Ahhhhh the sweet sound of hitting click and having my tax information be swirled through the internet space to our lovely governing treasury authorities.
Well it was more like the sound of my head hitting the back of the sofa at 1:30 a.m. on 4/15 followed by the sound of my laptop falling to the ground. I failed miserably with getting my taxes done this year. I usually have my accountant do them but life/work/ugh happened and I was scrambling at the last minute.
To avoid filing an extension, I did them myself. I think I did okay but time will tell.
One interesting lesson for me was reinforced this year since I did my own taxes and had to make a payment. Although I do about the same amount of work as my accountant each year (I tend to study tax information as well as my forms and regularly visit the IRS' website each year...). But some of the conversations that I have had numerous times with my accountant had not quite sunk in until this year.
First and foremost, my state (like most states) does not have the same deductions/credits as the federal government. This sucks big time. BIG Time. And means that I usually pay something to my state (usually something small).
However, this past year was particularly unusual because I began investing a lot more than before when I was focused on either saving money for a home or paying off my mortgage early. And all those nice investments and lovely dividends came rearing their pretty little heads in the form of additional taxes.
Definitely not happy about this. But as they say it is a cost of doing business. And we all know that Uncle Sam (and Aunt Samantha) like their share of the pie.
What this means for me is that I need to put a bit aside for next year's taxes since I will owe a little bit since I am still gonna be investing and earning dividends. And I hate having to pay something without having the same amount sitting in the savings wings, ready to go on stage.
Taxes filed, and now I can say state taxes paid - Yes! I'm good for another 10 months. (Next year I will not be rushing to do my taxes at the last minute.) All this means is that Pru was able to head out for a mini-break to get some much needed rest (still working on this!) and change of scenery.
Hoping things are well with you, whoever you may be dear reader :-)
Oh and if you are experiencing great weather, like my state is, get out and enjoy it!
Pru
Showing posts with label learning. Show all posts
Showing posts with label learning. Show all posts
Sunday, April 16, 2017
Sunday, January 29, 2017
Let's Get Real - Math, Money, Savings, Numbers
I'm gonna be honest here - nothing pisses me off like people who bullshit.
[Side note: I once told an interviewer that he was full of bullshit. He laughed. He was a salesman and considered it a compliment. We had a nice conversation afterwards but I made it clear I didn't want the job. In reality I didn't want to have to work with him.]
And a lot of politicians are FULL of bullshit. So while this isn't an anti-Twump rant per se, it is a rant about what is going on in my sphere of the world which happens to include Twump headlines.
As a conservative, I honestly do not think the politicians that are in charge of Congress and the WH have the interests of all Americans at heart. And by ALL I mean the minority that voted for Twump and the majority that didn't.
Who cares the most about your money? Who cares the most about your future?
YOU DO!
So what are you doing about it? If you are placing your hope in Uncle Sam, you shouldn't be. Yes the government has a very important role and even more important tools in its toolkit that can and should help the millions of people in this country.
But do not just sit back and accept what is being told to you while you wait for the riches and jobs to come rolling in.
You too have a role to play and part of that role is to question, question, question and then question some more. Now that does not just mean questioning the government, the politicians, the news you are reading but also yourself, what you believe and why you believe it, what actions you take and why you take them.
Learning to question is a very important skill. It is one that is and can be taught in schools but it is not always one that is learned.
With questioning you must learn to decipher arguments and logic and lies.
There are no such things as alternative facts. There are facts, there are feelings. Just because you feel like you are worth a million bucks does not mean that you are. There are facts and there are opinions. Just because you believe that the U.S. is in a cycle of decline does not mean that it is.
Feelings and beliefs are often emotional. Emotion is not logic. Just because you *feel* safe, does that mean that logically you should keep your home and car unlocked? Or better yet hand out copies of your keys?
Many reading this will say "of course not" - it sounds ridiculous. And yet many still lead lives and make many decisions based on feelings and beliefs ignoring logic and facts.
It is very, very important to separate facts from everything else.
If you sat next to someone and all they could do is talk about themselves, always turning the conversation back to themselves, what would you think? Is this someone who thinks about you? Cares about you? Or is it someone who appears to be focused only on themselves?
[This is something that Twump does consistently.]
If something goes up, must it come down? We are in a bull market (stock market) and for over 90 quarters the market has gone up. This seems great. Until we know the fact is that on average the market only goes up for 50-something quarters. Does this mean that the market will not go up next quarter or for the one after that? No. But it does mean that there is a high probability that the market will go down (and soon).
A simpler question (and asked without judgment) - do you know what average means? Do you know what high probability means? Many people do but many also do not. When we read or listen to the news, a lot of words and phrases are tossed about. If you don't know what they mean, look them up. You don't have to mention it to anyone if you are embarrassed. A good online search will give you the definitions. Or find a site you like and ask a question. Ask anonymously if need be.
Now a comment about taxes on imports. Twump supporters want to build a wall and Twump has the brilliant idea of taxing Mexican imports to find the funds to build that bloody wall. So let's say Pru is located in Mexico and I want to sell something to you, an American. The price of the item is $100. We make a deal and are both happy. Twump says hold up - that is gonna be an extra 20% import tax. 20% of $100 (100 x 0.20) = $20.
What do you think I do? Do you think Pru just nods and says okay sure I'll sell it for $100 and then give Twump $20 and lower my profit by $20?
HELL NO! I raise my damn prices. I raise them high enough to cover the cost of the good, the profit that I want AND the import tax.
And who exactly ends up paying for that bloody wall?! You do - the American consumer!
You can all say that you won't buy anything from Mexico then. Hmmm....okay....personally I love fruits and vegetables and a shitload of those come from Mexico....meh! Who needs fiber?
Or even better we'll just grow more ourselves. California makes great fruit right?! Yeah and they have a lot of foreign (ahem Mexican) labor too. What does that mean?
The point is that every decision made, every action taken is going to have an impact and there is a good chance that impact will hurt people who don't have a huge amount in the bank. (Question, question, question.)
Ask yourselves why someone who doesn't know you, wants to help you. In other words - what is in it for them? Most are looking to gain something for themselves even if it is just being noticed. A few are kind enough to truly care.
If a mortal claims to be your savior - Seriously, seriously think before accepting such a thing.
Let us all send positive thoughts into the universe if Twump tries to force our intelligence and military personnel to use torture. Because I don't even want to think of what will happen to our service men and women if they are captured.
Politicians throughout the world rely on the masses (that's you and I) not understanding, not questioning and believing regardless of the former. It's the only way they believe that they can govern. But that simply isn't true.
Read more! Ask more questions! Stop blindly accepting!
Remember who cares the most about your money and your future - YOU DO! Play an active role and don't swallow just anything that is told to you.
Pru
[Side note: I once told an interviewer that he was full of bullshit. He laughed. He was a salesman and considered it a compliment. We had a nice conversation afterwards but I made it clear I didn't want the job. In reality I didn't want to have to work with him.]
And a lot of politicians are FULL of bullshit. So while this isn't an anti-Twump rant per se, it is a rant about what is going on in my sphere of the world which happens to include Twump headlines.
As a conservative, I honestly do not think the politicians that are in charge of Congress and the WH have the interests of all Americans at heart. And by ALL I mean the minority that voted for Twump and the majority that didn't.
Who cares the most about your money? Who cares the most about your future?
YOU DO!
So what are you doing about it? If you are placing your hope in Uncle Sam, you shouldn't be. Yes the government has a very important role and even more important tools in its toolkit that can and should help the millions of people in this country.
But do not just sit back and accept what is being told to you while you wait for the riches and jobs to come rolling in.
You too have a role to play and part of that role is to question, question, question and then question some more. Now that does not just mean questioning the government, the politicians, the news you are reading but also yourself, what you believe and why you believe it, what actions you take and why you take them.
Learning to question is a very important skill. It is one that is and can be taught in schools but it is not always one that is learned.
With questioning you must learn to decipher arguments and logic and lies.
There are no such things as alternative facts. There are facts, there are feelings. Just because you feel like you are worth a million bucks does not mean that you are. There are facts and there are opinions. Just because you believe that the U.S. is in a cycle of decline does not mean that it is.
Feelings and beliefs are often emotional. Emotion is not logic. Just because you *feel* safe, does that mean that logically you should keep your home and car unlocked? Or better yet hand out copies of your keys?
Many reading this will say "of course not" - it sounds ridiculous. And yet many still lead lives and make many decisions based on feelings and beliefs ignoring logic and facts.
It is very, very important to separate facts from everything else.
If you sat next to someone and all they could do is talk about themselves, always turning the conversation back to themselves, what would you think? Is this someone who thinks about you? Cares about you? Or is it someone who appears to be focused only on themselves?
[This is something that Twump does consistently.]
If something goes up, must it come down? We are in a bull market (stock market) and for over 90 quarters the market has gone up. This seems great. Until we know the fact is that on average the market only goes up for 50-something quarters. Does this mean that the market will not go up next quarter or for the one after that? No. But it does mean that there is a high probability that the market will go down (and soon).
A simpler question (and asked without judgment) - do you know what average means? Do you know what high probability means? Many people do but many also do not. When we read or listen to the news, a lot of words and phrases are tossed about. If you don't know what they mean, look them up. You don't have to mention it to anyone if you are embarrassed. A good online search will give you the definitions. Or find a site you like and ask a question. Ask anonymously if need be.
Now a comment about taxes on imports. Twump supporters want to build a wall and Twump has the brilliant idea of taxing Mexican imports to find the funds to build that bloody wall. So let's say Pru is located in Mexico and I want to sell something to you, an American. The price of the item is $100. We make a deal and are both happy. Twump says hold up - that is gonna be an extra 20% import tax. 20% of $100 (100 x 0.20) = $20.
What do you think I do? Do you think Pru just nods and says okay sure I'll sell it for $100 and then give Twump $20 and lower my profit by $20?
HELL NO! I raise my damn prices. I raise them high enough to cover the cost of the good, the profit that I want AND the import tax.
And who exactly ends up paying for that bloody wall?! You do - the American consumer!
You can all say that you won't buy anything from Mexico then. Hmmm....okay....personally I love fruits and vegetables and a shitload of those come from Mexico....meh! Who needs fiber?
Or even better we'll just grow more ourselves. California makes great fruit right?! Yeah and they have a lot of foreign (ahem Mexican) labor too. What does that mean?
The point is that every decision made, every action taken is going to have an impact and there is a good chance that impact will hurt people who don't have a huge amount in the bank. (Question, question, question.)
Ask yourselves why someone who doesn't know you, wants to help you. In other words - what is in it for them? Most are looking to gain something for themselves even if it is just being noticed. A few are kind enough to truly care.
If a mortal claims to be your savior - Seriously, seriously think before accepting such a thing.
Let us all send positive thoughts into the universe if Twump tries to force our intelligence and military personnel to use torture. Because I don't even want to think of what will happen to our service men and women if they are captured.
Politicians throughout the world rely on the masses (that's you and I) not understanding, not questioning and believing regardless of the former. It's the only way they believe that they can govern. But that simply isn't true.
Read more! Ask more questions! Stop blindly accepting!
Remember who cares the most about your money and your future - YOU DO! Play an active role and don't swallow just anything that is told to you.
Pru
Saturday, January 9, 2016
Indexes and ETFs
As I mentioned in one of my launch posts, for me part of this journey is a learning one. Thus from time to time I will post some information that I can easily look back on.
I don't have a lot of money to work with. Thus for me, it makes sense to invest most of my money in funds vs. individual stocks. (I'm still going to buy some individual stocks though!)
Currently, I have 3 mutual funds at Vanguard. I've decided to switch to purchasing ETFs because the expense ratio is slightly lower (I get to keep more of MY money!) than in their mutual funds. (The mutual funds are actively managed which means that although they are very similar to the ETFs Vanguard offers, you are effectively paying experienced asset managers to try to ensure that specific fund earns x% a year - generally speaking. Thus the higher expense ratio is paying for those experienced asset managers.)
Needless to say those 3 mutual funds are going to just sit there and keep earning their dividends (which are reinvested). Hopefully the value will grow over time. But I don't need the money now so I am not going to sell them.
Exchange Traded Funds or ETFs (link to Investopedia) essentially trades like a stock but its purpose is to track an index. (Mutual funds do not trade like stocks.) Because ETFs trade like stocks, their value goes up and down throughout the trading day.
Similar to mutual funds, ETFs own a bunch of stocks (or bonds or ...). So by owning an ETF (or a share of an ETF) you indirectly own those stocks (or bonds or ...). What an ETF owns varies. For example, you can have an Energy ETF (owns only stocks of energy companies), or a Healthcare ETF (owns stocks of energy companies), or a Large Corporate Bond ETF (owns bonds from large corporations) or ... There is so many options that can be underlying the individual ETF.
My plan is to stick to simple ETFs that I can generally understand and identify what they own.
ETFs receive dividends (or interest) just like individual stocks so if you are invested in them, you will also receive a dividend. If you own a Bond ETF, you are effectively earning interest since you indirectly own the bonds that the corporations issued. (A bond is debt so think of it like a loan...) Dividends (or interest) are paid either monthly or quarterly depending on the ETF.
Vanguard offers its own ETFs as well as non-Vanguard ETFs. The Vanguard ETFs are commission-free to buy and sell. This is important to me as it saves me money on fees (I get to keep more of MY money!). Because of this, I will only be buying Vanguard ETFs.
At $7/trade, the fees are expensive but in-line with several other brokerages. Not paying that fee for an ETF is huge! Because of this, when I do buy an individual stock, I need to try to buy more than one. As an example, if I buy 1 stock that costs $100, the $7 fee is equal to 7% of what I paid. But if I buy 2 stocks, then my fee per stock reduces to 3.5%.
At least for the foreseeable future, I won't be able to buy more than a few stocks at a time. Keeping this in mind, I will probably only buy one company at a time and at a maximum of 1 trade per month. When I receive a bonus or a tax refund, then that is an opportunity for me to buy a lot of stocks at once. But for ETFs, as long as I have the cash I can purchase them.
Generally, I expect to purchase either ETFs or individual stocks 2x per month. Or when I get my paycheck. I'll be using January to see how much I can allocate per check to investing. Most likely one paycheck will be used to pay bills with the other one used primarily for investing/saving/paying-down-the-mortgage/funding other life goals.
Pru
I don't have a lot of money to work with. Thus for me, it makes sense to invest most of my money in funds vs. individual stocks. (I'm still going to buy some individual stocks though!)
Currently, I have 3 mutual funds at Vanguard. I've decided to switch to purchasing ETFs because the expense ratio is slightly lower (I get to keep more of MY money!) than in their mutual funds. (The mutual funds are actively managed which means that although they are very similar to the ETFs Vanguard offers, you are effectively paying experienced asset managers to try to ensure that specific fund earns x% a year - generally speaking. Thus the higher expense ratio is paying for those experienced asset managers.)
Needless to say those 3 mutual funds are going to just sit there and keep earning their dividends (which are reinvested). Hopefully the value will grow over time. But I don't need the money now so I am not going to sell them.
Exchange Traded Funds or ETFs (link to Investopedia) essentially trades like a stock but its purpose is to track an index. (Mutual funds do not trade like stocks.) Because ETFs trade like stocks, their value goes up and down throughout the trading day.
Similar to mutual funds, ETFs own a bunch of stocks (or bonds or ...). So by owning an ETF (or a share of an ETF) you indirectly own those stocks (or bonds or ...). What an ETF owns varies. For example, you can have an Energy ETF (owns only stocks of energy companies), or a Healthcare ETF (owns stocks of energy companies), or a Large Corporate Bond ETF (owns bonds from large corporations) or ... There is so many options that can be underlying the individual ETF.
My plan is to stick to simple ETFs that I can generally understand and identify what they own.
ETFs receive dividends (or interest) just like individual stocks so if you are invested in them, you will also receive a dividend. If you own a Bond ETF, you are effectively earning interest since you indirectly own the bonds that the corporations issued. (A bond is debt so think of it like a loan...) Dividends (or interest) are paid either monthly or quarterly depending on the ETF.
Vanguard offers its own ETFs as well as non-Vanguard ETFs. The Vanguard ETFs are commission-free to buy and sell. This is important to me as it saves me money on fees (I get to keep more of MY money!). Because of this, I will only be buying Vanguard ETFs.
At $7/trade, the fees are expensive but in-line with several other brokerages. Not paying that fee for an ETF is huge! Because of this, when I do buy an individual stock, I need to try to buy more than one. As an example, if I buy 1 stock that costs $100, the $7 fee is equal to 7% of what I paid. But if I buy 2 stocks, then my fee per stock reduces to 3.5%.
At least for the foreseeable future, I won't be able to buy more than a few stocks at a time. Keeping this in mind, I will probably only buy one company at a time and at a maximum of 1 trade per month. When I receive a bonus or a tax refund, then that is an opportunity for me to buy a lot of stocks at once. But for ETFs, as long as I have the cash I can purchase them.
Generally, I expect to purchase either ETFs or individual stocks 2x per month. Or when I get my paycheck. I'll be using January to see how much I can allocate per check to investing. Most likely one paycheck will be used to pay bills with the other one used primarily for investing/saving/paying-down-the-mortgage/funding other life goals.
Pru
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