Have you ever wondered what is the current value of your house? Or your neighbor's?
This information is available for free, the only thing you need to know is the exact address of the property (for example 123 Main Street, MyCity, PA 11111).
Here's couple of links that will provide you with the home's value:
Zillow - http://www.zillow.com/,
EAppraisal - http://www.eppraisal.com/
Yahoo's Real Estate - http://realestate.yahoo.com/Homevalues
I prefer the latter because it shows both Zillow and EAppraisal estimates along with price change over last year, original purchase price, prices of recently sold houses in the same area, and other interesting information.
Saturday, February 28, 2009
Thursday, February 26, 2009
Investing
Is investing right for you?
Yes of course it's right for you! We all need money now and we all will need them in the future.
If you are making more money then you are spending (kudos to you!) - make it work for you! How? This probably depends on your risk tolerance - here are couple of examples:
Low Risk tolerance (it's my hard-earned money, I don't want to lose any of it).
The safest way to preserve your money is to put it into a bank. Don't leave all of it sitting on your checking account though cause you'll be actually losing it due to inflation.
Consider opening a money market account (or online money market account), just make sure the account is FDIC insured. The good web site to check current rates is http://www.bankrate.com/
Even today when rates had fallen down dramatically you can earn up to 2.8% interest per year (called APY). So if you invest $10,000 today you'd increase your balance by $280 one year from now. Of course, you'll have to pay taxes to Uncle Sam from this income.
Things to consider: check writing can be limited (or not available), some accounts will require you to carry a minimal balance to guarantee a rate. However, this is a safe option. Setting up an account is easy, money can be transferred electronically, you can pull your money out at any time without penalty.
Another option is a CD (certificate of deposit) - this is a less flexible option because you're giving money to the bank for a certain period of time (3 months to 5 years) and can't pull your money out without incurring a penalty. The interest rates are generally higher compared to money market accounts, but not by much. For example, today's interest rates for 1-year CD are up to 2.93%.
Medium Risk tolerance (it's my hard-earned money, but I don't like the fact my savings are eaten by inflation; I'd rather see my money's value decrease short-term while expecting high returns in a long run. At the same time I don't want to risk it all).
I actually belong to this group. You put some money in a safe harbor (see above) and invest the rest into more risky ventures (stocks, real estate, etc.). Of course, it's up to you to decide how much goes into safe investments vs riskier investments.
By the way, you're probably already doing something similar with your 401K retirement plan.
High Risk tolerance (it's my hard-earned money, but I hate the fact my savings would be eaten by inflation; I'd rather see my money's value decrease short-term but get high returns in a long run).
If you belong to this group, put all your money in riskier investments - stocks, real estate, buy a business and so on.
Buying stocks
Two options here:
1)buy mutual funds through investment bank (the idea is similar to your 401K - you are buying shares of funds rather than individual stocks. The idea is to diversify investment and spread the risk (avoiding putting all the eggs in one basket). The fund can incorporate say 20 companies, so even if one if them goes bankrupt fund's value would not decrease too much). If you buy 5-10 different funds you are spreading the risk even more.
Many banks offer some kind of investment in mutual funds. You can first check with you 401K servicer or look at Charles Schwab http://www.schwab.com/ (go to investments section and then to mutual funds), Putnam Investments (https://www.putnam.com/individual/), etc.
2) buy stocks on your own (some funds can be purchased by individuals as well). You'll have to open an account with TD Ameritrade http://www.tdameritrade.com/welcome1.html (you'll pay $9.99 per transaction, but there are no other fees), Scottrade http://www.scottrade.com/?id=1 ,
E*Trade https://us.etrade.com/e/t/home?SC=NPNC7RW&tb=4209&WT.mc_id=NPNC7RW , etc.
It's quite easy to establish, fund and manage account.
What stocks to buy?
Disclaimer: I'll tell you what stocks I like, but of course, this is just my opinion, the decision is yours and I won't take a blame :). And like I said, you may see your stock value decreasing in a short term.
I (like Bernanke) believe we are getting close to the bottom of the downturn in economy and stock market. The government is already spending and will spend much more of our (tax payers) money to jump-start the economy. Some of these efforts will work, but of course it takes some time (like a medicine to fight a disease).
In any case, I like the Energy sector. The price of oil went from $147 per barrel (summer 2008) to about $40 per barrel and is very unlikely to go further down.
My picks are PENN WEST ENERGY TRUST (NYSE: PWE) - it closed at 9.00 per share on 2/25/2009, ENCANA CORP(NYSE: ECA) - 38.32 per share, PETRO CANADA VAR(NYSE: PCZ) - 21.50 per share, SPECTRA ENERGY(NYSE: SE) - 13.23 per share.
All these are paying dividends (yielding 3-5% per year; it means if you invested $10,000 in a stock paying 3% yearly dividend and the stock value did not change during a year you'll get a profit of $300).
Also I believe the Medical sector will be relatively stable and should do fine in the next couple of years. I'd pick big names like Merck, Pfizer, J&J, etc.
Financial sector can become an Eldorado for a gambler-investor with some stocks plunging 90% compared to last year's peak value. Again, pick the big names if you decide it's right for you but remember the turmoil is not quite over in Financial sector.
Yes of course it's right for you! We all need money now and we all will need them in the future.
If you are making more money then you are spending (kudos to you!) - make it work for you! How? This probably depends on your risk tolerance - here are couple of examples:
Low Risk tolerance (it's my hard-earned money, I don't want to lose any of it).
The safest way to preserve your money is to put it into a bank. Don't leave all of it sitting on your checking account though cause you'll be actually losing it due to inflation.
Consider opening a money market account (or online money market account), just make sure the account is FDIC insured. The good web site to check current rates is http://www.bankrate.com/
Even today when rates had fallen down dramatically you can earn up to 2.8% interest per year (called APY). So if you invest $10,000 today you'd increase your balance by $280 one year from now. Of course, you'll have to pay taxes to Uncle Sam from this income.
Things to consider: check writing can be limited (or not available), some accounts will require you to carry a minimal balance to guarantee a rate. However, this is a safe option. Setting up an account is easy, money can be transferred electronically, you can pull your money out at any time without penalty.
Another option is a CD (certificate of deposit) - this is a less flexible option because you're giving money to the bank for a certain period of time (3 months to 5 years) and can't pull your money out without incurring a penalty. The interest rates are generally higher compared to money market accounts, but not by much. For example, today's interest rates for 1-year CD are up to 2.93%.
Medium Risk tolerance (it's my hard-earned money, but I don't like the fact my savings are eaten by inflation; I'd rather see my money's value decrease short-term while expecting high returns in a long run. At the same time I don't want to risk it all).
I actually belong to this group. You put some money in a safe harbor (see above) and invest the rest into more risky ventures (stocks, real estate, etc.). Of course, it's up to you to decide how much goes into safe investments vs riskier investments.
By the way, you're probably already doing something similar with your 401K retirement plan.
High Risk tolerance (it's my hard-earned money, but I hate the fact my savings would be eaten by inflation; I'd rather see my money's value decrease short-term but get high returns in a long run).
If you belong to this group, put all your money in riskier investments - stocks, real estate, buy a business and so on.
Buying stocks
Two options here:
1)buy mutual funds through investment bank (the idea is similar to your 401K - you are buying shares of funds rather than individual stocks. The idea is to diversify investment and spread the risk (avoiding putting all the eggs in one basket). The fund can incorporate say 20 companies, so even if one if them goes bankrupt fund's value would not decrease too much). If you buy 5-10 different funds you are spreading the risk even more.
Many banks offer some kind of investment in mutual funds. You can first check with you 401K servicer or look at Charles Schwab http://www.schwab.com/ (go to investments section and then to mutual funds), Putnam Investments (https://www.putnam.com/individual/), etc.
2) buy stocks on your own (some funds can be purchased by individuals as well). You'll have to open an account with TD Ameritrade http://www.tdameritrade.com/welcome1.html (you'll pay $9.99 per transaction, but there are no other fees), Scottrade http://www.scottrade.com/?id=1 ,
E*Trade https://us.etrade.com/e/t/home?SC=NPNC7RW&tb=4209&WT.mc_id=NPNC7RW , etc.
It's quite easy to establish, fund and manage account.
What stocks to buy?
Disclaimer: I'll tell you what stocks I like, but of course, this is just my opinion, the decision is yours and I won't take a blame :). And like I said, you may see your stock value decreasing in a short term.
I (like Bernanke) believe we are getting close to the bottom of the downturn in economy and stock market. The government is already spending and will spend much more of our (tax payers) money to jump-start the economy. Some of these efforts will work, but of course it takes some time (like a medicine to fight a disease).
In any case, I like the Energy sector. The price of oil went from $147 per barrel (summer 2008) to about $40 per barrel and is very unlikely to go further down.
My picks are PENN WEST ENERGY TRUST (NYSE: PWE) - it closed at 9.00 per share on 2/25/2009, ENCANA CORP(NYSE: ECA) - 38.32 per share, PETRO CANADA VAR(NYSE: PCZ) - 21.50 per share, SPECTRA ENERGY(NYSE: SE) - 13.23 per share.
All these are paying dividends (yielding 3-5% per year; it means if you invested $10,000 in a stock paying 3% yearly dividend and the stock value did not change during a year you'll get a profit of $300).
Also I believe the Medical sector will be relatively stable and should do fine in the next couple of years. I'd pick big names like Merck, Pfizer, J&J, etc.
Financial sector can become an Eldorado for a gambler-investor with some stocks plunging 90% compared to last year's peak value. Again, pick the big names if you decide it's right for you but remember the turmoil is not quite over in Financial sector.
Monday, February 23, 2009
Credit Scores
What is a credit score?
Credit score is basically a rating that shows how likely you are to pay back your debt (mortgage, auto loan, credit card, etc)
Who is using credit scores?
Companies that lend money to consumers.
Types of credit scores
Credit score is basically a rating that shows how likely you are to pay back your debt (mortgage, auto loan, credit card, etc)
Who is using credit scores?
Companies that lend money to consumers.
Types of credit scores
FICO score - the most known, established and widely used credit score. It's developed by Fair Isaac company and ranges from 300 (highest risk of payment default) to 850 (lowest risk). When people talk about subprime population it generally means FICO score below 660. You can get your score at http://www.myfico.com/. The higher your score is the higher loan amount (or credit card line) and lower interest rate you will get.
Vantage Score - this is a new score that was developed by three major consumer bureaus - Experian, Equifax and TransUnion. The score is believed to outperform FICO, however the lenders are not using it (yet) as widely. Vantage score has a different scale compared to FICO - from 501(highest risk) to 990 (lowest risk). You can find more details at http://www.vantagescore.com/. You can get your Vantage Score through one of the consumer bureaus, for example Experian at http://www.experian.com/
Both FICO and Vantage score are so-called traditional scores that rely on individual's credit history. However, not all adults in this country have one (new immigrants, for example wouldn't have it or it would be too thin to reliably assess level of risk), so to serve this segment of customers the non-traditional scores were developed (using utility, cell phone payments, public records, address stability, etc.). Lexis Nexis' RiskView score is one of such scores.
How to improve your score?
This way or another the scores are using:
- Your payment patterns, so make sure you pay all your bills (including utility, medical bills etc.) on time!
- Utilization - ratio of the balance you owe to total credit limit. The higher it is the lower your score will be, so try not to revolve balances on your credit cards (pay balance in full if possible)
- Length of credit history - don't close your oldest credit card
- New inquiries - try not to apply for credit too many times in a short period of time
Please let me know if you have any questions!!
Vitaly
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