The $50 Billion Dollar Reason To Manage Your Own Money
December 15, 2008 by Erik Folgate
Filed under Investing, Scam Alert
Over the weekend, Bernard Madoff of Madoff Funds, was arrested for securities fraud, and he has admitted to swindling hundreds to thousands of investors out of $50 billion dollars over an undisclosed period of time. Madoff has been in business managing investments since 1960, but he also ran a hedge fund that was basically a Ponzi scheme. A ponzi scheme is a scam where early investors are paid investment returns from later investor’s money. Eventually, all of the money is gone and everyone loses out. There is never enough money to support the money paid back to earlier investors. Madoff’s hedge fund was boasting huge returns on investment, and this is how he attracted so many investors, including big names like Steven Spielberg.
Take Advantage Of Values In the Stock Market
November 10, 2008 by Erik Folgate
Filed under Economy, Investing, Stocks
Last night I had trouble sleeping, and for some reason, I started thinking about industries that are tanking and will be a value for investors in the future. So many of us are scared by the media when they throw out words like recession and depression. We automatically think we’re going to lose our jobs and all of our life savings. It’s simply not true. Yes, there are industries that are lagging, but the bulk of the economy is doing just fine. Circuit City filed for bankruptcy, but in my opinion, it has nothing to do with the economy. They were always the bastard child to Best Buy. They’re prices couldn’t compete, and their customer service was horrible. Sometimes, companies fail because they suck, not because the economy sucks. Getting back to my theme for this post, let’s take a look at the industries to keep an eye on and start buying at a value in the market.
Frequently Asked Question: Should I Cash Out My 401(k) During Weak Economic Times?
October 23, 2008 by Erik Folgate
Filed under FAQs, Investing
I am starting a new section of Money Crashers that will be labeled under the “FAQ” category. These are questiions that I either receive from my contact form, questions I hear people ask on radio/TV, or questions that I hear people asking in everyday conversation.
Should I Cash Out/Stop Contriibuting to my 401(k) During Weak Economic Times?
Buffet Encourages Investors To Buy Stocks and Trash the Cash!
October 17, 2008 by Erik Folgate
Filed under Economy, Investing, Stocks
Here’s the Op-Ed from Warren Buffet in today’s NY Times encouraging investors to buy American stocks and stock stashing your cash under the mattress. If you’re going to listen to anyone during tough economic times, you need to listen to WEALTHY people, not the media and not other poor people in tons of debt. Wealthy people became wealthy for a reason, and many of them become rich by taking advantage of opportunities during tough economic times. I have harped and harped about this over the past few months, but I am not sure if anyone is listening to it. So, don’t take my word for it, take Warren Buffet’s word for it, the second richest man in the country.
Dow Jones Drops Below 10,000 For First Time Since 2004
October 6, 2008 by Erik Folgate
Filed under Investing
It’s the latest doom and gloom headline from the financial world. The Dow Jones Industrial Average dropped below 10,000 points at the closing bell today, and it was the first time it closed below 10,000 since 2004. It first hit the benchmark of 10,000 in 1999 at the height of the dot com boom. What does this mean for you? Well, it’s not good, and your investments are taking a huge hit. The Dow Jones tracks the largest 30 U.S companies and their stock performance. Chances are that you have some investments with Dow companies. The Dow isn’t the best index to measure how the stock market is doing. The S&P 500 is a much better index to gauge the market’s performance from a snapshot point of view. However, that index has been dropping like a rock as well. Based on my infinite wisdom and knowledge, here’s my take on what to do and what not to do.
The Easiest Way to Insure Your Bank Deposits Beyond $100,000
September 22, 2008 by Erik Folgate
Filed under Banking, Consumer News, Investing
You know that the economy is on shaky ground when the hottest topic in personal finance is making sure your bank deposits are insured. Many of us never think about what would happen to our money if our bank closed its doors. Almost all traditional commercial banks insured their deposit accounts up to $100,000, which is enough coverage for the average citizen. However, some of you are blessed with an abundance of money and $100,000 might not be enough. Many small businesses carry bank deposit balances over $100,000 as well. Traditionally, the only way to make sure you are fully insured is to spread out your money to multiple banks in $100,000 increments. In fact, Clark Howard suggests that you spread it out in increments of $90,000 to account for the interest you’ll accrue on the money. So, if the worst happens and your bank closes up shop, you’ll insure your interest as well.
Where Should You Put Your Money During Times of Financial Turmoil?
September 16, 2008 by Erik Folgate
Filed under Consumer News, Economy, Investing
The recent news of the financial turmoil on Wall Street is unsettling. For younger folks like me, it’s even more unsettling, because my generation has never been old enough to remember financial problems like this in the past. Older folks know that we’ve rebounded from situations just as bad or worse than this one. One thing that we need to remember is that this is what happens in a free market. The market corrects itself by snuffing out companies that took on too much risk. This is why I disagree with all of the government intervention and bailouts on a philosophical level. On a practical level, I agree that it had to be done, or the future of our financial sector would have been very grim. Also, we need to realize that the government isn’t just bailing out these large corporations for the sake of helping a bunch of rich executives. They are thinking about the consequences that would ensue for the average customer of a company such as AIG. It’s a tough situation, but there is always a light at the end of the tunnel.
Are You Paying Too Much For Life Insurance?
September 3, 2008 by Erik Folgate
Filed under Insurance, Investing
For those of you who have life insurance, and for those of you who are looking to buy life insurance for the first time, here is a fair warning from your faithful Money Crasher’s host. It’s easy to get ripped off, just like every other insurance product on the market. The problem with life insurance, is that the actual product differs, and each one yields a different commission amount for the agent selling it to you. There are only so many ways to slice auto, homeowner’s, and health insurance. Agents can up-sell you on them by offering bonus coverages for extra premium, but the product is essentially the same. Life insurance does not work this way. Allow me to explain:
Investors Pour Into S&P 500 ETFs
July 22, 2008 by Erik Folgate
Filed under Investing
Yahoo Finance posted an article from Investor’s Business Daily about investors putting more money into S&P 500 index exchange-traded funds.
This is a good sign, because investors are starting to realize that now is the time to buy domestic stocks. The quasi-recession will be short-lived, and buying domestic stocks at a discount is how you become wealthy. Emerging Markets, European Markets, and the Gold market exchange-traded funds were the hardest hit for investors pulling out their money. These are trendy funds. This means that short-term investors are speculating a fourth-quarter rally for the U.S. economy. I think they’re right.
Should I Use the Cash In My 401k Account For A Down Payment On A House?
July 16, 2008 by Erik Folgate
Filed under Investing
I need your help. I think I know the answer to my own question, but I have the luxury of interacting with over 25,000 people per month on this site. Do you think it would be wise or unwise for me to take the money in my 401k account and use it for a down payment on a house? We are planning to buy in the next two months. I normally advise people that it’s a horrible idea to borrow from a 401k account. A 401k should be something that you contribute to regularly and forget that it’s there.
