Saturday, July 14, 2007

Portfolio July update

Here is the July update. My net worth has increased by around $4000 in 2 months, thats $2000 per month, which is okay.

I plan to buy a house in a year or two. I intend to collect money for my house down payment from 2 sources

  1. ESPP shares (currently its around $18,000)

  2. Part of my HSBC account (currently its around $24,000)

Right now its $42,000 so by the time I buy my house I should have enough money for my down payment (I dont wan to spend my entire cash in HSBC account!!)

Monday, May 14, 2007

Portfolio - May update

So, I have 2 additions from the last Portfolio update from March - VTSMX in my Roth IRA & VWO an ETF
My profile has increased 15K since March; thats 5K per month, pretty good!!

Thursday, April 5, 2007

My monthly cash flow

Monthly cash flow

Gross Pay 6500.42
401K 390.02
Taxes 1725.02
Net Pay 3417.00
IRA 500.00
Expenses 2500.00
Remaining 417.00

So, the plan is to invest as much as I can in stocks & ETFs & save aside for India & parents trip

Thursday, March 8, 2007

Losing weight

I finished reading "Total body makeover" by Bob Greeene & I thought it was a great book. I used to be around 20 pounds over weight around 6 months back, but right now I am around 5 pounds over weight. Right now I am around 170 pounds, my ideal weight should be less than 165 pounds. I am aiming for 160 pounds by August 2007.
His steps for losing weight & becoming fit are simple but effective; no fancy diets but good old exercising!
  1. Drink lots of water
    I've been doing this since some time now
  2. Have a nice & healthy breakfast
    I have a breakfast every day
  3. Avoid alcohol
    I drink rarely so this shouldn't be a problem
  4. Do cardio 6 days a week (5 days for 30 mins & 1 day for 60 mins)
    Working out 6 days a week, week after week is not a simple task. But I hope to work out at least 4 days a week
  5. Do weight training for 3-4 days
    Should do weight training 4 days a week
  6. Avoid fatty, unhealthy food
    I tend to eat outside around twice a week but avoid places like McDonald's, so I should be okay. But I need to switch to brown rice

March 2007: My weight = 170 pounds

Friday, March 2, 2007

Portfolio - March update

My portfolio was looking pretty decent before the last week. But after this week's crash; its not looking that good. But thats fine; I'm glad I am not panicking at all. There will be periods of ups & downs in the market; its all a part of the game.
If the market is down the next week too; I might buy some stocks or ETFs since there are so many stocks at a discount.

Wednesday, February 14, 2007

Scottrade versus Vanguard for my IRA

Well, I still don't have my IRA. I am just thinking if I should open a Vanguard account for that or use my existing Scottrade account.
Suppose I buy a Index fund & put $100 per month; that would mean
Initial cost = $3000 + 100*12 = $4200

Vanguard expenses
$10 + $10 = $20

$17 buy + $2 per transaction so that's $17 + 2*12 = $41

Of course if I do 'Systematic reinvestment' not every month but every 3 months; that would lower the expenses since I would have to pay 2*4 = $8 instead of $24. But then I'm keeping that $100 in my bank instead of letting it grow through this index fund.

But if I use Scottrade, I have the advantage of putting Stocks in my IRA & having just 1 investment broker for my IRA & taxable investments (of course I have Fidelity for my 401K)

I think I should not be worrying so much about $41 versus $20 in fees; Scottrade looks like a good option for my IRA. I should do this by end of February

Saturday, February 3, 2007

IRA & 401K - is that too much?

I am regularly investing money in my 401K & I plan to continue doing so. I put 6% of my salary in my 401K & my employer matches 50% of that; so that makes it 9% Well, if I continue doing that till I retire, I will end up with close to $1 million. $1M for just 401K is I think pretty good. If I continue being sincere with my 401K, savings & other investments I think I would amass pretty decent money when I retire. I am not being cocky but I think if I (or for that matter any one) is sincere & regular with his investments he should be pretty rich

Now, the question I have is should I invest in Roth IRA. Isn't 401K investment good enough for retirement? Plus, I don't know if I am going to stay in USA for ever. And, if put so much stuff is in my retirement account, I won't have a ot of money to "play with" right now. Is this okay?

Well, these are tough questions to answer. But I think Roth IRA should be a good investment. With Roth, I can withdraw my investment any time without penalty. And If I have to withdraw the amount, I will lose 10%; I think 10% is something I can afford to risk.

After doing plenty of research I have decided to go with Vanguard for my Roth IRA & invest in Index funds. I plan to buy VFINX first. I plan to buy Small Cap Value Index funds, Total International Stock MArket fund & REIT Index fund in the future. Go Vanguard!

Saturday, January 27, 2007

My Portfolio

I have a couple of stocks and some mutual funds but mostly my portfolio consists of cash. When I see some bloggers showing a pie chart of their portfolio and where their money is invested, I thought its a good idea for me to do so & find how much percentage of my investments is invested in each investment vehicle.
I think I have too much money in cash, something to work on!

Monday, January 22, 2007

Tax refunds check list

This is a check list for my tax refunds this year. I am going to keep updating this list
One of references is this link Thanks to All Financial matters; I really love that blog!

I've bought Turbo Tax this year!

The list just makes me wonder that all tax refunds are for doing stupid things like gambling losses or if you make mistakes like penalty on early withdrawal of savings. Unfortunately you are not rewarded for doing good things like not being in debt or that your finances are in order. Well, thats how life is:)

  1. Telephone tax refund
  2. Education - Stock market course in UW: Will have to research more
    I think I can not claim this because it does not fit the criteria " Education expenses to the extent required by law or your employer or needed to maintain or improve your skills"
  3. Moving expenses
    I think I can not claim this because it is within a small distance from my old house
  4. Taking care of my parents (dependants) for around 45 days: Will have to research more
  5. ESPP plan. Here is the link

Friday, January 19, 2007

The Great Indian dilemma

I am one of the thousands of Indians who have flocked to USA in search of better opportunities and better pay. I did my Masters here & now work in one of the best software companies in the world. Its been a joy ride so far. I was so used to getting my ready meals, clother ironed & not worrying about house cleaing in India that USA was a big shock. But I survived. I manged to attend classes in the morning, flip burgers in the afternoong, make dinner in the evening & study at night. USA taught me to be independent. I can safely say that I can survive anywhere in the world
But where does that leave me now? Will I stay in USA for ever? Don't I want to be with my parents & relatives in India? Is it worth to be away from my loved one's for ever?
Well, these are some tough questions...
I know that if I am talking about opportunites & money, India has it too now. Its a booming economy & there is a lot of money in India. But I am so used to living here, I think this is my home. But you never know where life takes you. For now I think this is my house but when ever I go to India for a vacation, I get a feeling that may be I should go back to India. This is compounded by the fact that I am not with any girl since the past 2 years so the 'lonely' factor adds up.

Where ever I live, the fact is that I love both - USA & India. Both have been nice to me & both have taught me different things. India has given me love & USA has made me tough. I know that irrespective of where I live I will be happy!

Wednesday, January 17, 2007

I plan to read 10 books this year

I plan to read any 10 out of this list!

  1. The richest man in Babylon
  2. The Monk who sold his Ferrari
  3. The Millionaire Next Door
  4. A Random Walk Down Wall Street
  5. The Bogleheads' Guide to Investing
  6. The World is flat
  7. One night @ the Call Center
  8. Five point something
  9. Rich Dad's Before you quit your job
  10. Purple Cow: Transform Your Business by Being Remarkable
  11. One up on Wall street
  12. How to buy stocks like Warren Buffet
  13. The Four pillars of Investing

One of my resolutions for 2007 is to read 10 books. I might add or change some books if need be.

I also plan to keep reading my favorite blogs every now & then (ideally every day)


& my Favorite Money/Investing portal

Saturday, January 13, 2007

Back from a vacation...

I just came back from a vacation to India. This was a very special vacation, especially since I went back to India after 3 years. The highlight was meeting my nephew for the first time. He is simply fabulous & I can spend hours with him not worrying about anything & just having a great time.
I am a little sad now since my house feels so empty now without my family. But well, the decision to be away from my family is mine so I shouldn't be complaining! Some times when I think about an old friend or one of my grand father or grand mother, I wonder if I will ever see them again. May be the last time I met them was the last time I ever met...
I have also realised not to think about Money all the time. Well, Money is very important but there are other things that are much more important than Money like Family & Love.

Wednesday, January 3, 2007

Emergency fund

Now what exactly is an Emergency fund? Its some money put aside to be used only during emergencies. That leaves us with 3 questions
  1. How much money do you put aside for an emergency fund?
    I recommed money worth 12 months of a person's expenses. So, if a person earns $1500/month & spends $1000/month, he should have 1000 * 12 = $12000 worth emergency fund.

    Some people might argue that this is a little too much but I think 12 months worth money is a safe margin. Lets face it, shit happens. We could lose our jobs, our business could be in trouble, you or your loved one could be in a serious medical condition.

    I think till a person has 6 months worth expenses in the Emergency fund, he should refrain himself from investing (apart from investing in 401K & IRA). After 6 months, he should invest a major portion towards the Emergency fund & little towards buying stocks and mutual funds. The final goal should be 12 months worth expenses.

    Once a person accumulates 12 months worth money in the Emergency fund, he still needs to keep a watch on the fund. The reason is a persons monthly expenses does not stay the same forever. He can move to a more expensive city, have a spouse and kids, have a bigger house. So, when the monthly expenses increase, he should increase his contribution to the emergency fund
  2. Where do you put this money?
    You should put this money in a savings account that pays high interest, something like HSBC Direct, ING Direct or Emigrant Direct. I use HSBC Direct and I am pretty satisfied with it. Anything that gives you 5% or more is a good option. These online banks are good because they give you a good interest rate plus its easy to withdraw money
  3. Should you use this money only during emergencies?
    Ideally, yes! As far as possible use only during emergencies. If a down payment for a car or house means an emergency to you, you may use it; thats a personal decision. But I would suggest to start another account for a house/car down payment and leave the Emergency fund as it is!

Monday, January 1, 2007

Formula to be rich!

This is a simple formula to earn wealth

Earning wealth = Money earned - Money spent

Earning money is income earned from job, business, real estate and investments (stocks/bonds/mutual funds)
Spending money is daily/monthly/yearly expenses including house rent, utilities, food expenses, entertainment expenses and all other expenses

This formula sounds very obvious but many people under-estimate its importance. If either "Money earned" or "Money spent" gets messed up, you are in a financial mess. A person might think that Earning money is the only thing that's important but if you have bad spending habits, you wont save any money. Simultaneously a person might spend only a small percentage of his income but is his income is very small, that wont help his cause either

These are some things that I recommend to earn wealth
Money earned
  1. If you are working in a company, work hard so that you can get a good bonus, stock options and a salary raise
  2. You can also earn some experience in the current company and then start working in a different company that offers a better salary and perks
  3. Start your own business.
  4. Have an alternate source of income like a money generating website and income from real estate
  5. Invest in stocks, mutual funds and bonds.
  6. Invest in 401K, IRA as much as you can
Money spent
  1. Track your expenses. Many people don't track their expenses thinking that their spending habits are proper but I think that's a big mistake. All of us have some areas where we have bad spending habits
  2. Buy Microsoft Money or Quicken to track your expenses. I use MS Money & I am a big fan of it
  3. When you identify that you are spending much more that you should on a specific area, make a conscious effort to control your spending habits on that area. If you spend way too much on a Starbucks coffee, you might think of buying a coffee machine & making your own coffee or you can drink the not-so-good but free coffee in your office
  4. Take good care of your health. There is no better investment than keeping good care of your health. Do a complete physical check up once a year, visit your dentist and eye doctor once a year.
  5. Optimize your taxes. This is the single biggest expense!
  6. Make your own lunch. Eating out is expensive
  7. Negotiate, ask for a deal; you can save a lot if you bargain plus you have nothing to lose

Finally, realise when not to be a cheapskate. Its foolish not to go to a dentist to save money only to realise later that what could have cost 100 bucks now costs a few 1000 bucks!