Saturday, February 19, 2005

Building Your Financial Freedom

Rich Dad's CASHFLOW 101 Board Game. Rich Dad CASHFLOW 101 is an successful investment educational program that teaches accounting, finance, investing success and at the same time and makes learning about managing your time and money fun and exciting.

Does the idea of planning for your financial future seem too complex or confusing? Do you think you can't save money because you're barely making ends meet as it is? The sooner you start planning for the future, the sooner you'll reap the rewards. Use this guide to help you build your financial freedom.

Social Security
You’ve paid into it most of your life, so don’t forget to include it in your financial planning. The income you receive when you reach the eligibility age (e.g., 65) is based on the average of your 35 highest salary years. You also can collect 80% of your benefit at age 62. If you die, your spouse may be entitled to your benefits. The age at which you can collect full benefits is currently scheduled to increase gradually to 67. You can check the record of your earnings and get a statement of your anticipated benefits by calling Social Security at 800/772-1213.

Life Insurance
Life insurance can help to financially protect your loved ones in the event of your death. It’s important if you are married and even more important if you have dependent children. There are several types of life insurance:

Term life insurance pays a fixed amount of money to your beneficiary if you die during the term of the policy. The cost of premiums increases as you get older.
Whole life insurance is permanent insurance that provides a death benefit that is guaranteed for the insured's life as long as premiums are paid. Participating policies may pay dividends that can increase the policy's cash value, but they are not guaranteed.

Universal life insurance is considered a variation of whole life insurance with more flexibility. Within limits, the policy owner determines the amount and frequency of his or her premium payments and is permitted to adjust the policy face amount up or down to reflect changes in his or her needs. As premiums are paid and cash values accumulate, interest is credited to the policy's accumulation fund.

Variable Life Insurance is similar to universal life in that there is flexibility in connection with premium payments and death benefits. However, with variable life, premium payments are held in separate accounts, and the policy owner chooses how the cash value will be invested. Consequently, such a policy's cash value will fluctuate with the performance of the chosen investment portfolios.

Health Insurance
Health coverage protects you in case of sickness or injury. Without it you run the risk of being financially wiped out by just one serious illness or accident. Most people receive subsidized health benefits through their employer, but coverage can also be purchased as an individual.

Disability Insurance
This is probably one of the most overlooked forms of insurance for working-age people. Disability coverage replaces a portion of your income when you can't work because of illness or injury. Most policies replace 60% to 80% of your income. (You also may receive income from Social Security for certain disabilities, or from Workers Compensation if you are injured on the job.) If your employer provides a 60% disability policy, you might want to consider a supplemental policy covering 20% of your income.

Long Term Care Insurance
Long Term Care insurance is designed to help pay for nursing home care, assisted living care or home health care expenses. This fast growing type of insurance can protect you and your assets against the high cost of long-term care. Most policies pay benefits when long-term care is prescribed by a physician as medically necessary or when someone can no longer physically or mentally take care of basic needs.

Homeowners Insurance
Homeowners coverage protects your financial investment in your home. It provides compensation for damages to your home and its contents, and it may protect you from financial liability if someone is injured on your property. The extent and amount of coverage needed depends on your situation, but if you can afford it, it is wise to insure your home for 100% of its replacement cost.

Auto Insurance
Auto insurance is more than a matter of insuring your vehicle for loss or repairs after an accident. It is a financial safety net that can help you offset the cost of bodily injuries to yourself or others, lost wages due to injury, and lawsuits brought against you as the result of an accident. Most states require the purchase of basic coverage and then you determine the additional insurance you need.

Estate Planning
Another way to safeguard your family’s financial future is through estate planning. Generally, estate planning includes taking an inventory of your assets and making a will or establishing a trust, with an emphasis on minimizing taxes. Estate planning is very complex and subject to changing laws. You may want to seek professional advice.

Sunday, February 13, 2005

The Great Stock Market Secret

It's Great To Be Rich! Gain the Knowledge, Set Your Goals High, Have A Plan, Take Action, and Acheive Success!

When the stock market is going up and all your stocks and mutual funds are making money you feel like a genius. It is too bad that some folks don’t remember what happened in 2000. Of course, right now we are in one of those genius phases. Your broker and financial planner are encouraging you to buy, buy, buy. And I can’t fault that at this time. You remember back in 2000 how many times they told you to buy, buy, buy while the market was going down, down, down. Are we in another of those periods now that are leading up to a humongous crash? Hey, I don’t predict, but I do listen to the voice of the market.

The great Wall Street mantra is “buy a good stock and put it away”. Did you keep WorldCom and Global Crossing? Even if these were exceptions because of fraud a smart investor would not have lost any money. In fact he could have made a nice profit.But Al, they went under! Yes, I know, but the smart money still made out because they sold near the top.

As a former exchange member and floor trader I was not right every time I bought something and I especially did not like giving back nice profits that had accumulated. You don’t have to be psychic to know when to sell and don’t think you are going to be able to pick the top. A really smart trader waits for a stock or fund to start up and then jumps on it with both feet. When it starts down he jumps off looking for another equity that is going up. The wise trader knows he can’t buy the bottom and sell the top. What he wants is a big bite out of the middle.

When you make a sandwich most of the meat is in the center and a professional trader does the same with his trading. He wants to take a bite out of the middle of the move. You can do this too by looking for stocks, mutual funds or Exchange Traded Funds that have a nice upward pattern. As I said before buying is not the secret. Then what is?

You must learn to sell - for two reasons. First to protect your equity after your initial purchase and second to keep from giving back profits you have made as the equity advances. The great Wall Street secret is an exit strategy: knowing when to sell. Unless you learn to sell you will not be successful in the market. Brokerage companies do not want you to sell and rarely issue sell signals. You must decide how much you are willing to risk before you buy.

The simplest way is with a percentage stop loss order of 5%, 7%, 10%, 12%, whatever you can live with. Instruct your broker to place a trialing stop or you can change it yourself every week. Do not lower a stop.

Selling is the great secret you will never hear from your broker.

Friday, February 04, 2005

Google Stock Hits New High!

Invest With The Trend. GOOG Is Your Friend

Google's high-flying stock hit a new peak Wednesday, propelled by the widening belief that the online search engine leader can continue to grow as major advertisers shift more spending from traditional media to the Internet.

After underestimating Google's robust earnings growth in its latest quarter, industry analysts substantially raised their future estimates in enthusiastic reviews that underscored Wall Street's deepening adulation for the company, though some injected a note of caution.

Investors appeared to agree after digesting Tuesday's news that Google's fourth-quarter profit was seven times higher than the previous year.

Google's shares surged $14.06 Wednesday to $205.96. Earlier in the day, the shares traded at $216.80 -- the highest price since Google went public at $85 per share less than six months ago.

American Technology Research analyst Mark Mahaney likened Google to the Michael Jordan of the Internet in raising his price target for the company's stock to $275 per share. Caris analyst David Garrity was even more bullish, arguing Google's outlook makes $300 per share look reasonable.

The feverish run-up in Google's market value -- now standing at $59 billion -- is reminiscent of the dot-com heyday of the late 1990s and early 2000 when investors bid up the prices of young Internet companies on the premise that they were about to change the world.

The biggest difference between now and then is that Google is generating genuine profits, which are multiplying at a dazzling rate. With few exceptions, the prized Internet stocks of yesteryear belonged to companies that weren't making money.

"In some respects, Google's [stock] price is out of control, but the business definitely isn't out of control," said Barry Randall, a portfolio manager for U.S. Bancorp's First American Technology Fund.

The advertising formula that Google has built around its popular search engine is the main reason investors are betting the company will continue to thrive. Google delivers advertising links tied to the requests entered into the main search box -- a system that businesses like because they pay only when a prospective customer clicks on the link.

Although Google has been selling the ads for several years, many of the elite companies in the Fortune 500 just recently began to buy into the concept. Analysts think that a steady stream of new advertising dollars will pour into the Internet during the next five years and that Google will be one of the biggest beneficiaries, along with Yahoo and Microsoft's MSN.

The biggest threat facing Google probably is the increasing competition from the likes of Yahoo and Microsoft, as well as a cadre of other ambitious startups.

"Technology can change very rapidly on the Internet," said Argus Research analyst Robert Becker. "Google has a terrific brand presence, but that doesn't mean some other group of engineers can't come up with some way to improve the search business that Google hasn't thought of yet."

Excluding charges unrelated to its usual business, Google earned nearly $800 million on revenue of $3.2 billion and investors appear confident that even bigger things are on the horizon. Some analysts are now projecting Google's earnings will increase by more than 60 percent this year, excluding accounting charges for items such as employee stock compensation.

Google management refuses to forecast its future earnings, but the company can't afford a misstep now or its stock may plummet.

"There is virtually no margin for error," said Janco Partners analyst Martin Pyykkonen.

Any sell-off of Google's stock could have a painful ripple effect because the company is starting to establish itself as a market mover.

"The longer this excitement goes on, the more influence the company is going to have in the overall stock market, not just tech companies," Randall said.

Despite the company's widespread appeal, Google's stock so far hasn't been included in Wall Street's bellwether indices.

It might be at least a few months more before Google is considered for inclusion in the Standard & Poor's 500, which is the index most money managers use as a performance comparison. The S&P 500's guidelines call for a company to be "seasoned" for six to 12 months after an initial public offering of stock. The one-year anniversary of Google's IPO is in mid-August.All rights reserved. This copyrighted material may not be published, broadcast or redistributed in any manner.