Finance

The Intelligent Investor by Benjamin Graham is considered the bible of investing.

Since I wrote the initial set of posts, quite a few people have asked me about good credit cards. So, I decided to write one about the same.

(Since my previous posts, quite a few people asked me a basic plan which can be followed, here it is) The items are ordered from first thing to be done to the last thing which can be done (assuming money is still left). Emergency savings Put 6 months worth of expenses in a Series I-Bonds (sold by treasurydirect.gov) - they try to match inflation rates (but nothing more than that) and can be sold after holding them for at least a year....

(Based on what I have seen financial savvy people doing and makes sense to me. Disclaimer: These are my opinions.) Should a person contribute to pre-tax 401K? Only if the company has a matching policy, else wise, its money trapped till the person reaches retirement age. Should a person contribute to post-tax 401K? Only if the company has a matching policy, else wise, its money trapped till the person reaches retirement age....

Books One up on Wall Street by Peter Lynch - a good book on stock picking A random walk down the wall street by Burton Malkiel - a good book on why not to pick stocks The only investment guide you will ever need by Andrew Tobias - a hilarious summary of investing/saving and many other random money related topics The retirement miracle - For people who believe in indexed universal life insurance plans (I don’t) Where are customer’s yachts - hilarious read on wall street trader who profit on the expense of customers (won’t help in investing though)....

Money has to be held in some form or the other. It could be cash, physical gold, land, or more conveniently accounts. The blog post is only about the last one. Normal accounts (or non-retirement accounts) - held at banks Checking account - Post-tax contributions Earnings are realized immediately and taxed as ordinary income Account will never go down in value (insured by FDIC for up to the first 250K $) money is highly liquid - can be deposited/withdrawn at any time (and absolute limits on deposit/withdrawal are usually of the order of 10, 000$ per day) Savings account Post-tax contributions Earnings are realized immediately and taxed as ordinary income Account will never go down in value (insured by FDIC for up to the first 250K $) Money can be deposited anytime but can only be withdrawn six times per month Investment accounts (for lack of a better term) - held at stock brokers These can be held as retirement or non-retirement accounts....

Contributions - Money being put into an account is called a “contribution” to that account. Earnings - Money “earned” in an account. Usually, as an interest or dividend on the money contributed but can also include things like bank bonuses. As a concrete example, a person opened a new bank account and “contributed” 1000$ in the account, the bank gave him a 150$ bonus and by the end of 31 Dec, the account earned and interest of 35$, the “earnings” will be 185$ (150 + 35)....

A year back I decided to try peer to peer(P2P) lending (out of curiosity) will a small sum of money. My net conclusion is that peer to peer lending is not a sensible form of investing. My money is still stuck (and that’s not the only reason why I would recommend people to stay away from it). How it works A lender with say 1000$ will go to a site like lendingclub....

(Notes from Burton Malkiel’s talk at Google in 2010) Lesson #1: Buy-and-hold is still the best strategy Not only timing the market is tough but people who are trying to time the market loose more often than not. Lesson #2: Dollar-cost Averaging Since it is impossible to guess whether the market is going to go bull or a bear, it is better to invest over a period rather than in one-shot....