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Check us out at FinanceDad.com

fdad1We are in the process of moving over to FinanceDad.com. Please com over and check out what we have to offer in personal finance, investing, budgeting, and much much more.

The 401k maze site is too narrow and I feel like I have so much more to offer. Moreover, I wasn’t thinking about how best to brand this site when I created the name. I am hoping to reach a much wider audience with this new site and attract a group of readers interested in my advice and style of writing. I feel like I can provide value to my readers and so I will try.

International Mutual funds posting the best performance over trailing year

foreign stocksWith company 401k plans (or savings investment plans) , you are forced to select from those options your company has selected for you, typically from around 15-20 or so plans. When looking back at my portfolio through Vanguard over the past year (and don’t take past year performance as indicator of the future – rather as way to gauge what may transpire in the future, because typically – it goes the other way) I have found that my international stocks have made massive gains. Now, some may argue this is in part due to how hard they fell, which maybe true, however, they did gain in some cases twice as much as their domestic peers.

Two of the international funds that have performed exceptionally well of which I am highlighting today and offered through Vanguard are (there are many other international stocks that have done well, but these are only a couple offered through my company plan):

  • International Stock Funds Vanguard International Growth Inv.
  • Vanguard Total Int’l Stock Index

The International Stock Funds Vanguard International Growth Inv. ( Redemption Fee: 2% if held < 2 mos) ticker (VWIGX) has posted phenomenal gains over the past 12 months of 50.42%.

  • Invests in stocks of non-U.S. companies with above-average growth potential.
  • Covers both well-established and still-developing markets.
  • Has high potential to help your money grow, but also high risk; share value may swing up and down more than that of U.S. stock funds.
  • Fund managers pick investments to try and outperform market returns, which adds an element of risk.
  • Appropriate for diversifying a portfolio of U.S. stocks.

The Vanguard Total Int’l Stock Index (Redemption Fee: 2% if held < 2 mos) ticker VGTSX has posted 45.64% gains over the last 12 months.

  • Provides exposure to European, Pacific, and emerging market regions.
  • Has high potential for growth, but also high risk; share value may swing up and down more than U.S. stock funds.
  • Appropriate as an investment to further diversify the risks of U.S. stocks.
  • Only appropriate for long-term goals.

So, why have these international stocks done so well you’re asking? Well, there is no clear cut answer it seems to anything in life. Many would attribute their success to people putting money back into the risky sectors as money starts to pour back into the stock market. In essence, when the market began selling, it removed itself from the riskiest investments, thus tremendously undervaluing the stocks of those companies. Those who stuck with the risky investments were rewarded handsomely when the capital flowed back into the market. Also, as equities became cheaper in the US, foreign investors have pumped money into the US stock market, helping escalate the stock prices.

Coming soon to a theater near you FinanceDad.com

401kMazeWhen I initially began blogging, my target was to help those people who were new to 401k plans and or investing, but in 18 months, I’ve been slowly expanding my reach to all things personal finance. Because I feel too limited by my domain name (401kmaze) – I will be slowly transitioning over to my new domain FinanceDad.com. I feel like I have the ability to create a memorable brand, provide valuable personal finance information to many people (from a father, accountant, and sole income providers point of view) while organizing the site in a much more effective and easy to understand way than it currently is.  I’m writing this as well to get myself going on this new site because I know how important it can and will be to many people. I expect to have the site up and running by this weekend (Sunday the 20th) and fully functional by the beginning of the new year.

Tax rates a rising? Time to switch that pre-tax IRA over to an Roth

taxIf you’re one of the many that foresee personal income taxes rising in the near future to pay for the current Obama administration plans, it may make sense to pay the taxes now, rather than later down the road, and switch your traditional pre-tax IRA over to a Roth IRA. There are likely multiple variables that should go into your decision, including, but not limited to:

  • Do you anticipate having more income in retirement, hence higher taxable income than now?
  • What about tax rates now versus the future?
  • If you anticipate your income will increase and or tax rates will increase in retirement, and you’ve recently realized significant losses, it surely makes sense to match the switch now – as the cost of doing so is much lower.
  • You may be better off leaving your investments alone and allowing the pre-tax dollars to grow to their fullest potential if you think tax rates and or your income in retirement will be lower,  you should choose to pay taxes when you withdrawal at retirement.

Who’s eligible to convert pre-tax IRAs to Roth IRAs?

  • Your taxable income must be lower than $100,000 to qualify.

Don’t forget:

  • If you’re under 59 and 1/2, you may be required to pay a 10% early withdrawal penalty.

Only you and or your financial adviser can work out your situation and make the best choice for your situation. It only makes sense to do the math, otherwise you may be leaving money on the table, or worse, losing it to taxes when you could have avoided it.

10 Reasons you’ll amount to nothing in life, loser

momsThis is the first time we’ve ever created a top ten list, and hopefully the last. The reason we’re doing this is to draw some attention from the idiots out there – in hopes of having them change their ways – and the best way to grab their attention – is through a top 10 list.

Here is the 401kMaze.com top 10 reasons you’ll amount to nothing in life (in no particular order you loser):

10. You’re waiting for the right time to leave mom’s basement.
9. You think school is too difficult or the wrong thing for you and you can do better on your own.
8. You think the lottery or the casino is a retirement plan.
7. You would rather work for money than have money work for you.
6. You can’t seem to ditch your old loser friends.
5. You spend your free time playing computer or video games.
4. You think reading means skimming articles at digg, reddit, or fark.
3. You check Facebook more than once a month.
2. You’re too good for a particular job, yet still don’t have one.
1. You’re lazy, a liar, and blame others for your situation.

Now, we don’t want you to leave here all pissed off, so let’s provide some context to the top 10 points above and some recommendations for getting your ass straightened out starting today.

Some people do have adequate reasons for living at mom’s house, but not many do. If you’re simply transitioning back from college, or if you’ve lost your job and have no other choice, then it’s understandable. But far too many people live at mom and dads and simply party every night. Everyone can see you’re a loser but yourself? Grow up and GTFO. You’re the laughing stock of the party you drunk, useless, asshat.

True, school is not for everyone, but most people who say that are just being lazy. There’s something to be said about the people who think that any college degree will do too, that’s bullshit and you’re marketing degree is probably going to be worthless, so before you pick a major – you better make damn sure you can find a job that pay’s enough to cover your loans and lifestyle you want to live after you’ve completed your degree. Otherwise, you better find a sugardaddy or sugar mama, because you’re going to be broke. Instead of picking a degree or major on doing something you like, find something that pays well – and do what you like outside of work. Inevitably, working for others will suck no matter what you do. Until you can build a stock portfolio that makes money with the money you’ve put in, so you can live off of investments, you will have to work for others.

There’s a good reason the casinos are so bright and shiny, with million dollar chandeliers, because they’re taking your money. Surely you may win a few times, or many – but over the long run – they’re taking your money, all of it. Playing the lotto is just as stupid, if you think you’re going to be that one person out of 140 million to hit it big, don’t waste more than a dollar on the lotto. It’s truly stupid considering you could take that money and invest it to make real loot that makes you more.

Your loser friends? Put yourself around people who are doing things with their lives, not the other way around. It may suck to cut the ties with your old friends, but they’re bringing you down, and you won’t be friends with most of them anyway down the road, so let them go. Seriously, worry about yourself and not them.

The way out of the rat race is to have money working for you, instead of you working for money. But it takes time to build an empire. With a good plan, you could start having your money work for you. The average historical return in the stock market is around 10%, the idea should be to put as much money away as possible in investments. If you started doing this right out of college, you could have a realistic plan in place to be retired in 20 years or less. If not, enjoy your continued quest to work for more money, instead of having your money work for you.

You have to get away from the time wasters, do something that is fun yet can help you make money on the side. Start a blog, learn something new. Video games are fun, but they will never help you become financially free. Why not push that off until everything else is done and you are free?

The social networking trap has been set, and you are wasting your valuable time you could be using to build yourself an empire, by helping someone else build theirs. It’s fun to read sites like Digg, Reddit, or Fark – or one the hundreds of others out there – but most of the information is useless, and repeated. Why not add something to the conversation, than simply reading crap. How about creating information that is useful and research oriented, that could help make you more money. Facebook is great networking tool – but too many people waste their lives away updating their profile, playing mafia wars or farmville, when they could be creating their own empire.

Too many people think they’re just too good for so many jobs it’s hilarious. Well, you’re much more a loser if you sit around and don’t do anything, rather than taking a job at the local fast food joint. There’s no reason you can’t still actively find a job while working at a crappy place. And if you’re having problems doing that, then your full time job should be finding a job. Get your ass up like you have to go to work in the morning, and start banging out the resumes to everyone and their brother.

People can see through your lies, even though you may think you’re cool. You’re tricking nobody but yourself and you’re mom if you’re lucky. It’s time for you to get off your ass, get a job – get an education, and start making money work for you, loser.

Diversification is more than just owning different stocks

diversificationI spoke with a friend of mine this past weekend, well he’s actually a coworker – but he moved states with the company, so I no longer work with him. One thing led to another and we were talking about how well the company is doing, and that’s when he chimed in about his stake in the company. He has been allocating 90% of his contributions (and the company match) to our company stock. I couldn’t believe my ears. He assured me though, he was diversified. He then proceeded to tell me he had a number of other stocks, and so he was diversified. The problem is, diversification is more than just owning a number of different stocks, it’s allocating your dollars across a number of stocks. Just because you have 10 different stocks doesn’t mean you’re diversified. Let me explain better below:

Poorly diversified portfolio of 10 different holdings ($10,000 investment – assuming all investments carry equal risk):

Stock A: 20 Shares, $500

Stock B: 2000 Shares, $1000

Stock C: 1500 Shares, $500

Stock D: 250 Shares, $100

Stock E: 1200 Shares, $400

Stock F: 300 Shares, $900

Stock G: 500 Shares, $1100

Stock H: 20 Shares, $500

Stock I: 15 Shares, $500

Stock J: 2500 Shares, $4500

Why is this bad? You’ve got $4500 in one company, or 45% of your investment dollars in one place. Your portfolio is too heavily dependent on one company. You should have no more than10% of your portfolio in any given investment or industry or company, etc.

Below is an example of a properly diversified portfolio ($10,000 investment – assuming all investments carry equal risk).

Stock A: 20 Shares, $1000

Stock B: 200 Shares, $1000

Stock C: 1500 Shares, $1000

Stock D: 250 Shares, $1000

Stock E: 1200 Shares, $1000

Stock F: 300 Shares, $1000

Stock G: 500 Shares, $1000

Stock H: 20 Shares, $1000

Stock I: 15 Shares, $1000

Stock J: 2500 Shares, $1000

Now, this is simplified, but the idea is to spread your risk, so if one investment is doing bad, chances are another will offset that down stock.

Also, there are numerous reasons why it’s a bad idea to invest so heavily in your own company,check it out here.

Don’t waste money on these items and for good reason.

throw-money-away-300x254There are so many things in life we could do without, and for good reason. The following list of items take money you could otherwise spend on your future and they don’t do much of anything for you.

5. Eating out: Although it may be convenient, it’s very costly and rarely healthy for you. Instead, plan ahead and bring a healthy lunch to work. Plan dinner meals ahead of time – so you’re not rushed into buying carry-out or dining in, it’s a huge money waster and usually much unhealthier.

4. Branded Food: Working in the food industry, I can give you personal insight into the fact that our private label foods are in some cases the exact same formulation as the branded goods. For example, an past company I worked for had their Evaporated Canned Milk products with the name brand, and the store brands – which sold for a deep discount – formulated the exact same way. Most people in this recession have shifted to store brands, and they should stay there after the recession.

3. New Cars: Besides the higher cost you’re paying, and the instant depreciation, you’re also going to pay higher insurance premiums. Buying a new car hardly ever makes cents.

2. Warranties: There are very few reasons for purchasing warranties or extended warranties. Studies show that you rarely recoup their cost, and you’re better off without them as a result.

1. Soda aka Pop: There is nothing good about soda (some may argue it tastes good), it has been shown that carbonated drinks wreak havoc on your body and can damage DNA. Instead of wasting money on this, drink some water and save that cash to invest.

When will the market peak? Do you have an exit strategy?


Yep, that’s the million dollar question everyone wants to know. But who knows the answer. Towards the end of last year I put out a recommendation to buy, buy, buy. Today, however, I am changing my tone. I believe (take it for what it’s worth) the market is nearing it’s peak as far as the next couple of years are concerned for multiple reasons of which I will discuss below. Clearly, I am not saying that there is not the potential that the markets can and will go higher, I’m saying it’s only a matter of time now before they contract again.

  • Fundamentals are no longer supporting stock prices, they seem driven by speculation that can’t last forever. There is only so much cost a business can cut before less sales undermine profits.
  • Interest rates will increase before long, stocks will become more expensive
  • Gold prices are in for a rude awakening, there may still be some short term gain – don’t expect it to last forever
  • Still too much uncertainty in real estate, prices still haven’t stabilized
  • People aren’t spending like they used to. People are cutting back on credit card purchases and this means poor retail sales in the future.

Above are only a few main points in my belief that there will soon be a correction. There are many more reasons besides those. What’s your exit strategy? Have you developed one?

Credit inquiries lower my scores drastically right? Wrong!

credit inquiryI haven’t seen my credit report since earlier this year, it was fine. It’s OK to check it once every year or two, right? Wrong!

It’s a common belief that credit scores will go down as a result of too many inquiries and reduce your attractiveness as a credit seeking consumer. Down, lower, less being the key word sparking this huge myth nationwide; the myth is not that it will decrease your scores, but that it will drastically bring them down. Only occurring if you frequently inquire your credit; by that I mean obsessive applying for credit daily/weekly. As a Mortgage professional specializing in Consumer Credit and Financial Planning, I will tell you that it’s rare see a credit report without the words ‘Inquiries Impacted this score’ under a score on a credit report. These words are usually followed by “but not significantly” and a lowering of more than 1-3 points is extremely rare and minimal on a credit scoring range of 300-850.

In fact, the common inquiries of impact show up on reports that do not have an inquiry listed in the 90-180 days before the credit was pulled. The factor is normally removed completely if it’s been more than a few years since an inquiry occurred.

A spreading reason of this myth is the fact that Competing Mortgage Loan Originators have been known to over emphasize the negative effect additional inquiries may have on your scores implying a possible loan denial. This practice occurs to deter and preventing further competition for the loan for the simple but hard to accept reason that a legitimate rate quote or pre-qualification letter is not possible without having your credit viewed. To repeat, an interest rate provided for auto, home, or credit card prior to your credit being pulled is meaningless. Every applicant has to qualify with credit history, income level, and many other factors; it all begins with your credit report. You may be aware of or offered the daily rates, or through the many rates advertised on billboards, painted in neon on glass windows, on TV, in the paper, and all over the internet. They again, mean nothing without a Credit Inquiry.

Reluctance to check your credit may be hard to let go of as your parents and friends instilled it in you. It’s far more important knowing the real factors driving your credit up or down, how much a pleasant sounding lowest interest rate will cost, and overall, what the other determining factors necessary for your Credit Approval.

Basically, we see and hear that our credit is more important than ever in today’s market. Also, we know Identity Theft is the most rapidly growing crime worldwide so protecting ourselves and our credit scores is a major priority. Checking one of the 3 credit bureaus every 3 months is an excellent practice to get into. (Experian, Transunion, Equifax) It’s also good to know how to read the report and where to look for possible negative information. There are several means to obtain your report at no cost, gimmick, later sign up fee, or membership once a year per Credit Bureau. These can be online, verbal requests over the phone, or even written requests. Make sure there’s no free trial period followed by monthly fees. These can cost over $150 a year and basically serve as a notification of bad information on your credit whereby no further advice or direction is given on how to correct or repair your report.

With a common name like Chris Brown, I’ve had to request corrections for mistaken identity and incorrect accounts since I pulled my first credit report at the age of 22. These were not just other Chris Brown’s that lived near me. They were out of state, had different Social Security numbers, different birth dates, and had different spelled last names entirely. Browne and Brownlee were my first 2 collection accounts on my report. Over the years, I’ve had different additions to my report including different SSN#’s, addresses, and accounts fortunately not in my name but in bad status on my report. The mystery of skip tracing errors and erroneous reasons as to why this could happen with billion dollar corporations is unknown and I’ll leave speculation alone for this article.

The bottom line is a full name, SSN#, birth date, and address are the only thing requested and needed to pull your report; variations of those 4 can show up and be linked to you as a credit applicant.

Other than checking 1 of the 3 credit bureau reports every quarter, more steps can be taken to protect any bad information being attached to your report. A consumer statement up to 100 words can be added to all 3 of the reporting bureaus reports for free over the phone with one of the bureaus. I described my names commonality and possible confusion of other Chris Brown’s on my report, my most frequent state of residence, my SSN#, and Date of Birth. This can help a bank or lender, employer, or landlord differentiate identity and account information on your credit if such a mistake occurs when they run your credit.

I offer a credit review every 3 months at no cost as part of my service to new and existing clients. It’s good to have a second set of eyes on your report from a trusted source, if not your mortgage or financial adviser, a credit connoisseur in the family.

This article was brought to you by my guest author and friend (contact him to get your free credit report, make certain you’re getting the best mortgage rates if you’re just starting out or even if you’re considering a refinance – I’m certain it won’t be a waste of your time – Mark.

Chris Brown
Mortgage Banker
Midwest Mortage Capital
St. Louis, MO