In the interest of full disclosure, I might as well give you a a peek into the investing side of my net worth.
Invested in the TIAA-Cref Equity Index [TCEIX], directly with TIAA-Cref. The fund invests in the stocks listed in the Russell 3000 Index. It has a low expense ratio of 0.26%, which is not as low as Vanguard’s funds. I chose TIAA-Cref to start my Roth IRA since there were no minimum balance requirements and no fees.
I have a discount brokerage account with Wachovia [WB]. It was originally a UGMA account. After college, I withdraw a substantial portion to help pay down my student loan, but I don’t know if that was a good idea. Also, for about six months I was investing $100 into the fund at the beginning of each month. That was a big mistake because of the 5.75% load fee, 0.25% max 12b1 fee, and 0.59% expense ratio which all contribute to making American Funds‘ Investment Company of America [AIVSX] an expensive mutual fund to own and invest. On top of that, there is a $50 inactivity fee which I found out about last year. If I wanted to move the account to another brokerage, I’d have to pay Wachovia a $75 termination fee.
Knowing what I know now, I would have had this money somewhere else and in some other fund.
My 401(k) retirement fund is held with the company I work for and has what I believe to be a decent mix of funds. It has consistently performed well (knock on wood). It includes a company match, half of which is invested in my company’s common stock fund. I don’t have a choice in that. The other half of the employer contribution matches the pre-tax contribution.
The funds included are small and mid cap funds (PEGZX and PJGZX), large cap funds (PJFZX and BIGRX), and international equity (PISZX). I have chosen no bond funds for now, since I’m willing to take a little more risk as I have a long time before retirement. A little more than $10,000 of my 401(k) has come from my contributions while the rest comes from the employer.
You can view my account balances here.
Suze Orman is appearing on PBS right now on her fifth special, Young, Fabulous, and Broke. I’ll live-blog the first hour of the program. You can catch her on WNET 13 New York or possibly your local PBS station. Show them your support.
Read on and reload throughout the hour! Keep in mind my server is a little slow when it comes to posting.
Read the full article →
Many of the people I’ve grown up with have been buying their first homes at this point. One of my closest friends (and his wife and daughter) is selling his first home and moving onto bigger and better. So yes, I’ve been thinking about it a bit. In that respect, this article caught my attention this morning.
For first-time home buyers, it is incredibly easy to borrow more than the value of a home and make the purchase. The article describes three potentially dangerous methods that have been popular.
* Piggyback Loans. You used to need 20% of the home’s value at the time of purchase. That’s not common anymore. 42% of all first-time home buyers do not put any money down. Without the 20% you have to pay private mortgage insurance or borrow their down payment from a home equity loan. This will only pay off if you can afford to pay more than the minimum each month, and there are many pitfalls of a variable-rate home equity loan.
* Interest-Only Loans. The buyer pays only interest for the first five, 10 or 15 years. If the buyer doesn’t budget for higher payments down the road, he or she could run into trouble. This might be good for someone whose income is definitely going to go up, but that can’t always be a sure thing.
* Minimum Payment Option. Each month, the home owner has several choices. They can either pay the principal and interest as they would on a regular mortgage, they can pay only the interest due, or they can make a smaller “minimum payment” and any outstanding interest gets added to the principle. Borrowers who use the last option often will see the balance of their loan go up over time.
There are some situations where one of the above options might be a good choice, but it’s best to understand the drawbacks.