one on Friday (July 18th) but I am not sure the store by me will have one. Especially since I can't get there until about 11:00 a.m. and there is sure to be a huge line (though I expect it to be less than last week).

Finally, I find a lot of the chat rooms humerous at this point since the longest anyone could have owned and used an iPhone is 6 days (counting today), and many of these posts are from a day or two after purchase and the writer is extolling the virtues or complaining that this is the biggest ripoff in all of retail! I just find it amusing that someone can be so sure and confident about something with only 24-48 hours of use! Now, if someone can help me decide whether I should spend the extra $100 for the 16 GB instead of settling for the $8 GB, that would help!!!

Apple iPhone 3G

Well, the Apple iPhone 3G made its worldwide debut on Friday, July 11th.  There were over 1 million units sold in that first weekend, and sales are still going strong.  I attempted to get mine on Friday, but the lines were real long!  I got to the store around noon, the line was long so I went to lunch and did some shopping.  Came back to the line around 1:30 and talked to someone still outside who had been waiting for 3.5 hours!  I decided to try again another day!  Yes, the phone still is locked to ATT, though different from a year ago, ATT coverage has greatly improved in my neighborhood, so I am ready to take the plunge.  The 3G will allow surfing the net at faster speeds than the EDGE network of the first iPhone, though WiFi is still faster if you are close to a hotspot.  This is important if you have 3G access where you are at (I do at work, but the home area doesn't have it yet, though the talk is soon!).  There is also an Apps Store which will allow iPhone users an ability to customize their phone to their liking with additional application software (games, productivity, etc.).  The phone comes in white 16GB, and black 8GB & 16GB.  I haven't decided yet.  I do like the black, but I have the iTouch which is black so I may decide on the white!

Asian Markerts

Part of investing philosophy is diversification.  Diversification can happen in a lot of ways, and frankly should happen in many ways (time horizon, industry, credit worthiness, etc.).  Often it has been reported that you can reduce your risk by adding a little international exposure to your portfolio.  Of all the companies trading in the world markets about 90% of them are not in the U.S. so this means you would need to get some international exposure or eliminate a large percentage of investment possibilities!  The financial crisis in the U.S. is having a negative impact on foreign stock markets and Asia is no different.  These markets are down from 15% (Tokyo) to 45% (Shanghai) to date.  Analysts are no longer asking if  we are in a bear market, but asking how long the bear market will last?

Crude Oil Prices

Commodities can be tough to get a handle on, and oil prices are not exempt from this difficulty.  The correlation between the price of the barrel and the price at the pump is something that many speculate about.  It can be difficult to understand how oil that was just traded today, can have a price which affects the gasoline already in the ground that you will pump today, when that gas was already contracted for and contracted prices determined.  Future prices would seem to be going up for the gas I will be buying next week.  Others feel with the influx of India & China in the market for oil, this is really a supply and demand issue.  Should be great fodder for election debates and we will have to see how it shakes out.

New material

Well it has been a while since my last post.  Part has been personal and part has been time and direction.  I think I have figured out the time and the direction - personal issue is mostly resolved so here we go!

I have decided to focus on money, finance, personal finance and things related to retirement and investing.  

Now, as usual you need a disclaimer her, as though I have a financial background, I am offering only opinion and/or data I have gathered from others and am not offering advice for a fee nor offering investment products or services through this blog site.  

I will periodically make comment about the world around me and I how I see things in the world of money.  I hope others are fascinated by some of the things I reveal and will share as well.