Archive for the ‘Financial Literacy’ Category

Time is of the essence – Part 6 (Kids Education Savings -Final)

June 1st, 2008 Vijaianand

Sorry to miss out on posting last week blog. Now I am back on track after a week long vacation break. Yes, a fun Road trip to Chicago from Houston with my family for a get-together and sight seeing. Road Trip, you might wonder at this current high gas price?!





Yep, you don’t believe it!! I came out as a winner compared to flying since its a last minute plan. You can expect a blog about it pretty soon. Let me jump right into core topic.



In the last few weeks, I been shedding lot of light and sharing as much information I know about Kids Education savings under Time is of the essence main topic. Starting with a detail analysis , moving on to different investment paths and the previous post with various savings plans available for kids education savings. I have covered many points on Kids Education savings which I feel important and essential under financial planning.





This final post, I am going to share my own realistic approach on the same line. Many of you might know, I always like to walk the talk. It is my core belief. My previous post can stand as examples. Advice is not just for others, its for yourself. You can only advice others if you truly follow your own statement. People will only trust and believe a person if one do things they talk about. Anyway, let me reveal the strategy of my own son’s education savings plan.

My Approach


Time to share my secret. I started my son’s education savings as soon I heard my wife is pregnant. I opened a 12 month CD with $250 monthly deposit in DCU which yielded around 5% last year. I know its not big return. (I shared this idea when I talked about different investment routes – Kids savings Part 2 post)I just wanted to give a kick start and get to a habit to manage my monthly budget to putting aside this amount every month.





I sticked with my initial plan and it gradually become a part of my budgeting. I renewed the CD one more time last year which just got matured 2 months ago. I didn’t really jump to anything as I wanted to start a 529 investment plan.




I analyzed and did my own research, finally ending up opening 2 good funds which can return at least 10% year over year. I opened 2 different funds with 2 different companies in 2 different plans.





I decided to open 2 funds in 2 different companies to diversify and be on a safer side. I also plan to do 2 different plans, coverdell and 529 because I can reap the benefits of both for short term and longer run. That’s my idea.



My First Fund Choice




I happen to come across Permanent Portfolio funds currently managed by US Bank corp from Timothy Sykes(hedge fund guy). He recommended from his personal experience, a all time more than 10% return fund, Permanent Portfolio Fund – PRPFX.





I did my initial research and found the fund to be amazingly interesting. I was astonished with their return as of date more than 10% year over year and 100% since the inception. See the chart below.




It had really interesting combination of holdings from Gold, Silver, Swizz Franc, US Stocks and Bonds. Check out the detail fund information from their fund fact sheet. I opened a monthly Automatic investment Coverdell plan with a $100 initial deposit. They charge $35 as opening account fee from that initial deposit. Every month I signed up for auto draft of $150 from my $250 savings.


Second Choice


You all know Vanguard is one among the top 3 fund management companies. They have really good funds and at the same time reasonable growth and return funds. I was initially debating whether to go with Vanguard or TRoweprice since I have International Market fund with them.


After my detail analysis, I found TRoweprice don’t have a good fund for 529 which has performance proven for long with good return. So I decided to do Vanguard this time. I planned to do 529 Aggressive Growth Portfolio which is 100% with blend pattern. It also has good return as of last year with 10% year over year. Check out the chart below. Check out the detail performance of the portfolio by check their fund sheet.


Since Vanguard as a Minimum $3000 deposit, I used my matured CD amount directly as opening deposit. My initial 2 years CD savings served a real good purpose as a initial opening amount to kick start 529 fund in Vanguard. I also signed for monthly automatic addition of $100 to this account which totals my $250 allocated in my monthly budget for my son’s education savings.


I hope to maintain these 2 funds and use them when needed. i also plan to add one more in the future to be better situation to handle the need. Better to be planned and cautious now then sorry later..


This concludes the series of Kids Education savings blogs. I hope it was useful and informative. Let me know what do you thing. I am planning to shift gear from “Time is of the Essence” topic and post blogs which are in my list for a long while on different areas. Watch out..

Posted in Financial Literacy, Financial Planning, Kids Education Tags: , No Comments »
Read More »

Whats up with GOLD?

February 29th, 2008 Vijaianand

Gold is one of the precious metal never lost value for all these years, I should say centuries. It’s been the craze of human race from the day it was found. This yellow metal always retained its magnetic power to attract both men or women. It’s metal for one reason Britains stepped their foot into India to capture hold of the country.


Gold has been considered as a good investment thats the main reason in India they gave gold ornaments as a dowry to the bride which can be used if necessary for the family. Its also used to pass on the wealth from one generation to another.


Enough of Gold history. Let me get on the fact. Look at the chart below. Last year around the month of Jun, it started to slowly raise and hit a lower high and pulled back on Sep again to $650 range. After that it never looked back and started to soar supported by subprime crises and later by weak economy.




Nobody really expected the yellow metal to claim this high close to $1000 within just 8 months and its not looking to stop anywhere soon and aiming for higher highs every day. Its all because of the weakening dollar pushing the inflation and recession is on the brink.


Check out the 5 year chart below, it has come a long way from $300. If somebody would have invested in just 10 bullions for $3000, now its worth $10000. Just calculate the return which is 225%. Wow, who don’t want to get that much return. You and me can’t predict the economy that pushed GOLD this far. But you surely make a wise choice to buy it when its affordable and it will never let you down.


Recommedation: Long term Investor

Don’t buy now. What goes up faster is set to come down 2 fold faster. Gold will eventually come down to a price which is afforable to conservative consumers. It will sure to pullback to $700 – $800 range or much lower. That time, don’t hesitate to catch the train. It will be a good investment for long time to come. The 20year chart below is the evidence.


(Chart courtesy: http://www.usagold.com/)


Short term Trader:


Gold has become an attractive commodity for the trader these days with market fluctuating so much dropping prices to more than $10 dollars a day. It is very good traders vehicle to put money for a short term and get a sweet lump of return in just few months. It really You can boldly make the decision to buy some gold as short term investment and reap the reward when it gets up to $1100 or $1200. But be cautions and brave enough to withstand some ups and downs on the way.

Posted in Financial Literacy, Investing Tags: , No Comments »
Read More »

What is Financial Freedom?

January 30th, 2008 Vijaianand

“Financial Freedom” – The magical buzz words, lot of you might have heard yelled at you in radio’s or whenever you attend a finance or investment seminars. It is very lightly used these days without any weightage to the actual concept. Let us put some thoughts together to dwell on to understand better.


Photo from automatednotes.com

What does it exactly mean to be Financially Free?

I know many of you have the answer just right under your collar. That is, Financial freedom means “Earn more so I don’t have to count each dollar I spend and not worry about paying my expense every month” Or “Make more money to spend like there is NO tomorrow“.


Is that the answer you got or something close to it?


If you think you got the right answer, please I am sorry to say that you are wrong. It’s not just you got the answer wrong, it’s just general outlook is not syn with reality. When you search google. You get the first result from Wikipedia as “Financial freedom describes a well-planned lifestyle where one no longer is required to work for income to cover their expenses. …”

It’s not just you you got it wrong. It’s the people who started it all out and echo everyday so it is easy for them to mold to their own view point.


Like many of you I also thought thats the answer few years ago. We all think if we have more money that will solve all the problems. No, its not going to solve it. It’s going create more problems and even bigger worries.


Financial freedom is not about having or earning more and spend whenever for whatever you want. According to me, “It’ is all about being content with what you have(earn) now and manage to work within the boundary instead of stretching it long to get in debt“. Its being self sufficient with the money you have and manage to spend wisely for all the expenses and grow it efficiently for the future. That’s what I call Financial Freedom.


You might even have million dollars. If you don’t manage it wisely, it will vanish in a month. With that million dollar comes great power and lot of responsibility. If you are not responsible enough to manage it, you will fail pretty soon and you still won’t get to sleep well at night.

Let me take a simple example. For a scenario, we assume an average middle class American earns on average of $40,000 – $50,000 a year. If he makes an habit to work with this income limitation and make proper planning to take care of all the expenses and also manage to grow some money(10%) for the future that’s what I call financially free. If you don’t have debt you can’t pay off and you have ability to manage and grow your hard earned money, that’s simply financial free in its own version.

Our schools or college system, never teaches us lot about Money management unless you opt for finance course. Yet it will be more theoretical, money lessons can only be learned in a hard way by practical means. But you don’t have to learn only from your experiences and mistakes, you can also learn from others mistakes. Thats a wise way.

So don’t make the mistakes others are making by going beyond your boundary unless you have the guts to pull back otherwise you will be in deep deep debt by inviting trouble. Watch out folks, don’t just take the advise of you finance guru’s or planners. Give it a thought and you will dwell on something on your own.

Posted in Estate Planning, Financial Literacy, Financial Planning, Retirement, Retirement Planning No Comments »
Read More »
« Older Entries
Newer Entries »