Cashola

When Mr. Buffett Speaks, You Listen

How privileged would you feel if you were attending the Berkshire Hathaway annual shareholder meeting? To be in the presence of the world’s most successful investor, the world’s richest man. Warren Buffett. Gasp. Tim Ferris of the blog Four Hour Work Week wrote great notes he took from the conference. I think one of my favorite answers from Mr. Buffet was:

“If you were 30 years old and had no dependents but a full-time job that precluded full-time investing, how would you invest your first million dollars, assuming that you can cover 18 months of expenses with other savings? Thank you in advance for being as specific as possible with asset classes and allocation percentage.”

Buffett let out a small laugh and began. “I’d put it all in a low-cost index fund that tracks the S&P 500 and get back to work…”

followed with…

“…Put it all in a low-cost index fund like a Vanguard 500.” M: “Professionals take croupier profits out of the system. No one will give you this advice [index funds] because no one gets paid for it.” M: “The whole secret of successful investing [full-timers] is non-diversification. If you know nothing —> diversity.” B: “There are situations, for the full-time investor, where it’d be a mistake not to invest 50% of your net worth in one business.” If more aggressive: small stocks and specialized bonds, but no currencies.

Now doesn’t this all sound familiar? Index funds = Boring but brings in the $$$. Read the rest of Tim Ferriss’s article - Picking Warren Buffett’s Brain: Notes froma Novice.

Financial News = Financial Doom

I was sitting at work today looking over the market news and surprise surprise…the market’s been acting like it’s the apocalypse. There seems to be no good news concerning the market. I’ve watched my Vanguard Star Fund fluctuate up and down - and then down some more. Being a new investor, it did draw some concern. I thought “should I put more money in my fund if the market is looking so poor?”. I’m sure many of you have thought the same thing. Despite how we feel…the answer is YES! I must stick to the advice and info I’ve learned and blogged about, because if I didn’t, I’d be a coward who says one thing and does the opposite. Dollar-Cost Averaging and Long-Term Investing type of strategies is the key to wealth. Block out the noise, and keep on your course.

Piggy Banks - Not Just for Kids

I was at the grocery today waiting to buy a lotto ticket when I saw a mother and daughter using one of those Coinstar machines. If you don’t know what a Coinstar machine is, you basically drop all your coins into the machine and it will count it up for you and pay you back in cash for a small fee. The mother cut open her daughter’s red plastic piggy and started dumping the coins in. How exciting it was for the little girl to have her first taste of the benefits of saving. I had a flashback. During my High School years, I used to dump all the coins I had in a big soup jar and when it was full, I would put them in coin rolls and cash them in at the bank. I would pull in about $130 each time. I essentially turned my pocket change into something substantial. I have change lying all over the place, so you better believe I’ll be breaking out that dusty soup jar again. Lesson learned - Piggy Banks are not just for kids.

Compound my Interest!

In the journey to learn more about personal finance and investing, you more than likely have heard someone preach about “the power of compounding”. They talk about it with such praise and conviction, but it’s not until you see actual numbers and graphs that you stand there in AWE at the true power of compounding. With compounding…time is your friend. The earlier you start, the better off you will be with your investments. I’m twenty-six and I feel like I started very late. Below is an animated visualization (courtesy of Vanguard) that shows the true power of time and compounding. Honestly, I wish I had seen this earlier in my life before I meaninglessly squandered any money I had. Want to help your spouse/child/family member/co-worker/student/etc.? Show them this, I bet it will open their eyes and change their outlook on money.

click to play

Financial Tracking - Software beats Paper II

In my first post Financial Tracking - Software beats Paper I mentioned:

Aside from Quicken and M$ Money, there were online options available such as mint.com, wesabe.com and yodlee.com, but I’m still a little hesitant to use such services. I guess there’s still a little old fashioned in me, but who knows…maybe one day.

Well it looks like “one day” came sooner then I thought. Instead of impulsively going to the store and spending money for Quicken, I’ve decided to give the free online alternatives a try. It may not offer an all-in-one solution for scanning and encrypting my financial documents, but that can easily be done on my own using other excellent (free) software. I’ve decided to go with the flavor of the month…Mint! The setup for Mint was easy and took less than 15 mintues to get fully up and running. The only issue I had was adding my American Express credit card to Mint, but that was quickly resolved. Here are a couple of things I thought about my experience with Mint:

The Good:

• Free to use!
• Suggests money saving ideas and offers without ads harassing you.
• Updates all your accounts automatically, showing clearly and concisely your total assets vs. total debt.
• Able to setup instant alerts, and weekly or monthly financial summaries that can be sent to your phone via Text or E-mail.
• Clean and easy to use interface.
• Available wherever you have access to the internet.
• Logs you out of your account if inactive for 10 minutes

The Bad:

• Can be annoying to setup transaction categories if you are a detailed/OCD budgeter and organizer.
• No setup for bill pay

In my experience so far, Mint.com’s online financial software has been incredibly useful. My only gripe would be the lack of paying bills online through the site, but thats petty compared to what they offer. I wouldn’t be surprised if it’s already in the works. Eventually, I will give Wesabe and Yodlee a chance so stay tuned for those reviews. Mint.com gets Cashola’s Stamp of Approval!