Charly Kirkland | Chill Maadi

Get Rich Investing In The Stock Market For Your Grandchildren

We experience highs and lows in the stock market, just as we experience highs and lows in the real estate market.

It’s slow and methodical, but you can get rich investing in the stock market. You must do your homework, understand the stock market, and monitor your stocks or the companies they represent. That is a tall order, some folks do it and it has shown proven results, others don’t and they sell before their stocks make money.

Over A Long Period Of Time

Over a long period of time, the stock market has been a good investment. The average return has been about 6%, but that adds up over time. Be aware of the reasons the stock market bombed in the past, and that should help you choose your stocks and understand the behavior of the market at specific times.

During the depression, we did not have unemployment insurance, disability insurance, and other safeguards to keep money circulating during financial crises, during the stock market crash of 1987, we did not have proper stock trading stops in place to help guard against a crash, and during the start of the internet dot-com companies hype took over all reason and many people lost money purchasing companies that had no history, no money or expertise behind them. After the 1987 crash, for those who stayed in, many of their stocks recovered in about three years.

The Best Stocks For Amateurs

The best stocks for amateurs to research are large companies with an excellent history and good management. If it is growing slowly and has a lot of cash behind it, it could be paying dividends that will help your portfolio until products get to market. If you are an amateur, seeking a stock specialist’s advice may help you understand the stock market.

Researching Your Stock

The Internet has made it easy to research stocks and track them. Most of the major portals have stock and other investment research. Most of the research is free.

Monitoring Your Stock

At least once a month, read the news about your company, ask your broker to give you research reports if you cannot search the internet, and understand what type of stock you have and its fundamentals. Any stock can change over time, especially if another company purchases it or a major product stops selling.

Only Time Will Tell

Sit back and relax. If you have a quality company, growth takes time if the company is well-balanced and well-managed. Our recent run-up in home prices came as a 20-30 year high, depending on the area of the country you were in.

We experience highs and lows in the stock market, just as we experience highs and lows in the real estate market. You must understand why the highs and lows are occurring, so you don’t make a mistake and buy or sell at the wrong time.

Women, Money and Marriage: What You Need to Know

In today’s world, “Leave It to Beaver” stereotypes for men and women in partnerships should only exist in Nick at Nite reruns. Yet many women still don’t understand their household’s finances and aren’t actively involved in managing money matters.

To achieve true equality in a partnership, both individuals must have knowledge of and involvement in their partnership’s assets and debts. If you’re one of those women who isn’t participating in the financial side of your marriage, here are some tips to get you on the right track:

Talk Money

If your partner has always handled most financial matters, it may seem difficult to bring up that you want to be more involved. The first step is to initiate a conversation with your spouse about your desire to learn more about your household’s assets and debts and to be more actively involved in making decisions.

Choose a time and place without high levels of stress or too many distractions to have this discussion. Bring it up in a positive way, rather than in a tone that might sound complaining or accusing.

Keep Current

It’s never fun to think about something bad happening to the people you love. Yet you must be responsible and realize that if your partner should no longer be able to carry out the role of primary financial decision-maker, the tasks would fall to you.

Make sure you’re familiar with and have access to all financial records and documentation. Know how to quickly access everything from account numbers to mortgage documents to investment information.

Get Involved

Look for ways to become more integrated in your marriage’s finances. Whether it be creating and maintaining the filing system for your financial paperwork or paying the bills, sharing responsibility can be rewarding and make your partnership more balanced and fulfilling.

Stay Independent

There can’t be a strong “we” without a strong “me.” While marriage is a partnership, you should still maintain your own financial standing. We recommend that each partner have a checking account and credit cards in his or her own name so that both can build good credit.

Get Help

There are many programs available today that are focused on helping women handle financial matters. Many companies today provide financial services to help women achieve financial empowerment, security and independence.

Equality in marriage exists on many different levels and requires working together as a team – a team where both members are informed and involved.

Credit Score Factors – The essentials

Do you know your credit score but are wondering what it means? We’re here to help you understand it. The data pulled from all of your financial histories is placed into five primary categories that make up your FICO score. These five factors are as follows: payment history, amounts owed, length of credit history, new credit, and types of credit used. Represented by the pie chart below, each factor is weighed differently – some are weighed more and some are weighed less. To find out which areas of your personal finances should be given more attention, review the easy-to-use chart below, and then read out tips for raising your score through these five factors.

What Makes Up a Credit Score?

Payment History

As the most weighed factor of your credit score, your payment history is a very important factor in determining your chances of qualifying for loans and mortgages. We all know that there is no way of going back and changing your past, but there are indeed ways of erasing your past mistakes. With 35% of your credit score is calculated from your payment history, it is important to make sure that you avoid missed payments and late payments. Contact our credit team to find out how you can get your bad items removed from your payment history.

Amount Owed

The next largest factor that determines your credit score is the amount that you owe to your creditors. This is calculated by the amount that you owe on all of your accounts, and how much credit is available to you on your revolving accounts. To easily determine where you stand in regard to the amount owed, you can calculate your credit-to-debt ratio. In this, you simply must divide the amount of debt on your credit card by the limit amount on your card, and then multiply by 100. For example, if you have $2,000 in debt on the card and the limit is $10,000, then your credit-to-debt ratio is 20%. Anything below 50% is an acceptable ratio.

Length of Credit History

The third factor of your credit score is particularly pertinent to young people. This number is calculated by how long your cards have been open. Basically, the longer your accounts are open, the better. In calculating your length of credit history, FICO takes the following factors into account: how long your collective credit accounts have been established, how long each credit account has been established, and how long it has been since you used each card. The best advice regarding your length of credit history is to keep all of your cards open for as long as possible.

New Credit

Making up 10% of the weight of your credit score, having new credit is an easy way to boost your score. If you have a steady source of income, then consider opening one or two new cards for charging small items. The credit reporting agencies will, however, penalize you for overdoing it and opening too many cards in a short period of time. In order to effectively build your credit by opening new credit cards, it is important to do so in moderation.

Types of Credit Used

Finally, the last factor of your credit score is the types of credit that you use. The types of credit considered in your FICO score are as follows: credit cards, retail accounts, installment loans, finance company accounts, and mortgage loans. It is important to have a good mix of all of these different types of credit in order to boost your credit score. Diversity in your credit cards and accounts is essential to building a good credit score.

The Differences in Debt

Debt is one financial matter that fills me with dread. The prospect of owing someone else money is like a crushing weight on my soul. But that being said, debt can, at times, be a good thing.

I classify debt into three categories:

Debt that does not add value.
Debt that adds value.
Debt that does not add directly add value, but is necessary, or has the potential to add value.

First, let me clarify that by “value,” I mean some intrinsic financial worth. Not the kind of value that you get when seeing the joy in your kids’ eyes while opening Christmas gifts.

Debt that does not add value is destructive. That new car is not increasing in value; it is depreciating. I know what you’re thinking, “Dude, I love my car, and I need it to drive to work, so it does have value!” Consider my ₹8,00,000 car loan that I took out last year. I’ve diligently been making payments every month, so my liability has decreased. Unfortunately, cars don’t last very long, and the resale value is decreasing even faster than I’m paying it off! This means that even if I were to sell it today, the best I could hope for is to make enough to pay off my loan.

Debt that does add value can actually be a good thing. Most people who open a business do so with the help of a loan. Ideally, the business will begin to make money, and the business will be worth more than the value of the loan. There are many examples of this constructive type of debt. But the idea is that you get a loan for the purposes of making money. This is leverage and thus needs to be used with care. However, if you know that you can borrow money at 6% and you know that you’ll make 8% off of the investment, then you’ve just earned 2% on money that didn’t belong to you. Even better is that (at least in India), you can deduct the interest from investment loans!

The third type of debt lies somewhere between the previous two. For example, taking out an education loan does not immediately provide you with a return. For the four years (or two, or ten, …) that you are in school the loan money does not provide you with a fiscal return on your investment. But in the end, when you get your high-paying job, it does reveal its benefit.

I will also place in this category the most common debt, your mortgage. Many people claim their home is an investment, and therefore it is constructive. I disagree;

You make mortgage payments out of your own pocket rather than having the investment pay for it;
You would not likely sell your ‘investment’ because where would you live;
In India and the USA, these payments can be used against taxes. However, this is not the case in many other countries, such as Canada.

Don’t get me wrong; homeownership and mortgages can be a good thing. I simply argue against it being a constructive debt.

So my goals in order of importance to me are to:

Eliminate all destructive debt.
Reduce necessary or non-value adding debt.
Make use of constructive debt where prudent.

I’m sure most people would agree on the first item. However, it is the last two points that will draw a lot of contention.

In the past few years, people have been loading up the mortgage debt to the point where they can afford little else – all in the name of home-ownership. 25-year mortgages have now become almost commonplace so that you can retire in debt.

With the low cost of borrowing, even so-called constructive debt is running rampant (leveraged buyouts, etc., and included in this). Corporations buying another or an individual buying any arbitrary stock with debt simply because it’s cheap will certainly be sorry once rates rise and/or the company’s finances crumble. That is why I say use leverage when prudent

When Should You Start Social Security Benefits?

When should you elect to receive Social Security benefits – at age 62, full retirement age (which is gradually increasing from age 65 to age 67), or age 70? The decision will permanently affect your Social Security benefits. Start at age 62, and your benefits will be permanently reduced by 20.8% to 30%, depending on your year of birth. Wait until age 70, and your benefits will increase by 3.5% to 8% annually, depending on your year of birth.

Since Social Security benefits probably won’t be sufficient to maintain your current standard of living, first decide whether you have sufficient retirement resources even to consider retiring at age 62. If that is not an issue, keep in mind that it will take approximately 12 years for someone electing benefits at age 65 to receive the same total benefits as someone electing reduced benefits at age 62. It takes approximately 11 to 14 years for someone electing increased benefits at age 70 to receive the same total benefits as someone electing benefits at full retirement age. You may want to calculate precise numbers for your situation since your full retirement age and the percentage reduction in benefits at age 62 will impact your answer.

For most individuals, the long payback period may make it worthwhile to start benefits at age 62. And in fact, more than 60% of retirees elect for benefits before age 65, while less than 2% wait until age 70 (Source: U.S. News & World Report, June 3, 2002). But there are a couple of situations where you might want to wait until full retirement age.

If you plan to continue working, consider delaying benefits. Individuals who have attained full retirement age can earn any amount of wages without losing any Social Security benefits. However, between the ages of 62 and 65, you lose $1 of benefits for every $2 of earnings over $11,520 in 2003. Between the ages of 65 and your full retirement age, you lose $1 in benefits for every $3 of earnings over $30,720 in 2003. Individuals earning substantially more than these limits will probably want to wait to start Social Security benefits.

If your spouse is significantly younger and is counting on your benefits, you may also want to delay benefits. While you are alive, your spouse is entitled to the larger of 100% of his/her benefit based on his/her earnings or 50% of your benefit at full retirement age. However, if you elect benefits before the full retirement age, your spouse’s benefits will be reduced by a higher percentage than your benefits were reduced, provided he/she obtains benefits based on your earnings. If you delay benefits past full retirement age, you receive increased benefits, but your spouse’s benefits remain the same, provided he/she obtains benefits based on your earnings.

After your death, your spouse’s benefits are based on your benefits and the age he/she elects to receive benefits. He/she receives 100% of your benefit, provided your spouse is over the full retirement age. If he/she is younger than full retirement age, your spouse receives between 71.5% and 100% of those benefits. Thus, the larger your benefit is, the larger your spouse’s benefit will be after your death.