Cashflow Coach's Blog

$8,000 At Closing

cashflowcoach — Mon, 08 Jun 2009 00:42:14 +0000

Pass this around. This is the latest on the use of $8000 of Federal First Time Home Buyer tax credit money for the down payment and settlement costs of buying a home.

Here’s to You Mayor Hollister!

cashflowcoach — Thu, 04 Jun 2009 00:20:35 +0000

What does 200% turnover mean to you?

cashflowcoach — Wed, 03 Jun 2009 01:50:44 +0000

When a fund is turning over the stocks in your mutual fund like a rotisary chicken, you pay dearly for it. I recently analyzed a fund mix on the popular Fidelity funds on a 401k palet ? the average turn over was just under 200%! This translates into over 4% cost inside the fund in a single year. This cost comes after a market decline of 39% and underperformance of over 10% against market benchmarks. What should have been around a 40% drop in value translated into a 54% drop in this fund mix!

What should an investment manager do for you?

cashflowcoach — Wed, 03 Jun 2009 01:25:05 +0000

Rather than participating in all of the speculative hype so prevalent on Wall Street, your money manager should help you focus. Keep costs low, diversify and rebalance – over and over again ? this WILL give the best of returns with the lowest cost. Less activity, more investing.

Avoiding Black Swans

cashflowcoach — Wed, 03 Jun 2009 01:16:16 +0000

We would be far better off if we learned to avoid Black Swans. These three suggestions are priceless.

Benjamin Graham Quote

cashflowcoach — Thu, 21 May 2009 19:02:38 +0000

The value exchange in the world of investment management has long rewarded relationships based on frugality, simplicity and maintaining a disciplined balance of a varied selection of investment classes. Benjamin Graham knows it and you know it. I affirm that the widely accepted speculative techniques used by Wall Street are propagated by Wall Street primarily for the benefit of Wall Street. This is done by blurring the real returns and siphoning unsubstantiated and unnecessary costs from your investments.

Why Markets Rebound So Quickly

cashflowcoach — Wed, 01 Apr 2009 21:22:00 +0000

Evan explains how the current market correction is a good thing is the long run.

What Will Happen to Interest Rates?

cashflowcoach — Thu, 26 Mar 2009 02:42:36 +0000

Anyone who gives you their opinion about the direction of interest rates in the future is giving you just that their opinion. Im not sure any piece of information could be further from the realm of helpful. The problem with predictions about the future is that we tend to make decisions based on them and we rarely check retroactively for accuracy. Rates are low right now act if it makes sense – gamble if you want to, but make sure you can pay the bet if you lose.

Tags: interest rates, evan vanderwey

2010? 2020? But Who’s Counting?

cashflowcoach — Fri, 20 Feb 2009 17:37:43 +0000

Evan Vanderwey takes a look at the 2008 returns of some of the top “Safe” Targets Funds

The Fed Cuts Again

cashflowcoach — Thu, 31 Jan 2008 22:27:34 +0000

The Federal Reserve Cuts Rates .50%

And leaves the door open for more cuts if necessary

The Fed met yesterday and today to discuss inflation and the economy. They decided to cut the Fed Funds rate (FFR) by .50% to stimulate a slowing economy. There’s a lot of debate as to whether we’re in a recession or not. Some pundits say that if the Fed starts to talk about a potential recession that usually means we are already in one.

What does this mean for interest rates?

If you have a loan with a short-term interest rate or a rate based on the Prime index, your rate will be declining. The Prime rate is simply the fed funds rate plus a margin of 3%, currently at 6%. Most home equity lines and some credit cards are based on the prime rate.

Other short term indexes like the 1 month, 3 month & 6 month LIBOR rates will also likely decrease. The decrease may not necessarily be by the same .50% FFR reduction and not as quickly. The 1 month LIBOR typically follows the FFR over time.

For long-term interest rates like the 15 yr. and the 30 yr. fixed rates, these rates will most likely be increasing. The last four rate cuts resulted in higher fixed rates in the subsequent days and weeks. For more information on why this happens read my previous post on Fed Rate cuts.

If Goldman Sachs’ predictions are correct, then we may see a few more cuts from the Fed to stimulate the economy even more.

What does all of this mean to you? It means you should schedule your annual review call with us, if you haven’t already. Interest rates may rise or they may decline, there are so many factors that go into the supply and demand for long term bonds. Make sure you’re ready for the next interest rate decline. Stay up to date with by subscribing to our cashflowcoach blog and attend our next Total Wealth Workshop. We want to be your source of valuable information and financial education.

Thank you for your loyalty and your business!

the Cashflow Coach