Archive for January, 2009

Are Houston, Dallas & Austin are still good for Realestate Investing?

Yes, they are very much a hot real investor zones compared to other cities because of the price drop with good appreciate when the market bounces back. These markets didn’t get affected during the real estate burst. They only went down 10-20% in certain areas compared to 40%-50%.

They are good depending on the location. Location is always the key to real estate.

Be your own Financial Planner

In my last post, we saw how Goal Setting works better than Resolutions. I also promised to show, how Goal Setting Techniques works better in achieveing your financial dream. Let’s start with a quick check on your stand with money and move on setting some new goals, draft realistic plans and try to reach them by taking some action to make this year a fruitful one. 

Self assess yourself by answering these 3 questions below and figure out where you are in regard to financial planning.  Say “YES” if you have an answer or NO if you don’t have an answer or don’t know anything about the question.

Do you any personal financial goal like buying a new car or home? 
Do you have a Budget in place to track all your income and expenses?
Do you have a Savings Plans to grow your money?

If you said “Yes” to all of these questions, you are really way ahead of many people. If you said “No” to all them, its better you start thinking about them, now as it’s the right time.

Set/Revisit your Goals

When comes to selecting and Setting goals, Try to set SMART goals. These are goals that are Specific, Measurable, Achievable, Relevant, and Trackable. For example, you may want to create an emergency fund in six months to have 3-6 months worth of your salary.

Allot a specific time. Sit down with a pen and paper or your computer. Start listing your goals, dividing them into three categories: short term, medium term, and long term.

• Short-term goals might include buying a new computer, or paying off credit card debt.

• Medium-term goals could be purchasing a car or going back to school.

• Long-term goals might be to buy a home, saving for your kids education or retire with enough money to live comfortably.

At the end, make sure you prioritize the list. Which ones are the most important to you? Which ones can wait? 

Define a Plan
People don’t plan to fail, they usually fail to plan. If you want to go to a place, you better know your directions, otherwise you are sure to get lost. It is as simple as that. Similarly, if you have set your goals, you better work on a clear and concise plan to reach them. Let’s define a plan by taking a simple goal.

The goal is to buy a home in 3 years with 20% down payment. That’s a SMART goal but to get you there you better draft a sound plan. In this case, you need to know things like:

Target Amount: Amount needed for the goal using today’s dollars. If your goal is to make a 20 percent down payment on a home valued at $100,000 today, you would need $20,000 for the down payment.

Target Dates: Enter the year or date when you want to reach your goal, say 2011.

Start out Amount
: If you have $10,000 saved in a money market account, you may decide to allocate half of it to the down payment. In this case, you would write $5,000 under Current Assets.

: Indicate the gap between the cost of each goal and the assets you have allocated, in our example $15,000.

Number of Years to Target Date
: Enter the number of years between now and your target date, which is 3 years.

Amount to Be Saved Each Year
Divide the difference by the number of years to the target date. That amount you need to save each year to reach your goal is $5,000 a year.

Coming up with $5,000 for a year might be a tough deal. Try to split it monthly. You can then start a savings plan to save around $420 per month to get to $5,000 a year. The next and important step in the financial planning is executing the plan.

Ready, Set and Go: Take Action

Wisdom is knowing what to do next; virtue is doing it,” said David Starr Jordan.

Making up goals and plans is just 20% of the challenge; executing them is 80%. In our example, you have the goal and plan to be ready to buy a house in 3 years with a 20% down payment.

How are you going to implement the plan if your financial situation is already tight? The first step is to analyze your current income and expenses to see where your money is going and what can you scale back. Start a simple budget to track your income and expenses, going after expenses which can be easily cut without affecting your lifestyle to achieve your monthly savings goal. Open a savings account or an add-on CD to put away a fixed amount every month. Or setup an automatic debit from your checking account to this savings account. This way you don’t have to do it manually.

Finally stick to the plan rain or shine and you are sure to reap its rewards. 

Obama Economy – Stock Picks 2009 – Long Term

Today, the biggest ever stimulus package of $819 billion is been approved by the senate. Its a first victory for Mr. President Obama. He has got of stake in this new stimulus package and we all hope it works. But many analyst thinks with money going to public sector in developing infracture like bridges and so forth. We won’t see the benefit until for 1- 2 years.

Taking that foreword, many analyst are focusing on stocks which has focal point towards infrastructure like Catepillar (CAT), Maintowo (MTW) who all makes some machineries really needed for the infrastructure growth. Also

I would bet my dollar with CAT as they just laid off few thousand and its selling 42% below its high, P/E ratio of 5.83. It also yields 5% dividend which is sweet. In conclusion, its really a good buy as a long term investor (2-3) years.

Another good one, GS – Goldmann Sachs which follows real conservative methods in investing. They performed real well last year and only announced their first loss ever in the last quarter. They will be the first one to pay back the TARP loans. They are selling in 50% discount from 52 week high. A good buy for long run.

Next Healthcare industry. An Industry which is always envyed by others because of its recession proof characterization.  In 2008, the S&P 500 fell 37%, while the healthcare industry fell 24.5%. Some good ones from the bunch are, Johnson&Johnson (NYSE:JNJ), Abbott Laboratories (NYSE:ABT), Merck (NYSE:MRK) and Bristol-Myers Squibb (NYSE:BMY), Pfizer (PFE) and Wyeth.

JNJ was considered a strong company until it got hit by serious of patent cases. Currently, Abbott Laboratories (NYSE:ABT) faces no such issues in its drug portfolio. Further, it experiences strong growth in all of its business segments across the globe. It dropped by only 4% last year. Thus, Abbott’s solid relative performance and its sound operating fundamentals will position it as a leader in the pharmaceutical industry for some time to come.

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