The Sun's Financial Diary

Haven’t seen rally like this for quite a while. Actually, the last time it happened was more than five years ago.

US stocks surged Tuesday after the Fed, in a coordinated action with other central banks, said it will pump $200 billion into the financial market to ease credit fears. Stock index futures jumped when the news came out at 8:30 am and traded sharply higher from beginning to finish. According to Bloomberg, the Dow gained 416.66, or 3.6%, to close today’s session at 12,156.81, the NASDAQ surged 86.42 points, or 4%, to 2,255.76, and the S&P added 47.28 points, or 3.7%, to 1,320.65, the most since October 2002.

On the currency front, Euro is last traded at $1.5357 after reaching $1.5495 against the dollar and one dollar buys 103.08 Japanese Yen. Spot gold is at $974.80 an ounce, silver $19.73/ounce, and spot platinum $2042.50/ounce. Meanwhile, crude oil future traded at record price for fifth consecutive day as traders bet on commodities to hedge against the falling dollar. Crude oil for April delivery traded as high as $109.72 a barrel in New York, the highest level since oil contracts began trading in 1983.

Looking at my own investments, Global Resource (GSOL) led the way with a gain of 34.21% after Citibank upgraded the stock from hold to buy, followed by China Life Insurance (LFC) 11.16%, and Blackstone Group (BX) 7.93%.

One big story over the weekend is that an Associated Press investigation found that more than 41 million Americans are drinking water contaminated by antibiotic, anti-depression medicine, and sex hormones for areas from Southern California to Northern New Jersey.

It really sounds scary when thinking of all the stuff coming out of my tap. However, the report did mention that the amount of contamination found in our drinking water is very, very small. So tiny that you may have to drink a billion, or trillion, glasses of water just to get the amount of drug from the water that’s equivalent to a dose of medicine.

The real problem isn’t what one element in the water can cause for our health, but so many drugs, OTC or prescribed, all together over the long-term. Taking one pill in my life is one thing. Taking a little bit everyday for my life is clearly another.

If tap water is “dangerous,” what about bottled water or filtered water? They are not “safe” either, thee report says.

Even users of bottled water and home filtration systems don’t necessarily avoid exposure. Bottlers, some of which simply repackage tap water, do not typically treat or test for pharmaceuticals, according to the industry’s main trade group. The same goes for the makers of home filtration systems.

Looks like we got nowhere to hide but live in this dangerous world

Does this study make you think twice every time you get a glass of “clean” water fro your tap from now?

photo credit: ac94

Jonathan Clements, who writes the Getting Going column on The Wall Street Journal, recently celebrated his 1000th column. In his milestone piece, Mr. Clements reflected his journey of the past 1o years for writing the Getting Going and summarized what he has observed from the developments in the financial industry in the past decade.

According to the article, Mr. Clements is a firm believer of investing in low-cost index funds, which can essentially be simplified to a three-fund portfolio: a US equity fund, a world equity fund, and a bond fund. While these three funds can, and should, be the core investments for any investor who wants to build a diversified portfolio, adding new elements, especially specialty funds offerings in the form of exchange-traded funds (ETFs), to the mix properly can reduce investment risk, which will in turn reward investors with healthy long-term performance.

But new, exotic ETFs are be introduced every day and some disappeared as quickly as they came out, how should regular investors embrace the flood of new investments? Mr. Clements offered his rules in the article that I think are quite useful:

• Stick with specialized index funds that you can see holding for the long-term. WisdomTree International Real Estate Fund makes the cut. WisdomTree International Consumer Non-Cyclical Sector Fund doesn’t.
• Add specialized funds in quantities that won’t leave you desperately unhappy if the market goes against you. Given that we’re talking here about volatile sectors like emerging markets and REITs, earmarking maybe 5% of your stock portfolio for each is probably plenty. As you add funds, write down your new target portfolio, spelling out what percentage of your money will be invested in each.
• Look to rebalance regularly, adding to those funds that have fallen below their designated percentage and lightening up on highflying funds that are above your written targets.
• When everyone’s ebullient, build your new fund positions slowly. You don’t want to be making short-term market predictions. But you also don’t want to be throwing great wads of money at overheated sectors.
• So when should you add new funds? That brings me to my final rule. Purchase new funds not for their return potential, but because they will reduce risk.

What do you think?

Do you file your tax return yourself? Or you get a pro to do the job for you? Ben at Money Smart Life wondered whether the cost of expert tax advice worth it. If they can lower my tax bill, then Yes.

How do you like the idea that IRS plans to spend $42 million sending out reminders to people waiting for the tax rebate check: You have to file your tax return to receive the check? Jeremy at Generation X Finance thinks it’s wasted money that can be put for better use.

Silicon Valley Blogger at The Digerati Life said cheaper toys are better for your kids. Isn’t it the case? Money doesn’t always bring happiness, the same kids as for adults

Lazy Man at Lazy Man and Money asked What’s social capital? I had a little idea of what it is before I read his post. No wonder social networking sites, such as Facebook, MySpace, LinkedIn, etc, are booming. People are accumulating their social capital

NCN at No Credit Needed talked about his biggest financial regret being not to fully his retirement account for a decade.

FMF at Free Money Finance had examples to show that poor people can also get ahead financially.

MBH at Mighty Bargain Hunter asked an interesting question: Should you write your own tax software? I used to file our taxes manually without any software. I assume if the rules are clear, that shouldn’t be a difficult task.

Steve at Birp Blap looked at the double-digit myth. Is that, a double-digital annual return, you are looking for from you stock investments as well?

The Honest Dollar discussed price discrimination and the existence of coupons. Are you using coupons when shopping?

Made a little side income from your blog? Ciaran at Chance Favor outlined ways to reduce taxable blogging income. I am considering set up a SEP IRA for myself

Finally, Mrs. Micah launched The Finwikian, a personal finance wiki. Check it out and you will find lot of your familiar blogs over there.

When I wrote about the RevolutionCard back in last September, I didn’t pay much attention to the other product, RevolutionMoneyExchange, from the same company. The reason for me not feel excited by the new product was 1) I didn’t use a lot person-to-person fund transfer and 2) I already have a Paypal account which is much more popular than RevolutionMoneyExchange and it’s market leading position is unlikely to be threatened by the newcomer.

Early last week, I received an email from RevolutionMoneyExchange, inviting me to join their program with a $25 sign-up bonus. The incentive was there when I first knew the product half a year ago, so I decided to give it a try and take the free money

How it works

If you use Paypal, then RevolutionMoneyExchange (RME) isn’t of much difference in the way it works. Basically, it allows account holders to send and receive money (money exchange) fast and securely. So to use the service, the parties have to have RME accounts. Like Paypal which serves as a tool for merchants to make and receive payments, RME also claims that it provides tools for online sellers. However, I didn’t notice any such function from my account. I feel that RME’s primary function is to exchange money between members and most of its services, such as send and receive money are free of charge (fee schedule).

Continue reading …

Over the weekend, I received a copy of Robert T. Kiyosaki’s new book, Rich Dad’s Increase Your Financial IQ: Get Smarter with Your Money from Jeffery Anderson, a publicist from FSB Associate. Kiyosaki is no stranger to many people. He is the author of the popular book, Rich Dad, Poor Dad. I myself never read that book, though I did finish the first couple of chapters from an audio file two years ago and what I still remember is how Kiyosaki argued that house is really a liability, not an asset. Somehow, I kind of agree with his argument because until I pay off the mortgage, I don’t really own the house. By the time I really own the house, what I have paid for it may exceed its value. And if I decide to take profit and sell the house, the money I make from it may not be more profitable than, say, investing the money in the stock market while renting over the years.

Anyway, while I am still trying to finish up the book (too many things to do and too little time), I got the following financial IQ quiz from Jeff yesterday that I would like to share with everybody.

What’s Your Financial IQ?

1) Which of the following is not an asset?

1. Gold
2. The Corvette you bought for your 40th birthday
3. A business
4. Wheat

2) On average, Americans save how much of their income?

1. Enough to buy a new flat screen TV
2. Why save when you own a house?
3. They don’t save. They owe.

3) A retirement plan that is paid for by your employer is known as a:

1. Defined benefit plan
2. A miracle
3. Both

4) What kind of income is the hardest to protect from financial predators such as taxes?

1. The dividends that just got cut from the financial stocks you bought
2. The $50 and rocking CD collection you inherited from your uncle Craig
3. The forty hours worth of cash your company pays you for sixty hours of work

5) What is the best way to create a budget surplus?

1. Cut down on expenses by buying a fuel efficient car
2. Get a higher paying job to make more money
3. Saving and investing before paying your bills

6) An example of leveraging your money is:

1. Putting money in an interest bearing savings account
2. Buying investment real estate with a bank loan
3. Going to a local casino.

7) The best way to invest is in a diverse portfolio of stocks, bonds, and mutual funds. True or False?

8 ) The key to becoming wealthy is:

1. Only having two scotches per night
2. Buying high and selling low
3. Selling the CD collection you inherited from Uncle Craig
4. Increasing your financial intelligence

What are your answers?