Category Archives: Investing

Kids and Money: Start Teaching Them Early

The other day I was looking at a Clark Howard special on television about “Kids and Money”.  It was very informative and definitely worth my hour of time.  Even though I currently don’t have kids, I still think that it is imperative to teach them about money early so that they will be well prepared for retirement when it comes.

We need to instill a sense of future in our kids. Parents should make it a priority to talk to their children about saving and investing before the world teaches them because they might not like the outcome.  We as Americans have got to change our ways when it comes to saving and spending. As a nation, we are in tremendous debt and it doesn’t look like the guys in Washington are trying to rectify the situation anytime soon.  We can’t wait on the government to find a way to get us out of debt, we’ve got to stop using them as a scapegoat or an excuse for our negative habits when it comes to money and how use it.  We’ve got to take responsibility for how handle money and we can start by teaching our children good financial habits because they are our future and the next generation of teachers, doctors, lawyers and politicians.  They are the ones who will determine what state America will be in 15-25 years from now.

We already know that Social Security and Medicare are changing and might not even be around when our kids get to the qualifying age, so we have to teach them not to be dependent on the government and show them how they can stand on their own two feet without expecting a hand-out. Don’t let your kids develop a welfare mentality.  Show them how to be financially independent by encouraging them to become entrepreneurs and not “slaves to wages”.

Some of the important topics that Clark Howard covered were student loans and how not to get into debt by starting a college fund early such as a 529 Plan or an Educational IRA.  He mentioned that there were plenty of resources available such as scholarships through various organizations but the key is to start early and not wait until your child is in their junior or senior year of high school.

He also talked about kids investing their money to make it grow and that it’s never too early to learn about stocks, bonds and mutual funds.  There are certain banks out there who offer special mutual funds or other investment vehicles specifically for children to invest in and as an added benefit, they waive most, if not all, custodial fees..and this is just the tip of the iceberg. In addition, he mentioned that young adults should stay away from credit cards and other alluring money pitfalls that some deadbeat companies throw out there to attract young naive college students.  Fortunately, it is now against the law for companies to offer credit cards to students younger than 23-24 yrs old….thank God.  I remember when I was in college, I signed up for a major credit card that eventually became a nightmare because I was not prepared and not taught how important having good credit was to my financial future…but one thing I did get was a free t-shirt!  What a price I paid for being financially ignorant….about 7 yrs.

Clark interviewed quite a few kids and he asked them if they had a certain amount of money, what would they do with it.  Some said that they would spend half of it and save the rest, others mentioned that they would give some of to charity and then buy themselves something nice and then save the remainder.  All the answers were pretty good, however, the highlight of the show last night was this little boy who had been saving up his allowances and had amassed a nice little stash of $327 dollars!  This little boy; couldn’t have been no more than 10 yrs old, hadn’t spent a dime of his allowances.  He asked Clark how he could make his money grow because he wanted to be a billionaire.  It was pretty impressive; his parents had started early teaching him about the benefits of saving and it caught on…now the poor kid won’t spend a dime.  It was so funny but truthfully, down the road it will pay-off.  I just don’t want him to be a stingy lonely old man….you do need to teach them to balance it. 🙂

In conclusion, I can’t stress to you enough how important it is to start teaching your kids about money and how to be financially responsible and independent early.  It will be one of the best lessons in life they’ll ever learn and it will yield great results!

Facebook IPO: To Buy or Not to Buy

By now, I’m sure you’ve heard about the Facebook IPO taking place on tomorrow.  If you haven’t then you’ve been hiding under a rock.  Honestly, what’s all the fuss about?  Do you actually think you have a shot at getting some of this coveted stock when it hits the stock market tomorrow?  Good luck with that.

There are so many questions surrounding this IPO.  However one of the main questions is about the value of the stock.  Is the stock worth the price of $38?  Is the company really worth $104.1 Billion?  If so, that would make it the 40th largest company in the world putting it ahead of companies such as Amazon. That’s pretty impressive.

Tomorrow, the stock will go on sale, under the ticker symbol FB o the Nasdaq, at 11:00 a.m. ET and there’s sure to be a frenzy and of course a lot of volatility as investors scramble to purchase as much as they can get their hands on.  I honestly doubt if people like me and you will be able to get any of it and I’m not sure if we want to.  There have been both negative and positive reactions and opinions about whether purchasing Facebook stock is a good idea.

So the question still remains… should we buy or not buy Facebook Stock?

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Borrowing from your 401(k): Advantages and Disadvantages

With today’s companies getting rid of pensions 401(k)s have become one of the primary ways, for most individuals, to save for retirement.

Most 401(k)s are pretty flexible in that in they allow you to borrow against them.  But before you run off and cash out your nest egg, there are some advantages and disadvantages that you should be aware of:


  • You can borrow up to $50,000 or ½ of your plan balance.
  • The loan payment is usually automatically withdrawn from your paycheck, which makes it very easy to pay back.
  •  No credit check is required since you’re actually borrowing from yourself.  This works out well if you have poor credit.
  • You’ll pay a pretty competitive rate on the loan but the good thing is that you will be paying this back to yourself.
  • Little to no administration fees involved.


  • You’re borrowing from future money reserved for retirement which makes it harder for your money to grow.  The longer your money is outstanding from your 401(k) plan the longer you forgo all potential investment gains from all borrowed funds for the duration of your 401(k) loan.
  • If for some reason you are not able to repay the loan back, such as the loss of a job, then you will trigger a tax bill (federal/state taxes) as well as pay an additional 10% penalty for early distribution.

You should be cautious when borrowing from your 401(k) as it defeats the purpose of saving for retirement.  Only borrow from your plan if it is an emergency and you’ve exhausted all other avenues.