The 3 Worst Reasons to Buy a House

If you want to buy a house, make sure it’s not for any of these reasons. Image source: Mark Moz , via Flickr.

Buying a house is a rite of passage for many Americans, but the conventional wisdom behind the decision is — in my humble opinion — backwards. In fact, I think purchasing a house for the wrong reasons is one of the most financially and emotionally disastrous decisions young people can make.

My wife and I are both in our mid-30s — with a two-year-old daughter — and have yet to buy a house. The day may soon come where we are homeowners. But in the interim, we’ve had plenty of friends tell us that we’re making a mistake by renting. When we asked them why they bought their house, we’ve heard some doozies.

Here are the three most flagrant — be sure they don’t factor into your decision-making process.

“Real estate is a great investment”
Lots of people look at their parents’ situation with envy. For instance, my parents bought their house in the mid-1980s for $100,000 and it’s now worth about $250,000. If they ever choose to leave, they’ll realize a 150% return on their

How Does Social Security Work


Imagine living somewhere where you’re 100% responsible for your own economic security, regardless of your age or health, with no one to bail you out if you find yourself in need of financial assistance. If you’re a U.S. citizen, you don’t have to worry about it. Through a little program called Social Security, the U.S. government has committed to providing for the economic security of its citizens.

There’s a good deal of confusion surrounding Social Security and how this vast program works, so let’s go over the basics that every American should know.

How does Social Security work?
Social Security works by pooling mandatory contributions from workers into a large pot and then paying out benefits to those who are eligible for them. When you work, you pay into the system by having a portion of your earnings taxed and earmarked for Social Security. For 2015, the maximum taxable earnings limit is $118,500. Later on, when you become eligible for benefits, you get to collect them instead of paying for the benefits of others.

The Social Security Administration reports that $0.85 of every Social

The Real Threat to Your Retirement Portfolio

Forecasting the future can be stress inducing. This should help make the retirement-planning process easier.

There are lots of reasons why people worry about having enough money in retirement. Pensions are disappearing, Social Security could get cut, and many haven’t done an adequate job of saving for their Golden Years.

But even if you have done a good job, there are still threats that could deplete your nest egg while you’re still alive. The culprit isn’t ballooning healthcare costs or unforeseen changes in lifestyle, either. In fact, it’s probably not what you think at all.

First, a little background
Two weeks ago, I published a piece encouraging readers to ” Ignore the Retirement Alarmists .” In it, I argued that withdrawing 4% of your nest egg in year one, and continuing to increase that amount to match inflation each year, was a very safe strategy to protect your principal and allow you to enjoy retirement.

Some have recently argued that this “4% Rule” needs to be lowered to 3% — which is actually a much bigger deal than you might think. But assuming that you’d have a 60/40 mix between stocks and bonds, retirement planning expert Michael Kitces has

This is Georgian finance website which gives clients opportunity to compare loans to each other.

With the proliferation of loans available to the ordinary man in the street, deciding on which loan will best suit your needs and more importantly be affordable becomes a daunting task.

Fortunately help is at hand to guide you through this maze of options (don’t you just love the internet)? A lot of loan providers are pretty good at explaining their own products that they want to sell to you, but what if they are not suitable or do not fit your budget?

Yes you can use the internet to look around, but that becomes very tedious not to mention extremely time consuming. Luckily Kings Water Finance has done the searching for you and found a website that compares products from different companies and sets it all out in an easy to understand table format.

They are a Georgian finance website called and you can find them at


Here you will find a good selection of different products (fifteen at the time of writing) from various providers to compare simultaneously. Information compared includes pay back periods, interest rates, special offers, loan amounts and basically everything you would need to make an informed decision.

It is important to note that are not

Find Out How Self Directed IRAs can help you reach your retirement goals

A self directed IRA offers you so many perks over traditional IRAs and 401ks. They are one of the many alternative IRAs that are available that are designed to help you save more money faster towards your retirement, making them perfect for those who didn’t start saving soon enough or those who are looking to make up ground where money was lost during the most recent, though certainly not the last, financial recession. Self directed IRAs work much like other, more mainstream IRA accounts with one notable exception: they allow you to make investments in a wider variety of investment vehicles which allows you to grow your balance faster and protect it from loss. Here’s how it works:


Self directed IRAs allow you to save money on a tax preferred basis, just like your current IRA. However, instead of just socking it away in an investment account where a manager helps you funnel it into one fund or another, all of which are chosen by the IRA manager, you get to choose to invest in a wide range

Technical analysis of forex – axioms (postulates)

Technical analysis is a method based on price forecasting information on quoted market prices (quotes), the amount (volume) and open interest (Open Interest).
The most important of these three components is the price. The study of the price of technical analysis methods is most convenient, because the information about the price, as a rule, available to the public, has a long history.
Note: the forex market technical analysis uses only data on pricing and volume tick Tick volume – the amount of quotations) as the real volumes of data available, and the public interest is not calculated.
Technical analysis differs from other types of research also by the fact that it is based on mathematical, statistical, rather than economic calculations. All technical analysis methods are developed separately, so no strict system does not exist, there is only a set of methods or techniques, from the simplest (graphical analysis), to highly complex (eg, neural algorithms). Moreover, often various individual methods of technical analysis are contradictory. The only thing that links these individual techniques – general principles and axioms.
Technical analysis is based on three postulates, which are also sometimes called axioms The course take into account all the factors

Not so evil Finance study makes case for hedging

The overuse of financial contracts known as derivatives — which were designed to help companies hedge against risk — was widely blamed for triggering the economic crisis of 2008. None other than Warren Buffet has attacked derivatives as “time bombs — both for the parties that deal in them and the economic system.”

But now, for the first time, researchers have found that hedging can increase firm value.

In a pioneering study published in the Journal of Finance, Michigan State University’s Hayong Yun and Stanford University’s Francisco Pérez-González show that electric and gas utilities that used derivatives to hedge against unpredictable weather experienced a “positive and significant effect” on the value of their firms.

“Many people have a perception that derivatives are evil, that they helped destroy the economy,” said Yun, MSU assistant professor of finance. “And while there is some truth to the argument that derivatives were overused, our research provides the first fundamental evidence that hedging with derivatives can improve company value.”

Derivatives are widely used in the corporate world — from a CEO’s stock options to corn futures, in which a cereal maker, for example, purchases 2,500 corn bushels from a farmer at current prices for delivery in

Which States Tax Social Security Retirement Benefits

Build a sizable nest egg? Check. Purchase a new set of golf clubs? Check. Plan for taxes on your retirement income? Chhhh … Wait a minute. Plan for what?

Lots of retirees are surprised by the big bite that taxes can take out of their savings . And depending on where you live, the tax hit can be especially painful. In fact, some states even tax Social Security benefits , the most important source of income for many retirees.

The 13 states that tax Social Security are Colorado, Connecticut, Kansas, Minnesota, Missouri, Montana, Nebraska, New Mexico, North Dakota, Rhode Island, Utah, Vermont and West Virginia.

But just because a state taxes Social Security doesn’t mean it’s a bad place to retire. Overall, Colorado and West Virginia are actually tax-friendly places to live in retirement despite the tax on Social Security. Weigh a state’s entire tax picture — from income tax to sales tax to property tax — to better understand how your money will be taxed and how you can budget for those costs.

Kiplinger’s tax maps can help. Check out the most tax-friendly states for retirees and the least tax-friendly states for retirees to identify your best place

Will Having a Mortgage Improve My Credit Score

Until the Fair and Accurate Credit Transactions Act was signed into law in 2003, Americans weren’t entitled to a free copy of their credit reports. And 24 years ago, when I began my career in consumer news, you couldn’t see your credit score at all, at any price.

Consumer access to credit reports and scores is a good thing. After all, if someone’s going to make important decisions about your future based on this stuff, we have both the right and obligation to make sure it’s accurate, as well as understand how to improve things.

While it’s good to be vigilant, however, let’s not become obsessed. Here’s this week’s question:

On my latest credit check, there was a remark about a lower ranking because “I had no mortgage.” I paid my mortgage off by 1996 and don’t understand how that could be counted against me. How can I fix this? -Helen

Here’s your answer, Helen!

Can a lack of debt hurt your credit score?

When it comes to credit scores, by far the most important factor is how good you’ve been at paying your bills on time, every time, for a long time. Do that flawlessly, and you can rest easy.

While a long, on-time history is

Employees’ Health Costs Up 134% in a Decade

The average amount that employees contribute to their health care has increased by more 134 percent over the past 10 years — and is projected to increase again next year.

That’s according to Aon Hewitt, which analyzed data for more than 600 large U.S. employers representing 11.7 million participants, more than 1,200 health plans and nearly $59 billion in 2015 health care spending.

The firm found that in 2015 employees contributed a total of $4,698 for their share of the premium cost ($2,490) and their out-of-pocket costs such as co-payments and deductibles ($2,208). In 2005, their premium and out-of-pocket costs totaled $2,001.

From our Solutions Center: How to quickly shop insurance

Next year, the average employee’s share of the costs is projected to continue to increase to a total of $5,068 ($2,635 toward the premium and $2,433 in out-of-pocket costs).

The employer share of health care costs also has been increasing, and that rise also is projected to continue next year.

The increase in costs was actually relatively modest in 2015. The 3.2 percent rise was the lowest increase since Aon began tracking the data in 1996.

Mike Morrow, senior vice president of Aon Health, attributes the slower growth in costs to

Why Learning Obamacare’s Metal Plans Is Important

Health insurance companies are increasingly adding the metal plans to the names of the plans, which can add to the confusion of which option to choose.

Since 2014, all the health insurance plans being offered are now designated by a metal level — platinum, gold, silver or bronze. The names of the metal levels are intended to be a shortcut on how much a consumer will pay for their coverage. Figuring out what they mean is crucial to all consumers, not just ones who are receiving subsidies.

Metal levels provide a guide to the amount of cost sharing consumers will be paying for all plans. Cost sharing is the amount you pay for deductibles, co-pays or co-insurance, said Nate Purpura, vice president of consumer affairs at, an online health insurance exchange based in Mountain View, California.

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Choosing a higher metal such as gold or platinum means the out of pocket costs at a doctor’s or hospital visit will be less. The silver and bronze plans, which are the lowest metal plans, “tend to have higher cost sharing” and consumers will have to spend more money

American Airlines Revamps Its Frequent Flier Program

NEW YORK — American Airlines (AAL) is changing its frequent flier program, becoming the latest carrier to have passengers earn miles based on how much they spend rather than how far they fly.

The move announced Tuesday follows similar changes by Delta Air Lines (DAL) and United Airlines (UAL) and benefits business travelers who purchase expensive, last-minute tickets.

The Fort Worth, Texas-based airline also tweaked its reward chart, effective for trips booked after March 22. A domestic roundtrip award ticket remains 25,000 miles but flights from the U.S. to Canada and Alaska will go up to 30,000 miles roundtrip. Off-peak flights to Hawaii also become more expensive at 40,000 miles instead of 35,000 miles but peak flights remain 45,000 miles. Some long-haul flights to South America, Europe and Asia are increasing, too.

The biggest change domestically is the introduction of new 15,000 mile roundtrip awards for short flights of 500 miles or less.

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American spokesman Casey Norton said the most-popular awards aren’t changing. At least 75 percent of the award tickets booked wouldn’t cost more under the new system.

But it will likely be harder for those

7 Ways to Lower the Cost of a Holiday Road Trip

The holidays are nearly upon us, with many families driving long distances to spend time with each other in the next weeks. Road trips are also an annual part of my family’s holiday traditions, with our extended families living at least three hours away (and many relatives even farther).

Along the way, we’ve developed a lot of strategies for minimizing the cost of such road trips. Here are seven tactics anyone can pull off before and during long drives.

Fill your tires with air before you leave. Check your owner’s manual and find out the maximum recommended pressure for your tires. Then stop at a gas station, and fill your tires to that pressure. All you need is a small pressure gauge, which most gas stations and convenience stores sell; if you need detailed instructions, check your owner’s manual.

This saves money in two ways. First, automobiles with tires filled to the recommended level get better gas mileage than cars with tires that have lower pressure. Second, low pressure in your tires increases the chance of a blowout, so if you fill them up to the recommended pressure, you’ll reduce your chance of an unwanted (and expensive) roadside stop.

Fill your tank with gas

Avoid These 10 Retail Scams That Target Holiday Shoppers

While you shop for gifts for your friends and family members this holiday shopping season, don’t fall victim to the schemes that retailers use to take advantage of your holiday spirit and eagerness to get a good deal. Learn the most popular retail tricks and why they often work so you can avoid or overcome them this holiday season.

1. They Relax You With Carefully Chosen Music

Think of how noise around you often affects your mood. Head into a store with loud, disruptive music or yelling, and you’ll likely want to get your shopping done and get out of there as soon as possible.

But research reported by the American Psychological Association and European Journal of Scientific Research shows that when you go into a store with relaxing music, you are much more likely to spend more time in the store. Spending more time in a store can lead to spending more money before you leave.

Shoppers who hear classical music while shopping, for example, might spend more money than they planned because classical music is connected to the perception of affluence, reported U.S. News. This tactic is used more frequently during the holiday season, according to retail specialist Mari Corella, who has

Is Now the Time for Reverse Mortgages for Baby Boomers?

Talk about back from the dead. About 15 years ago, so-called reverse mortgages — which let senior citizens pull out equity from their homes to supplement retirement income — were just about buried in bad press. Too many bad products and bad deals gave them a terrible rep, said Casey Fleming, a mortgage adviser in Northern California.

But that was then. Now there’s a shift. “Reverse mortgages are becoming more popular, as baby boomers retire,” said Jamie Hopkins, a professor of retirement at the American University of Financial Services in Bryn Mawr, Pennsylvania. “In the next two to three years you will see a tremendous amount more. A lot of our wealth is built into home equity. This will be a saving grace for a lot of baby boomers.

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Both experts are right, but many things have happened that effectively have put reverse mortgages on the financial planning agenda for some baby boomers. The main thing is: boomers may need the money. Many are coming up woefully short when it comes to retirement savings and investments. But many have substantial equity in a

How Women Can Get Ahead of the Retirement Savings Gap

When it comes to saving for retirement, women might be pleased to learn that they are more likely to enroll in their workplace savings plans than men and to save at higher rates. That’s the good news, according to a just-released study by investment management company Vanguard.

The not-so-good news is that, even though women are setting aside a higher percentage of their incomes for retirement, their account balances remain smaller than those of male workers. In fact, Vanguard found that men who participated in workplace savings plans had account balances that were 50 percent larger on average than women participants.

What’s more troubling is that a separate study by Financial Finesse — a workplace financial wellness provider — showed that women’s shortfalls in retirement savings were exacerbated by the fact that they need bigger nest eggs than men. Not only do women live longer, but they also have higher healthcare costs throughout their lives.

“If you as a woman want to ensure your financial independence, you have to save more than a man does,” said Kelley Long, a certified financial planner with Financial Finesse.

How much more? According to Long, Financial Finesse estimates that women need to save 26 cents more on the

Don’t Let the Airlines Lose Your Luggage This Thanksgiving

NEW YORK — Heading into winter, fliers should take extra precautions with their checked luggage — December and January are traditionally the worst months for lost bags.

To avoid problems, arrive at the airport early enough to let your bag get to the plane, and print out a copy of your itinerary from the airline’s website and stick it inside just in case all the tags get ripped off.

In the U.S. during the first nine months of this year, 3.3 bags for every 1,000 passengers didn’t make it to their destination on time, according to the Bureau of Transportation Statistics. That’s not great if you are one of those people whose bag is delayed or lost. But consider this: during the 2007 peak in air travel, airlines were mishandling more than twice as many suitcases — 7.2 bags per 1,000 passengers.

Globally, the baggage-mishandling rate has fallen 61 percent from its peak in 2007, according to SITA, an aviation communications and technology provider. That has saved the industry $18 billion.

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The vast majority of bags — 80 percent — aren’t lost but just delayed, according to SITA.

10 Infamous ‘Last Words’ of Personal Finance

Managing your finances can be confusing. You might hear all sorts of advice that seems prudent. And you might assume that you’re taking the right approach by acting on this advice.

But what seems like a smart course of action might actually jeopardize your financial security. Here are 10 personal finance statements that financial experts have heard at least once from clients or others that weren’t wise moves.

1. ‘I want to cash out my IRA and buy a new truck.’

Jeff Rose, a certified financial planner and founder of Alliance Wealth Management, said a client once said he wanted to use the money in his IRA to buy a new fully loaded GMC Denali. It might have seemed like a good idea to Rose’s client because he would be using his own money rather than borrowing to make the purchase. But there’s a high price to tapping an IRA before retirement.

“When I explained to him the taxes he would be paying by cashing out his retirement account were almost half of what the truck’s sticker price was, he back pedaled a bit,” Rose said. IRA withdrawals are treated as taxable income and subject to an additional 10 percent early withdrawal penalty if

12 Frugal Shopping Tips for Thanksgiving

By Maria Lalonde

With Thanksgiving fast approaching, many of us are already licking our lips at the promise of plump turkeys and flaky apple pies. But those of us who’ve hosted before know there can be a lot of time, energy and money that goes into laying out the Thanksgiving dinner table.

With a bit of thoughtful planning and a resourceful shopping strategy, however, you can tackle Thanksgiving dinner without spending a fortune. Below, we’ve listed 12 frugal shopping tips for saving money while celebrating the season of giving.

Start early. Thanksgiving planning should begin weeks before Thanksgiving eve. By planning ahead, you allow yourself time to hunt down the best deals and spare yourself the stress of rushing out to find a last minute item on Thanksgiving Day at a corner shop, where prices may be marked up. The more shopping and preparation you are able to do in advance, the more time you’ll have on Thanksgiving to relax with family and linger over second slices of pumpkin pie.

Map out your menu. It’s easy to go off budget when shopping for Thanksgiving, when grocery stores employ a variety of marketing strategies to encourage customers to spend. To avoid overstepping your budget, plan

Ready, headset, go

THOSE trying a virtual-reality set for the first time can be transported to the top of a skyscraper at night. Stepping up to the edge, they look down on the bustle of the city, far below. If he is standing nearby, Brendan Iribe, the boss of Oculus, which makes virtual-reality headsets, likes to dare people to jump. But many, including your correspondent, are too fearful: it feels like they really are teetering on the brink.

Whether consumers can be convinced to leap unflinchingly into buying their own virtual-reality device is another question. On November 20th Samsung, which makes smartphones and other gadgets, will start shipping a new version of its headset, called Gear VR, which it is producing in collaboration with Oculus. Its price tag of around $100 could give it broad appeal. But consumers will soon have many other options. Google already offers a $5 virtual-reality viewer, Cardboard, in which a user’s smartphone provides the screen. In early 2016 Sony and HTC will release more expensive offerings aimed at video gamers, as will Oculus, which was bought by Facebook for $2 billion last year.

In the near term virtual reality will appeal most to serious gamers, who are keen to immerse

A funny form of conservation

TEMPORARY solutions have a way of becoming permanent. The fate of Fannie Mae and Freddie Mac, the two “government-sponsored enterprises” (GSEs) that stand behind much of America’s housing market, is a case in point. The GSEs, which buy American mortgages from banks and other originators, bundle them into securities and resell them to investors with a guarantee, are stuck in a technocratic no-man’s land. Their status has not yet been normalised after their first bail-out, but they may soon require a second. If they do, the administration of Barack Obama, which has been running them since 2009, will be largely responsible.

Fannie and Freddie were tethered to America’s housing market when it fell off a cliff in 2008. The GSEs faced a double impact: they had to cough up to honour their guarantees, while also suffering losses on their own big portfolios of mortgage-backed securities. The firms had an odd ownership structure, with a public charter, and thus an implicit government guarantee, but private shareholders. To stop them collapsing, which would have further hurt both the housing market and the financial system, the government injected $188 billion and placed them into conservatorship—a form of government control. A further backstop, currently $258

Does Deutschland do digital

SINCE it was founded in 1923 Trumpf, a family-owned company based near Stuttgart, has had one main mission: making things that make things. It started out with motorised hand shears and other tools to work sheet metal. It then invented fabrication machines with a numerical-control system and later was among the first to use lasers to cut metal. A prime example of a firm from Germany’s industrial Mittelstand that has outgrown the label (which literally means “mid-sized trades”), the firm today has annual sales of €2.7 billion ($3.2 billion) and more than 10,000 employees worldwide.

Trumpf’s roots in metalworking and other hardware stand in stark contrast to what it is trying to achieve next: building a new business purely based on software and data. Unveiled last month, its online offering, called Axoom, connects machines built by Trumpf and others, and uses the data it collects from them to help customers organise their production—for instance, to warn them when they are running out of material or to order it directly from the supplier. Much like smartphones, Axoom will be able to run “apps” from other providers, such as software to schedule workloads, or to predict when machines will need a spare part.

Many unhappy returns

“KEEP your eyes on the stars,” said Teddy Roosevelt, “and your feet on the ground.” America’s can-do spirit keeps its economy moving forward, but over-optimism can be harmful, especially if it leads people to make promises they cannot meet. If investment returns are lower in coming decades than they have been in recent ones, that is the position pension funds and college endowments will be in.

When final-salary pension schemes, which are still prevalent among America’s public-sector employees, decide how much to put aside to pay pensions, they have to make an assumption about what returns they will earn. The higher their estimate, the less employers have to contribute today. Similarly, endowments have to estimate their future returns to determine how much to spend each year: pay out too much and their funds will dwindle away.

The average American state or local-government pension fund assumes it will earn a nominal (ie, not accounting for inflation) annual return of 7.69% in future, according to the National Association of State Retirement Administrators (NASRA). Based on past performance, that seems reasonable. Over the past five years the median pension fund has earned an annualised return of 9.5%; over the past 25 years, the return has