Novel Investor

Holiday Roundup: Lessons From A Christmas Vacation

December 21, 2011 by Jon

In the spirit of higher learning I decided to put myself through the arduous task of studying the educational side of National Lampoon’s Christmas Vacation. A few things I took away from the hours of research:

Several strings of lights are okay, 250 strands for a grand total of 25,000 imported italian twinkle lights, might be excessive. If you’re trying to compete with the laser light show at Epcot Center, stop, you lost already. Your wallet will thank you and so will your neighbors.

Writing a $7,500 check to cover the deposit on a swimming pool when you don’t have money in your account is a bad idea.

Hoping that your Christmas bonus shows up on time and is big enough to cover the check is even worse.

I’m not sure how far ahead one normally pays for a pool instillation, but the middle of winter might just be too early. Paying too far in advance is borderline sketchy, wait till the ground thaws.

Despite what you might think, kidnapping your boss, will not get you that bonus either.

When the insanity of the holidays begins to set in, remember, there’s always Jack Daniels. Continue Reading…

I’m Addicted To CNBC!

December 13, 2011 by Jon

If I had known several years ago, that going down the CNBC path would be so addictive, I would have switched to the Cartoon Network.

It all started back in 2006 or maybe 2005, I’m really not sure, probably earlier. My job allowed me the unfortunate opportunity to watch daytime TV. I worked nights, or at least evenings to early mornings. While most people came home from their 9 to 5, I was off to work. Which was fine by me. Except one thing, there is almost nothing of value on daytime TV!

Once you get through the talk shows, soaps, People’s Court rip offs, and reruns, you’re left with sports news, world news and market news. I found out real quick that sports news tends to be on a repeat news cycle until the nightly games start. World news can be way to negative. Certainly educational, but depressing.

Then there was CNBC! I was immediately hooked and needed my daily fix. Continue Reading…

New Cost Basis Reporting Changes For 2012

December 8, 2011 by Jon

Starting January 1, 2012 new cost basis reporting changes will take effect regarding mutual funds, ETFs, and DRIPs (Dividend ReInvestment Plans). Under the new changes, the IRS will require all brokerages and fund companies to track the purchase and sale price of these assets. These are similar to the cost basis changes for stocks that were put into place at the beginning of 2011.

Cost basis, if you’re not familiar, is the original value (purchase price) of an asset. This value is used by the IRS to determine your capital gains (losses) when you sell shares in a mutual fund, ETF, or stock. Which is why it’s so important to track your investment purchases and sales closely. Using a simple spreadsheet covering: purchase date, invested amount, shares purchased, and sales date, will get the job done.

Which Shares Will Be Impacted?

Every time shares of a stock, mutual fund or ETF are purchased, that transaction is given a share lot ID, also referred to as a tax lot ID. Even if you already own shares, each new purchase is given a separate share lot ID. If you invest money every month into a specific mutual fund, there will be separate share lot IDs for every purchase.

Starting in 2012, all new share purchases in non-retirement accounts will be affected by these cost basis reporting changes. Any shares bought prior to January 1, 2012 will not be affected by these changes. The reason retirement accounts are excluded from the changes is due to the tax advantages of those accounts. Continue Reading…

Buying Stock In The…Packers?!

December 6, 2011 by Jon

The entire concept of owning part of an NFL team sounds pretty cool, until you realize it’s the Green Bay Packers. Having lived in the Chicago area all my life I’m still surviving off the fumes of the Super Bowl Shuffle. Which should offer some explanation toward my anti-Packer stance. That said, if the Bears offered a similar gimmick stock offering, I might think twice about buying shares, until I saw the price.

The $250 Super Fans Dream

What’s the #1 item on all the Packer super fans Christmas lists this year? Yep, stock in the team and starting today it’s on sale for the low, low price of $250 per share plus $25 shipping and handling. Limit 200 shares per customer.

There’s something to say about the timing of all this. Certainly the shares should sell well. As much as I hate myself for saying it, the team’s actually playing better than last year. But the fact the shares are on sale right before the holidays should give you an idea of what they actually are. Just a good gift. Something to hang on the wall and point to when your Packer friends come over. Continue Reading…

Savings Stuck On Pause? Pay Yourself First

December 2, 2011 by Jon

When it comes to saving money, sometimes it can be easily overlooked in these debt focused times. Deservedly so, paying down debt has its importance. Typically, with any budget, money is set aside each month for all the bills and other monthly costs. Leaving savings to sometimes take a backseat to those credit card bills or student loans. Which only puts off those savings goals another month. Before long that vacation fund is four months short and sitting on a beach in December is looking very unlikely.

There’s a reason company retirement plans tend to work well from a savings perspective. How many 401k deposits can you miss when the money is taken out before you get paid. It’s basically an automatic bill pay for your retirement account. As long as you show up for work, your retirement savings gets it’s monthly payment.

A Lesson From The Past

As a kid getting any amount of money is a big deal. It can be hard to grasp what things cost and how it relates to the value of the dollar. So, even getting a few quarters can be exciting. At least it was when I was growing up. A quarter back then got me a game of Pac-Man or a bunch of candy. Continue Reading…

We Need U.S. Debt, Just Not All Of It

November 22, 2011 by Jon

There’s been a singular view that has swept through the nation over the past few months since the debt debacle back in August. Apparently the U.S. has too much debt. The U.S. government currently has over $15 trillion in outstanding debt obligations. Some view it as excessive, wanting it paid down to a reasonable level. Others believe it should be eliminated entirely.

This isn’t the first time that the U.S. debt has become a political hot topic. The last time was back in 1992, when then presidential hopeful, Ross Perot made eliminating the deficit a major campaign issue. Clinton eventually was elected, signed the Deficit Reduction Act of 1993, and all was better. For the most part, until you fast forward to today and it’s playing out again.

A Super Committee was set up to solve the debt problem. It failed, not surprisingly. Putting debt reduction as a major talking point in the next election cycle. On a side note to the government, don’t name a committee “Super” if it’s bound to fail. It tends to destroy all meaning of the word. Anyways, the committee’s failure enacts forced spending cuts starting in 2013. Being that far out, they’ll never see the light of day. But enough about politics.

Another way of looking at this debt issue, there is currently about $15 trillion invested in U.S. debt. Used as a safe haven for money, backed by the full faith and credit of the United States. Which is the biggest argument that the debt level is fine for now. Continue Reading…