gold http://www.wisebread.com/taxonomy/term/1235/all en-US The Cost of Finding a Treasure Chest Full of Gold http://www.wisebread.com/the-cost-of-finding-a-treasure-chest-full-of-gold <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/the-cost-of-finding-a-treasure-chest-full-of-gold" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/open_treasure_chest_on_the_beach.jpg" alt="Open treasure chest on the beach" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>Most of us have had the fantasy of discovering hidden treasure. Maybe it's digging in the backyard and unearthing a chest of gold, or it washes up on the beach. However it happens in your mind, finding treasure and living happily ever after is the end of the story. But what about the costs and legalities involved? How much of that treasure would you actually get to keep?</p> <h2>First, can you legally keep the treasure?</h2> <p>&quot;Finders keepers, losers weepers.&quot; Is that an accurate description of the law when it comes to treasure, or finding anything of value? Well, yes and no. United States common law dictates that a treasure trove belongs to the finder. However, there are discrepancies to this in some states.</p> <p>For example, Texas does not recognize the common law regarding treasure troves. In Louisiana, found treasure must be split between the finder and the property owner. In Tennessee and Idaho, the treasure belongs to the landowner.</p> <p>In other states, you are required to make a reasonable effort to return found treasure to the rightful owner, which includes first taking it to the local police. If no one claims the find after a certain time period, it's yours. If you find treasure and do <em>not</em> report it or make efforts to return it to a rightful owner, you can be found guilty of theft. What's more, if the gold you find was due to criminal activity, it could well be claimed by the state if the rightful owner cannot be found.</p> <p>So, make sure you are free and clear in the eyes of the law before you think of spending a cent from that chest of gold.</p> <h2>How much of the treasure will be yours to own?</h2> <p>Again, this is going to vary depending on what you found and where you found it. Look at the example of the Schmitt family and the <a href="https://www.cbsnews.com/news/300-year-old-treasure-gold-found-schmitt-family-off-coast-florida/" target="_blank">treasure chest they found on a shipwreck</a> in 2015.</p> <p>Filled with gold and coins valued at over $1 million, it would seem they hit the jackpot. However, the haul was discovered on a wreck off the coast of Florida. By law, the state collected 20 percent of that $1 million, and as the wreck was owned by a company called Queens Jewels, LLC, the remaining gold had to be split 50-50 between that company and the Schmitts. That reduced their $1 million find to $400,000.</p> <p>You may get lucky and find your treasure on a piece of land not owned by anyone, and live in a state that abides by the treasure trove law. But guess what? You still have to pay Uncle Sam ...</p> <h2>That treasure chest's value must be reported to the IRS</h2> <p>Taxes: It's a dirty word at the best of times, but it can really cast a dark cloud over your haul. IRS code section 61 states that &quot;gross income means all income from whatever source derived.&quot; While the tax code does not specifically call out buried treasure, it has been left broad enough to collect taxes on whatever the IRS deems to be income. And you can bet a find of valuable gold coins or jewels will make the IRS sit up and take notice. You can look for legal deductions to reduce your tax burden, but don't avoid paying it altogether. If you are living a Champagne lifestyle on a beer budget, the IRS will become suspicious. (See also: <a href="http://www.wisebread.com/35-bizarre-things-you-can-be-taxed-on?ref=seealso" target="_blank">35 Bizarre Things You Can Be Taxed On</a>)</p> <h2>Know what you're selling, and how to sell it</h2> <p>So, you've gone through all the steps, and the treasure chest is yours. It's time to sell the gold and pocket the cash, and you know you will have to report that money to the IRS. What are your options?</p> <p>For a start, you need to know exactly what it is that you're selling. Not all gold coins and jewelry are made alike. In some instances, you may have a very valuable artifact that has historical significance, or was made by a highly-prized designer. In that case, the object will be worth much more than the going rate for an ounce of gold. If you have these items appraised, and they are indeed collector's pieces, you will most likely have to put the object up for auction. In that case, the auction house will take a percentage of the final value.</p> <p>If, on the other hand, it's simply a bunch of gold that is worth the going market price, you should find legitimate sales avenues. The first place to go is a reputable jeweler in your area. Their main source of income comes from selling jewels, not trading in gold, and they will be less likely to rip you off. Avoid those &quot;cash for gold&quot; places; they will try to give you the least possible amount of money for your trade. The same is true of pawn stores. The owners aren't knowledgeable in what you have, and just want to buy low and sell high. Also, do your homework. What kind of gold do you have? If it's 24 carat gold, it will get the highest value.</p> <p>A box of treasure is a lucky find however you slice it &mdash; but you will not get to keep the whole amount unless you're intent on breaking the law and accepting the consequences.</p> <h2 style="text-align: center;">Like this article? Pin it!</h2> <div align="center"><a data-pin-do="buttonPin" data-pin-count="above" data-pin-tall="true" href="https://www.pinterest.com/pin/create/button/?url=http%3A%2F%2Fwww.wisebread.com%2Fthe-cost-of-finding-a-treasure-chest-full-of-gold&amp;media=http%3A%2F%2Fwww.wisebread.com%2Ffiles%2Ffruganomics%2Fu5180%2FThe%2520Cost%2520of%2520Finding%2520a%2520Treasure%2520Chest%2520Full%2520of%2520Gold.jpg&amp;description=The%20Cost%20of%20Finding%20a%20Treasure%20Chest%20Full%20of%20Gold"></a></p> <script async defer src="//assets.pinterest.com/js/pinit.js"></script></div> <p style="text-align: center;"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/u5180/The%20Cost%20of%20Finding%20a%20Treasure%20Chest%20Full%20of%20Gold.jpg" alt="The Cost of Finding a Treasure Chest Full of Gold" width="250" height="374" /></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/paul-michael">Paul Michael</a> of <a href="http://www.wisebread.com/the-cost-of-finding-a-treasure-chest-full-of-gold">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-2"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/heres-what-to-do-if-your-wages-are-garnished">Here&#039;s What to Do If Your Wages Are Garnished</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/9-ways-expats-can-maintain-their-credit-scores">9 Ways Expats Can Maintain Their Credit Scores</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/7-things-you-need-to-know-about-401k-hardship-withdrawals">7 Things You Need to Know About 401(k) Hardship Withdrawals</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/what-can-you-do-if-you-cannot-afford-to-pay-your-taxes">What can you do if you cannot afford to pay your taxes</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/cross-your-fingers-and-hope-you-re-not-caught-by-alternative-minimum-tax-amt-this-year">Cross your fingers and hope you’re not caught by Alternative Minimum Tax (AMT) this year.</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Personal Finance Entertainment buried treasure common law gold hidden costs IRS taxes treasure chest valuables Tue, 28 Nov 2017 09:00:06 +0000 Paul Michael 2057737 at http://www.wisebread.com 4 Ways to Add Gold to Your Portfolio http://www.wisebread.com/4-ways-to-add-gold-to-your-portfolio <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/4-ways-to-add-gold-to-your-portfolio" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/iStock-165418687.jpg" alt="Learning ways to add gold to your portfolio" title="" class="imagecache imagecache-250w" width="250" height="141" /></a> </div> </div> </div> <p>Owning gold can be an attractive insurance policy in case of stock market turmoil or a decline in currency valuation. In times of economic uncertainty, gold prices tend to increase even when the value of other investments goes down.</p> <p>If you are looking to reduce your exposure to stock market investments, or simply want to have something of value to trade in case of a zombie apocalypse, here are four ways you can invest in gold today.</p> <h2>1. Gold coins and bullion</h2> <p>The U.S. Mint issues American Eagle gold bullion coins in the following denominations:</p> <ul> <li>1/10 ounce</li> <li>&frac14; ounce</li> <li>&frac12; ounce</li> <li>1 ounce</li> </ul> <p>The selling price of these coins floats with the price of gold, plus you will pay a few percent premium for getting a minted coin instead of a plain piece of gold. With the current price of gold at over $1,200 an ounce, you can find 1/10 ounce American Eagles selling from dealers for under $150. Gold coins produced by the U.S. Mint are not sold directly to the public, but may be purchased from a network of <a href="https://catalog.usmint.gov/bullion-dealer-locator?_ga=2.66368809.627583906.1498523906-142188866.1498523906" target="_blank">authorized bullion dealers</a> who buy the coins from the mint for resale.</p> <p>Another option is the American Buffalo gold coin that comes in a 1 ounce denomination. This is a legal tender coin whose gold content is guaranteed by the U.S. Government. These coins are available at coin dealers and participating banks. The South African Krugerrand, Canadian Gold Maple Leaf, Australian Gold Nugget, Chinese Gold Panda, and British Gold Britannia are other popular gold coins from around the world.</p> <p>A less expensive alternative to gold coins is to buy gold bars or gold rounds. These are not as impressive to look at, but are priced near the current trading price, or &quot;spot price,&quot; for gold. This form of bullion may have simple markings with the weight and purity of the gold.</p> <p>If the thought of keeping gold hidden in your closet or safe makes you nervous, consider using a bullion trading and storage platform. You can buy and sell physical gold bullion and it never has to leave the secure vault where it is stored unless you want to take it out. This gives you the benefit of directly owning gold without the hassle of transporting and storing it.</p> <h2>2. Gold jewelry</h2> <p>An advantage of buying gold in the form of jewelry is that you can wear and enjoy your investment, and it is highly transportable. A smart way to invest in gold is to give gold jewelry as a gift. A gift of precious metal jewelry will hold its value and possibly grow in value while most other gifts depreciate and eventually end up in a landfill.</p> <p>When buying gold jewelry, you need to pay attention not only to the weight of the jewelry, but also the purity of the gold. Pure gold is designated as 24 karat gold. But pure gold is too soft and malleable for jewelry, so it is often mixed with other metals to make the jewelry harder and stronger. For example, jewelry that is 18 karat gold is 18/24, or 75 percent gold and 25 percent other metals. You can divide the karat rating of jewelry by 24 to determine the fraction of gold that it contains.</p> <p>Sometimes you can find broken, tangled, or damaged gold jewelry for sale at a pawnshop for less than the spot price of gold. Just make sure you are buying solid gold, and not just gold plated items.</p> <h2>3. Gold exchange traded funds (ETFs)</h2> <p>A gold ETF is a fund that aims to track the price of gold. Some funds actually hold gold, while others do not own gold, but use derivative contracts instead. Gold ETFs allow a quick and easy way to get an investment that tracks the price of gold, and are convenient for large transactions since you do not need to move or store a lot of gold.</p> <p>There are a couple of potential downsides to investing in a gold ETF. When you buy shares in a gold ETF, you might not actually own any gold &mdash; in some cases, you will own only shares in the fund. Since the fund tracks the price of gold, you may not have a problem with this. But if you are trying to reduce your exposure to large financial institutions by investing in gold, buying shares in a fund run by a large financial institution might not meet your goal. Also, some gold ETFs sell some of the gold that they hold to cover expenses, so the amount of gold per share that you own can be reduced over time.</p> <h2>4. Gold industry stocks and mutual funds</h2> <p>Another way to get a piece of the gold market is to buy stock of companies involved in gold mining and gold production. When gold prices go up, the stock prices of these companies can also go way up. Conversely, when gold prices go down, the stock prices of these companies can go way down.</p> <p>You can buy individual company stocks or mutual funds that provide holdings in a number of companies in the gold industry. This market segment is especially volatile, but may provide a hedge against other types of investments in your portfolio.</p> <h2 style="text-align: center;">Like This Article? Pin it!</p> <div align="center"><a data-pin-do="buttonPin" data-pin-count="above" data-pin-tall="true" data-pin-save="true" href="https://www.pinterest.com/pin/create/button/?url=http%3A%2F%2Fwww.wisebread.com%2F4-ways-to-add-gold-to-your-portfolio&amp;media=http%3A%2F%2Fwww.wisebread.com%2Ffiles%2Ffruganomics%2Fu5180%2F4%2520Ways%2520to%2520Add%2520Gold%2520to%2520Your%2520Investment%2520Portfolio.png&amp;description=4%20Ways%20to%20Add%20Gold%20to%20Your%20Investment%20Portfolio"></a></p> <script async defer src="//assets.pinterest.com/js/pinit.js"></script></div> <p style="text-align: center;"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/u5180/4%20Ways%20to%20Add%20Gold%20to%20Your%20Investment%20Portfolio.png" alt="4 Ways to Add Gold to Your Investment Portfolio" width="250" height="374" /></p> </h2> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/dr-penny-pincher">Dr Penny Pincher</a> of <a href="http://www.wisebread.com/4-ways-to-add-gold-to-your-portfolio">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-1"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/8-things-everyone-should-know-about-the-commodities-markets">8 Things Everyone Should Know About the Commodities Markets</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/the-10-weirdest-etfs-you-can-buy">The 10 Weirdest ETFs You Can Buy</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/are-you-choosing-the-right-fund-for-your-portfolio">Are You Choosing the Right Fund for Your Portfolio?</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/the-3-rules-every-mediocre-investor-must-know">The 3 Rules Every Mediocre Investor Must Know</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/8-ways-etfs-can-put-more-money-in-your-pocket-than-mutual-funds">8 Ways ETFs Can Put More Money in Your Pocket Than Mutual Funds</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Investment bullion coins ETFs exchange traded funds gold gold industry jewelry mining stock market u.s. Mint value Mon, 07 Aug 2017 08:00:05 +0000 Dr Penny Pincher 1994330 at http://www.wisebread.com 8 Money-Smart Things I Wish I'd Asked Santa For http://www.wisebread.com/8-money-smart-things-i-wish-id-asked-santa-for <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/8-money-smart-things-i-wish-id-asked-santa-for" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/santa_good_list_-499122032.jpg" alt="Asking Santa for items on Christmas list" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>I spent a couple of decades asking Santa Claus for toys, clothes, and gadgets galore, but I don't have a single thing to show for it &mdash; I mean, besides a basement full of outdated stuff. Instead, I should've begged Ol' Saint Nick for these eight things that would have paid for themselves over and over again &mdash; so I could afford an even bigger basement full of outdated stuff. Take a look:</p> <h2>1. An Impenetrable Credit Score</h2> <p>When I turned 18 and the friendly lady at Discover Card called to ask if I'd like my very own credit card, I enthusiastically said yes. I generally consider that my very first adult mistake. Not that credit cards are bad, but they're the devil in the hands of a financially irresponsible college freshman. Because not only did I max the card out in less than six months, I was unaware that not paying the bill for five years thereafter would result in a disaster of a credit score when I entered the &quot;real world.&quot; If only Santa could have done me a solid by fortifying my credit score &mdash; against myself.</p> <h2>2. Everything Gold</h2> <p>In 2006, I asked Santa Claus for things like seat covers for my vehicle and a new digital camera because that's what materialistic 25-year-olds in major credit card debt ask for. Instead, I should've asked for straight-up gold bars. Heck, I would've been happy with a few flakes &mdash; like this guy who got away with <a href="http://www.nytimes.com/2016/12/04/nyregion/the-one-that-waddled-away-retracing-a-weighty-gold-theft.html">86 pounds of jeweler's &quot;bench sweeps&quot;</a> worth $1.6 million. Because 10 years ago, on Dec. 11, gold was valued at $625.81 per troy ounce. Flash forward a decade and the price has nearly doubled to between $1,100 and $1,200, depending on the day, and that's really just midrange. On Sept. 12, 2011, gold hit its 10-year high of $1,861.49 per troy ounce, which &mdash; if you were feeling lucky that day &mdash; raked in three times its original amount if you unloaded a few bricks.</p> <h2>3. EE Savings Bonds</h2> <p>Hardly anybody gives savings bonds as gifts anymore (well, except maybe your grandma) because what fun is a certificate that you have to hold on to for, like, ever to reap its benefits? But just because they're not as popular as they once were doesn't mean they're not still valuable &mdash; if you got in on them in the 1980s and '90s, that is. EE bonds issued in the 1980s had rates of return of 6% to 9% a year, compared to today's 0.1% annual fixed rate. Mathematically, if you have a $500 bond from June 1983, for instance, it reached full maturity in June 2013, with a value of $1,014.40. Santa, can you hear me?</p> <h2>4. Real Estate in Depressed Markets</h2> <p>Throughout my years living in major cities like Baltimore and NYC, I've heard legendary tales of beautiful row houses and brownstones in economically and socially depressed areas, like Federal Hill in Baltimore and Harlem in New York City, that sold for crazy-low prices like $1. The $1 price is probably a myth, but dilapidated properties have in fact gone for very affordable prices with agreements that buyers reside in their neighborhoods for a specified period of time. I personally know a few people who purchased homes in blighted areas for around $30,000 20 years ago and are now sitting pretty on $2+ million lots.</p> <h2>5. College Tuition</h2> <p>All I needed was a cool $100K, Santa. I would've paid my college tuition and room and board outright so I didn't have to make up for half that amount myself over the next 20 years after graduating. Alas, I'm halfway there, and I've paid two of three notes off, but if you could cut a check for the rest this year, I'd appreciate it.</p> <h2>6. A Trust Fund</h2> <p>My financial woes would be nonexistent if I had asked Santa for a generous trust fund at an early age. Then I'd be just like the rest of my friends who were lucky enough to be related to someone filthy rich &mdash; free of debt with plenty of time to take selfies on a beach and dedicate my life's work to my own liver replacement.</p> <h2>7. Guaranteed Employment</h2> <p>There's nothing more stressful than job hunting, and I'm thankful that I haven't had to do that in a while since I'm self-employed. But self-employment isn't easy, either. I'm responsible for my own income instead of enjoying that twice monthly direct deposit for just showing up at my desk five days a week. Still, even that's on shaky ground if you don't mind your Ps and Qs &mdash; a friend of mine was recently laid off two weeks before Christmas &mdash; so this year I'd like to ask the big guy to make sure everybody can get (or keep) the job they really love for a happy and prosperous 2017.</p> <h2>8. Winning Lottery Numbers</h2> <p>I rarely play the lottery, but I do spend a few bucks when Mega Millions is, like $300 million, because, hey, somebody has to win. If that ever happens, my friends, you'll never hear from me again. Ev-er. Send me those winning numbers, Santa!</p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/mikey-rox">Mikey Rox</a> of <a href="http://www.wisebread.com/8-money-smart-things-i-wish-id-asked-santa-for">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-5"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/10-ways-for-college-students-to-save-loads-of-money">10 Ways for College Students to Save Loads of Money</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/10-places-to-stash-your-money-besides-a-savings-account">10 Places to Stash Your Money Besides a Savings Account</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/the-benefits-of-a-walkable-neighborhood">The Benefits of a Walkable Neighborhood</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/how-big-of-a-house-do-you-really-need">How Big of a House Do You Really Need?</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/6-ways-that-dieting-and-budgeting-are-exactly-the-same">6 Ways that Dieting and Budgeting are Exactly the Same</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Frugal Living credit score employment gold personal finance real estate santa savings bonds trust funds tuition winning the lottery wishlist Fri, 16 Dec 2016 11:00:09 +0000 Mikey Rox 1853793 at http://www.wisebread.com Could Trump Bring Higher Interest Rates and Inflation? Consider These Money Moves http://www.wisebread.com/could-trump-bring-higher-interest-rates-and-inflation-consider-these-money-moves <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/could-trump-bring-higher-interest-rates-and-inflation-consider-these-money-moves" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/donald_trump_98978789.jpg" alt="Donald Trump could bring higher interest rates and inflation" title="" class="imagecache imagecache-250w" width="250" height="167" /></a> </div> </div> </div> <p>In a matter of weeks, America will have a new President, and people are already speculating as to what a new man in the White House will mean for the economy.</p> <p>Donald Trump outlined a series of policy proposals on the campaign trail, including some that, according to economists, may impact inflation and interest rates. This comes at a time when the Federal Reserve has been hinting at raising interest rates for a while. So if all of this happens, what should you do with your money? Here are some ideas.</p> <h2>If There's Inflation</h2> <p>Ifd the federal government opens up the fiscal spigot, inflation is sure to follow.</p> <h3>1. Take a Look at Gold</h3> <p>Gold has long been a popular investment for those seeking protection against inflation, especially during times of political and global uncertainty. Prices for gold spiked in the immediate aftermath of Trump's election, but are still quite low from a historical standpoint.</p> <p>There are several ways to purchase gold. You can buy gold bars or bullion and store it, or purchase shares of companies involved in gold mining. There are also exchange-traded funds (ETFs) that track the performance of gold or gold-related industries.</p> <h3>2. Get Into TIPS</h3> <p>The U.S. Treasury offers something called Treasury Inflation-Protected Securities, or TIPS. These are pegged to the Consumer Price Index, so when the index rises, the value of the investment rises with it. These are solid, low-risk investments that are perfect for when inflation is a possibility, and they are exempt from state and local income taxes. It's also possible to own TIPS in a retirement fund, via an ETF or mutual fund.</p> <h3>3. Invest in Commodities</h3> <p>In addition to gold, there are other commodities that can be used as a hedge against inflation. Many commodities, including oil, wheat, and even live cattle naturally rise with inflation. If you're unsure of which commodities to buy, consider looking at a fund or ETF that invests in commodities broadly. The PowerShares DB Commodity Index Tracking Fund [NYSE: <a href="http://www.google.com/finance?cid=722064">DBC</a>]) and the Fidelity Series Commodity Strategy Fund [NYSE: <a href="https://www.google.com/finance?q=FCSSX&amp;ei=4G48WJC_BdWNmAHcobLABw">FCSSX</a>] are two examples.</p> <h3>4. Get Real With Real Estate</h3> <p>Real estate is another area that often does well during an inflationary period. There are many ways to obtain real estate, either by purchasing property directly, or by buying shares of real estate investment trusts, or REITs. The caveat here is that if interest rates rise, then the cost of a mortgage to purchase real estate will also go up. So it may be smart to get in now while interest rates are still at historic lows.</p> <h2>If Interest Rates Rise</h2> <p>The Federal Reserve is expected to tick interest rates up a bit soon, while Trump's economic proposals could accelerate that process.</p> <h3>1. Invest in Banks</h3> <p>Banks generally do better when interest rates are higher than they are now. Right now, these companies have a low &quot;net interest margin&quot; &mdash; the difference between the interest they earn and the interest they pay out. Higher rates will increase this margin, thus increasing the bank's profitability.</p> <h3>2. Lock in a Fixed Rate</h3> <p>If you have a mortgage with an adjustable rate, now is the time to lock into something more stable, before interest rates rise. Convert your mortgage to a fixed-rate loan now, while interest rates are low. If you don't do this, your rate could adjust upward to a level that you may find unsustainable.</p> <h3>3. Switch to Short-Term Bonds</h3> <p>If interest rates are about to go up, you don't want your money tied up in something that's not paying a high rate. Placing your money in shorter term bonds and bond funds will allow you to remove your money earlier and then reinvest it in something with a higher return once rates rise. Long-term bonds do pay a higher rate than short-term bonds, but you lose flexibility.</p> <h3>4. Bolster Your Cash Holdings</h3> <p>With interest rates at ultralow levels, there hasn't been much incentive to hold on to a lot of cash. But if interest rates rise, you may find it's worth it to have a little more cash on hand, as it will generate some income for you. Stocks and other investments will probably still be more lucrative, but higher interest rates means there won't be as much downside to having more liquid savings, and it may give you more peace of mind.</p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/tim-lemke">Tim Lemke</a> of <a href="http://www.wisebread.com/could-trump-bring-higher-interest-rates-and-inflation-consider-these-money-moves">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-10"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/oh-noes-inflation">Oh noes! Inflation!</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/how-to-live-with-inflation">How to live with inflation</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/7-best-money-management-tips-from-john-oliver">7 Best Money Management Tips From John Oliver</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/8-investments-that-may-soar-during-trumps-term">8 Investments That May Soar During Trump&#039;s Term</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/7-cool-things-bonds-tell-you-about-the-economy">7 Cool Things Bonds Tell You About the Economy</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Personal Finance Financial News bonds donald trump federal reserve gold inflation interest rates investing president Wed, 30 Nov 2016 12:00:11 +0000 Tim Lemke 1843966 at http://www.wisebread.com 10 Places to Stash Your Money Besides a Savings Account http://www.wisebread.com/10-places-to-stash-your-money-besides-a-savings-account <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/10-places-to-stash-your-money-besides-a-savings-account" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/star_wars_lego_000021962705.jpg" alt="Finding places to stash money besides a savings account" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>The long-awaited interest rate hike from the Fed finally arrived on December 16, 2015. But as of May 2016, it still hasn't affected the interest rate of most savings accounts. The national average savings account interest rate currently stands at a measly 0.06%, according to data from the Federal Deposit Insurance Corporation (FDIC). And some brick-and-mortar banks are offering rates as low as a pitiful 0.01%!</p> <p>There are far better places to park your hard-earning savings. Let's review 10 places to stash cash besides a traditional bank savings account.</p> <h2>1. Online High Yield Savings Account</h2> <p>With the Internet taking over pretty much everything, it's not a surprise that it has also taken over banking. By putting your funds in an online savings account, you'll have access to higher yields. As of April 2016, you can find high-interest savings accounts with yields ranging from 0.75% with the Capital One 360 Savings Account, to 1.05% with the Synchrony Bank High Yield Savings Account. Make sure to read the fine print, though, because they may require minimum deposits and limit the times you can access funds per month. (See also: <a href="http://www.wisebread.com/5-best-online-savings-accounts?ref=seealso">5 Best Online Savings Accounts</a>)</p> <h2>2. Certificate of Deposit</h2> <p>By tying up your money for a longer period of time, banks and credit unions are willing to offer you a higher interest rate. With terms ranging from one to 60 months, a certificate of deposit (CD) is a financial vehicle insured by the Federal Deposit Insurance Corporation (FDIC) for up to $250,000 per account per depositor. Certificates of deposit can easily beat that 1.10%. For example, a credit union in Honolulu, Hawaii is currently offering 16-month and 60-month CDs with a 1.20% and 1.78% APR, respectively.</p> <h2>3. Series I Savings Bond</h2> <p>Backed by the full faith and credit of the U.S. government, Series I Savings Bonds (also referred to as &quot;I Bonds&quot;) are adjusted for inflation every six months so the purchasing power of your savings stays intact. Earnings are exempt from state and local taxes and can be entirely tax-free when used for qualifying post-secondary education expenses. I Bonds are available on small denominations starting at $50 and can be bought online via <a href="http://www.treasurydirect.gov/indiv/products/prod_ibonds_glance.htm">TreasuryDirect</a> or through your tax return using <a href="http://www.irs.gov/pub/irs-pdf/f8888.pdf">Form 8888, Allocation of Refund (Including Savings Bond Purchases)</a>.</p> <h2>4. Gold</h2> <p>For a long time, several countries, including the U.S. and the U.K., committed to fix the prices of their domestic currencies in terms of the market value of a specified amount of gold. Even though the market price of gold has proven to be quite volatile, it still could work as a good way to stash your savings, depending on your timing. When it comes to gold, history has proven that it's best to buy and hold for a long time. On May 1, 2006, the price of gold per ounce was $670.30 and on April 18, 2016, it was $1,245.68. That's a 85% total return for about 10 years. This is why investors still use gold to hedge against uncertainty and inflation.</p> <h2>5. Exchange Traded Fund for Precious Metals</h2> <p>Of course, buying and selling coins, bars, or privately minted coins of gold and silver requires skill, storage space, and knowledge of the commodities market. An alternative way to put your savings in gold and silver is to buy an exchange traded fund (ETF) that tracks the market price of those precious metals. Some examples include the iShares Silver Trust [<a href="http://finance.yahoo.com/q?s=SLV">NYSEArca: SLV</a>], SPDR Gold Shares [<a href="http://finance.yahoo.com/q?s=GLD">NYSEArca: GLD</a>], ETFS Physical Silver [<a href="http://finance.yahoo.com/q?s=SIVR">NYSEArca: SIVR</a>], and iShares Gold Trust [<a href="http://finance.yahoo.com/q?s=IAU">NYSEArca: IAU</a>].</p> <h2>6. Lego Sets</h2> <p>If the investment returns from gold impress you, wait until you hear that of Lego Sets:</p> <ul> <li>Imperial Star Destroyer was <a href="http://time.com/money/4162059/lego-investment-compare-gold-return/">worth $249.99 in 2002</a> and today is worth about $2,185 (return: 774%)<br /> &nbsp;</li> <li>Death Star II was worth $372 in 2005 and today is worth about $2,270 (return: 510%)<br /> &nbsp;</li> <li>Taj Mahal was worth $134 in 2007 and today is worth about $2,753 (return: 1,954%)</li> </ul> <p>Of course, you'll have to do some research to identify the most promising sets. With about 80 stores in the U.S., you'll have plenty of opportunities to play&hellip; ahem!... I mean, research.</p> <h2>7. Discount Gift Cards at Costco</h2> <p>Bulk buying 170 oz. detergent jugs and $4.99 roasted chickens aren't the only ways to let your dollar go the extra mile at Costco. You can stash your savings in discounted gift cards. For example, you can currently get two $50 gift cards for Buca di Beppo for $76.99 ($74.99 plus $2 for shipping and handling) at the Costco website. By planning out your purchases of discount gift cards for restaurants and other retailers, you can get a better return than that of a savings account.</p> <h2>8. Christmas Club</h2> <p>Another alternative to savings accounts is the Christmas club, which will hold money put aside for future holiday spending. Also known as Christmas savings accounts, Christmas clubs are available at over 70% of U.S. credit unions. By committing to hold your funds in the account for a predetermined period (e.g. November 1st), a credit union will pay you a higher interest rate than that of its regular savings account. The catch is that if you withdraw the funds before the deadline, you'll be charged a steep fee that nullifies all your interest gains. (See also: <a href="http://www.wisebread.com/9-good-reasons-to-choose-a-credit-union-instead-of-a-bank?ref=seealso">9 Good Reasons to Choose a Credit Union Instead of a Bank</a>)</p> <h2>9. Peer-to-Peer Lending</h2> <p>Banks make a profit by taking your deposits and offering those monies as loans to other individuals at a higher interest rate. You, too, can take a crack at profiting from lending through peer-to-peer lending at sites including <a href="http://prosper.evyy.net/c/27771/27132/994">Prosper</a> and <a href="https://www.lendingclub.com/">Lending Club</a>. With a minimum investment of $25, you could start investing in loans with an average annual interest rates ranging from <a href="https://www.lendingclub.com/info/demand-and-credit-profile.action">5.23% to 9.11%</a>. By sticking with the highest grade of investment loans, you have a good chance at beating the annual percentage yield (APY) of any savings account.</p> <h2>10. Secured Credit Card</h2> <p>While <a href="http://www.wisebread.com/what-are-secured-credit-cards?utm_source=wisebread&amp;utm_medium=internal&amp;utm_campaign=article">secured credit cards</a> can be useful to building or repairing your credit history, some of these cards also allow you to gain interest on your security deposit. For example, the <a href="http://www.wisebread.com/usaa-secured-card-american-express?utm_source=wisebread&amp;utm_medium=internal&amp;utm_campaign=article">USAA Secured Card American Express</a> lets you gain 0.54% per year through a two-year CD. If you're considering to apply for a secured credit card, getting one that lets you make money on your secure deposit would let you kill two birds with one stone.</p> <p><em>What are other great places to stash away your savings?</em></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/damian-davila">Damian Davila</a> of <a href="http://www.wisebread.com/10-places-to-stash-your-money-besides-a-savings-account">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-2"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/6-smart-ways-to-use-old-savings-bonds">6 Smart Ways to Use Old Savings Bonds</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/5-signs-you-arent-ready-for-a-credit-card">5 Signs You Aren&#039;t Ready for a Credit Card</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/top-5-ways-thieves-use-your-stolen-credit-card">Top 5 Ways Thieves Use Your Stolen Credit Card</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/cash-is-king-now-what-should-i-do-with-it">Cash Is King: Now What Should I Do With It?</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/8-savings-mistakes-even-smart-people-make">8 Savings Mistakes Even Smart People Make</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Personal Finance certificate of deposit christmas funds gift cards gold peer to peer lending savings savings bonds Tue, 10 May 2016 09:30:24 +0000 Damian Davila 1703947 at http://www.wisebread.com 8 Things Everyone Should Know About the Commodities Markets http://www.wisebread.com/8-things-everyone-should-know-about-the-commodities-markets <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/8-things-everyone-should-know-about-the-commodities-markets" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/cows_000066842465.jpg" alt="Everyone learning things about commodities markets" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>It's common in the investment world to hear a lot about commodities. These are things like oil, soybeans, gold, and even cattle, which can be bought and sold on exchanges, similar to stocks.</p> <p>The price of commodities plays a big role in our economy, from how much it costs to fuel our cars, to the price of a gallon of milk. It's possible to earn money trying to predict how the price of these commodities will move, although it can be risky.</p> <p>Investing in commodities is not for beginners, but it's helpful to know some of the basics of how they work and how they may impact other parts of your portfolio &mdash; and even your day-to-day life.</p> <h2>1. There Are Four (or Three) Basic Groups of Commodities</h2> <p>Commodities can be lumped together in an infinite number of ways, but are generally placed in four groups:</p> <ul> <li>Energy (Things like oil and natural gas)</li> <li>Metals (Gold, silver, platinum, zinc, etc.)</li> <li>Livestock and meat (Cattle, pork bellies, hogs, etc.)</li> <li>Agricultural (Corn, soybeans, coffee, and so forth)</li> </ul> <p>Some people like to group agricultural and livestock together. But no matter how they are categorized, it's possible to invest in certain groups of commodities through funds and ETFs that track specific commodity exchanges.</p> <h2>2. The Chicago Mercantile Exchange Is the Place</h2> <p>We all know the New York Stock Exchange and NASDAQ as the places to buy and sell traditional stocks. But for commodities, the world's largest exchange is the Chicago Merc or CME, located on Wacker Drive. About 80% of the trades on the CME are done electronically, but a portion still come from &quot;open outcry&quot; in which traders stand in a &quot;pit&quot; and call out orders, prices, and quantities.</p> <h2>3. They Are Volatile</h2> <p>If you're looking for slow and steady growth, commodities aren't for you. In fact, volatility is pretty much the norm, and it's gotten worse in recent years. A report from consulting firm Deloitte said that several commodity groups including oil, natural gas, coffee, and copper, have seen price increases of 30% to 60% over a three to six month period. And between 1997 and 2012, there were far more extreme price changes than the previous 15 years.</p> <h2>4. Commodities Are Impacted by the Dollar</h2> <p>Just about every aspect of the world economy is impacted by currency values in some way, but commodity prices are especially sensitive. That's because commodities are often priced in dollars around the world due to faith in the American economy. In the U.S., a strong dollar usually means low prices for commodities. And the inverse is true; it will take more dollars to buy commodities when the value of the dollar goes down, so commodity prices go up as well.</p> <h2>5. Weather and World Events Can Affect Commodity Prices</h2> <p>Commodity investors often find themselves becoming experts in meteorology and world affairs, because of the various things that can impact commodity prices. Maybe it's a drought in the Southeast United States that has taken out soybean crops. Or perhaps the threat of a hurricane that could temporarily shut down oil refineries. Everything from floods to flies to civil war can impact the supply of certain goods, thus impacting prices.</p> <h2>6. It's Okay for Your Portfolio to Have Commodities, But Not Too Many</h2> <p>Many financial advisers suggest holding commodities along with stocks, bonds, and real estate as part of a diverse portfolio, particularly if your nest egg is large. But keep in mind that commodities don't pay dividends or interest, and very few have a terrific track record of gains over the long term. Charles Rotblut of the American Association of Individual Investors told the Wall Street Journal that most investors should only consider investing in commodities after having the basic allocations down. In the same publication, Rick Ferri, an advocate of low-cost index fund and ETF investing, called commodities &quot;dead money&quot; and said most people would be better off without them.</p> <h2>7. You Can Invest in the Future With Commodities (Sort Of)</h2> <p>Investors who want to avoid some of the risk of commodity price fluctuations can buy something called a &quot;futures contract,&quot; which is essentially an agreement to buy or sell a commodity at a certain price at a certain date. Investors who are sellers get to lock in prices this way. Investing with commodities futures is not for inexperienced investors, as it requires a certain amount of cash up front and often involves the borrowing of money, or leverage. It is easy to lose a lot of money in a short amount of time this way.</p> <h2>8. It's Possible to Have Commodities Exposure Without Owning Commodities</h2> <p>If you don't feel comfortable trading commodities futures or owning commodity ETFs, you can buy shares of stock in companies that work with those commodities. For instance, an investor can buy shares of a company involved in gold mining, or in producing equipment for oil fields. By going this route, it's possible to diversify your portfolio with exposure to commodities, but avoid some of the volatility.</p> <p><em>Are there any commodities in your portfolio?</em></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/tim-lemke">Tim Lemke</a> of <a href="http://www.wisebread.com/8-things-everyone-should-know-about-the-commodities-markets">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-6"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/4-ways-to-add-gold-to-your-portfolio">4 Ways to Add Gold to Your Portfolio</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/are-you-choosing-the-right-fund-for-your-portfolio">Are You Choosing the Right Fund for Your Portfolio?</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/should-you-treat-your-social-security-benefits-like-a-bond">Should You Treat Your Social Security Benefits Like a Bond?</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/the-3-rules-every-mediocre-investor-must-know">The 3 Rules Every Mediocre Investor Must Know</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/7-ways-to-compare-stock-market-investments">7 Ways to Compare Stock Market Investments</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Investment agriculture commodities ETFs Food futures gold oil stock market volatility Thu, 14 Apr 2016 10:01:03 +0000 Tim Lemke 1687440 at http://www.wisebread.com 8 Ways to Prepare for a Stock Market Dive http://www.wisebread.com/8-ways-to-prepare-for-a-stock-market-dive <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/8-ways-to-prepare-for-a-stock-market-dive" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/bronze_piggybank_coins_000017285252.jpg" alt="Learning how to prepare for the next market downturn" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>If the stock market downturn in August freaked you out, you may find it helpful to be more prepared for the next time <a href="http://www.wisebread.com/10-signs-a-stock-is-about-to-tank">stocks take a dive</a>. While there's little value in panicking and assuming the markets will tumble, there are certain things investors can do to ease their minds and protect their assets.</p> <p>Consider these eight ways to get ready for the next market downturn.</p> <h2>1. Assess What Money You May Need Soon</h2> <p>If you are investing with some short-term goals in mind, it's worth taking stock of how much money you may need in the near future. For instance, if you have some investments set aside to pay for your child's college and he or she is graduating high school in a few months, it might make sense to withdraw in advance of a drop.</p> <h2>2. Save Up for Some Deals!</h2> <p>There's nothing worse than having great stocks available on the cheap, but not having the cash to buy them. Now's the time to save up so you can pounce when the values are good.</p> <h2>3. Get More Conservative</h2> <p>Anyone approaching retirement age should think about shifting investments from stocks to more stable investments, such as bonds or cash. Hopefully, this is something you've been doing anyway as you've gotten older, but if you believe the market is on the cusp of a dive, it's worth evaluating whether you should accelerate this transition.</p> <h2>4. Take a Look at Gold</h2> <p>Since the dawn of time, gold has been used as protection against disaster. It can be a good investment if interest rates rise, as many people have historically flocked to it during times of geopolitical uncertainty. Gold is cheap right now, so adding some to your portfolio could be a helpful antidote to a market downturn.</p> <h2>5. Prepare a Tax Loss Harvesting Strategy</h2> <p>If you sold investments earlier in the year and are on the hook for capital gains taxes, you may be able to offset those taxes by reporting losses from elsewhere in your portfolio. This is called tax loss harvesting. Now is the time to assess which stocks have dropped in value since you bought them, and which may be poised for a drop. A thoughtful tax loss harvesting strategy will help you avoid capital gains taxes and may even reduce your taxes from earned income.</p> <h2>6. Read Up</h2> <p>A stock market downturn can be a scary thing, in part because it's sometimes hard to discern whether the dip is a result of bad company financials or broader macroeconomic effects at work. This is when it's helpful to study earnings reports and balance sheets to get a good read on a company's health. Armed with knowledge, you'll be able to get a better handle on a stock's true worth.</p> <h2>7. Give Yourself a History Lesson</h2> <p>For many people, the thought of a stock market dive can make them sick to their stomach and keep them up at night. It helps to know that historically, the market always rebounds after decline, often quickly to new heights. Consider that since the end of World War II, the S&amp;P 500 has had a losing year just 15 times, and only three times has there been a decline in consecutive years.</p> <h2>8. Do Nothing</h2> <p>Stock markets go up. They go down. If you are investing with a long time horizon, your investment strategy should remain simple and consistent, and should not change because the market hits a rough patch.</p> <p><em>Are you ready for the next stock market downturn?</em></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/tim-lemke">Tim Lemke</a> of <a href="http://www.wisebread.com/8-ways-to-prepare-for-a-stock-market-dive">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-1"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/why-invest-in-the-stock-market">Why invest in the stock market?</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/10-times-you-shouldnt-invest-in-stocks">10 Times You Shouldn&#039;t Invest in Stocks</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/10-stocks-and-bonds-that-will-profit-from-the-fed-rate-hike">10 Stocks and Bonds That Will Profit From the Fed Rate Hike</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/the-best-ways-to-invest-50-500-or-5000">The Best Ways to Invest $50, $500, or $5000</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/the-most-important-thing-youre-probably-not-doing-with-your-portfolio">The Most Important Thing You&#039;re Probably Not Doing With Your Portfolio</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Investment bonds crashes gold market downturn protecting assets saving stocks Wed, 30 Sep 2015 13:00:50 +0000 Tim Lemke 1570336 at http://www.wisebread.com How to Sell Gold Without Getting Ripped Off http://www.wisebread.com/how-to-sell-gold-without-getting-ripped-off <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/how-to-sell-gold-without-getting-ripped-off" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/buy_gold_3.jpg" alt="Guy near buying gold sign" title="Guy near buying gold sign" class="imagecache imagecache-250w" width="250" height="158" /></a> </div> </div> </div> <p>The price of gold has reached heady heights &mdash; high enough to make many of us remember that tacky old bracelet or single earring at the bottom of our jewelry boxes. Gold buyers are promising &quot;top dollar&quot; everywhere. But selling gold is one of those situations that pits the novice &mdash; you &mdash; against the expert &mdash; the buyer. How do you make sure you're not being taken advantage of?</p> <p>Since I'm no expert myself (I don't think I own any gold besides my wedding and engagement rings, and those aren't going anywhere), I turned to Helena Krodel of the <a href="http://www.jic.org/">Jewelry Information Center</a>, part of the Jewelers of America trade association. She shared some helpful gold-selling tips from the jewelry industry's perspective. Before we get to her advice on how to sell gold, let me point out that although the neighborhood jewelry shop is probably the most convenient place to cash in, jewelers aren't the only ones buying. (See also: <a href="http://www.wisebread.com/how-to-insure-jewelry-for-cheap-or-free">How to Insure Jewelry for Cheap</a>)</p> <p>If you are willing to do a little more legwork, you can probably get a better price by <a href="http://goldeducator.com/index.php/cash/refinery">selling directly to a gold refiner</a>. Refiners offer up to 95% of the current gold price for the gold content of your items, while jewelry stores tend to top out at 85%.</p> <p>Before selling to anyone, please check out warnings such as <a href="http://www.wisebread.com/so-will-cash4gold-offer-me-cash-to-kill-this-story">Paul Michael's post about Cash4Gold</a> and the <a href="http://www.bbb.org/us/article/gold-soars-but-be-careful-when-selling-your-jewellery-warns-bbb-28799">Better Business Bureau's tips to avoid rip-offs</a>.</p> <p><strong>Carrie Kirby: How can would-be sellers distinguish between reputable gold buyers and non-reputable ones?</strong></p> <p><strong>Helena Krodel:</strong> Just as you would shop at a reputable jeweler, one should SELL to a reputable jeweler. Reputable jewelers will give you fair market value for your gold and be open and honest throughout the process of selling. We recommend shopping and selling at jewelry store that is a member of a professional trade association, like Jewelers of America. Members are asked to sign a Code of Professional Practices, thereby ensuring you are going to get what you pay for.</p> <p><strong>CK: Even among reputable businesses, will certain kinds of businesses pay more for gold? For instance, should I seek out a bulk scrap gold buyer instead of a jewelry store?</strong></p> <p><strong>HK:</strong> There is no rule here. Different companies will pay different amounts. The best thing to do is to go to several different places and ask. If you decide to leave your gold with the company or person, be sure to get a receipt detailing the item. Also ask if they are selling it off site. This typically means they are the middle man and can be charging a surcharge for the service.</p> <p><strong>CK: What process should I go through before determining where to sell my gold? Should I get estimates from more than one place?</strong></p> <p><strong>HK:</strong> Yes! Always shop around. Online companies are popping up everywhere. If you decide to sell online, beware! Be sure to call the company and speak to a real person. Ask the same questions you would in a store. And do not send your jewelry blindly without the option to get it back should they give you a price that is less that market value.</p> <p><strong>CK: I understand that buyers will not pay 100% of the day's price for gold, even if what I have to sell is 24 karat, because they need to melt it down and still make a profit. What percent of the day's price could I expect to get?</strong></p> <p><strong>HK:</strong> Every (retailer) is obviously different, but you should expect to get 75 to 85% of the percent of gold in the piece. So if it is 14K gold, the amount of gold in the piece is 58.5%. The 75-85% given is based on that amount.</p> <p><strong>CK: When I called a local jeweler to ask what percent of the daily price they pay, they declined to give a price over the phone. Is this normal?</strong></p> <p><strong>HK: </strong>Perhaps. Given that it is a competitive market, therefore some jewelry stores may not opt to disclose this information.</p> <p><strong>CK: Is there any type of gold seller that I should completely avoid, such as mail-in or pawn shop?</strong></p> <p><strong>HK:</strong> Mail-in companies have been known to veil very low returns when buying back gold from consumers. Not all, but many charge a premium for the convenience to you the customer. Jewelry parties are suspect as well. If you decide to partake, be sure to do some research on the company or person hosting the party to find out about their credentials as well as their policy in case you have seller&rsquo;s remorse. Some like the entertainment factor, however, there are better ways to yield higher paychecks.</p> <p><strong>CK: What kinds of items should be appraised independent of their scrap gold value?</strong></p> <p><strong>HK:</strong> Remember that jewelry is something that is typically passed down for generations. It also typically has a sentimental worth and value. A quick buck can result in seller&rsquo;s remorse unless you go your homework. Never sell a piece of jewelry that has intrinsic or emotional value. Never sell a piece of jewelry without removing the gemstones. You will typically get nothing &ldquo;extra&rdquo; for side stones or bejeweled settings if they are small. If the piece of gold jewelry is signed or has a trademark, noting the manufacturer who made the piece, be sure to investigate. If you have any reason to think that the piece might have more value as a jewelry item than scrap, be sure to get an appraisal. They typically cost less than $100.</p> <p>There you have it. Always shop around; the higher gold goes, the higher the potential cost of not doing your homework. Look at it this way &mdash; as of this writing, <a href="http://www.wisebread.com/understanding-the-gold-standard">pure gold</a> is selling for $1,827 an ounce. Say you have several old necklaces and rings that contain one half an ounce of 24 karat gold; this would be worth $913.50 on the market. If the first jewelry store you visit offers 75% of market value, you'll get a check for $685 and walk out feeling great. Then you find out that your cousin sold the same amount of gold to a jewelry store a few blocks away that was paying 85% and netted $776. Oh well &mdash; at least you feel better than your other cousin who handed over his jewelry to a dealer who paid 50% &mdash; she only got $457.</p> <p>It all boils down to how much gold you have to sell and how much your time is worth. Going to three different stores for estimates might take an hour or two &mdash; researching reputable refiners might take longer. Would you spend a few hours to net an extra $100? What about an extra $1,000?</p> <p>You make the call.</p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/carrie-kirby">Carrie Kirby</a> of <a href="http://www.wisebread.com/how-to-sell-gold-without-getting-ripped-off">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-2"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/so-will-cash4gold-offer-me-cash-to-kill-this-story">So, will Cash4Gold offer me cash to kill this story?</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/how-being-uninformed-costs-you-money">How Being Uninformed Costs You Money</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/4-ways-to-add-gold-to-your-portfolio">4 Ways to Add Gold to Your Portfolio</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/get-your-piece-of-the-diamond-class-action-pie">Get your piece of the Diamond Class Action pie.</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/should-there-be-a-fat-tax-on-junk-food">Should There Be a &quot;Fat Tax&quot; on Junk Food?</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Consumer Affairs gold jewelry selling Fri, 02 Sep 2011 09:48:19 +0000 Carrie Kirby 687234 at http://www.wisebread.com Understanding the Gold Standard http://www.wisebread.com/understanding-the-gold-standard <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/understanding-the-gold-standard" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/gold_men.jpg" alt="Gold men" title="Gold men" class="imagecache imagecache-250w" width="250" height="188" /></a> </div> </div> </div> <p>I first starting thinking seriously about the gold standard back in 1980, when inflation spiked up over 10% (completely destroying my very first budget) and the value of the dollar seemed to be collapsing. (See also: <a href="http://www.wisebread.com/surviving-a-financial-panic-lessons-from-the-past">Surviving a Financial Panic &mdash; Lessons from the Past</a>)</p> <p>During the early 1980s, I read quite a few &quot;hard money&quot; books. Each of them included refutations of the arguments against a gold standard &mdash; refutations of arguments I hadn't yet been exposed to, so my experience was a little backwards &mdash; but I learned why a gold standard was good and got the gold bug chapter and verse on why the arguments against the gold standard were all bogus.</p> <p>(The term &quot;gold bug&quot; was originally a pejorative term for those who thought that only gold was &quot;real money,&quot;&nbsp;and was quickly expanded to include anyone who thought gold was a great investment. Over time, though, the hard money advocates embraced the term and started calling themselves gold bugs.)</p> <p>You will not be surprised to learn that it turns out to be more complicated than either the gold bugs or their detractors would have you believe.</p> <h2>Historical Gold Standards</h2> <p>Since ancient times, gold coins have circulated as money. That was always problematic, and gold was only rarely the main sort of money. Actual gold coins would be used by rich people and for certain kinds of transactions &mdash; in particular, to pay taxes and to trade internationally.</p> <p>For ordinary transactions, though, gold tended to be too valuable. The monthly pay for a Roman legionnaire was one gold aureus (a coin about the size of a nickel, weighing a bit less than a quarter of a troy ounce). It was a lot of money &mdash; a similar size coin right now would cost you about $400. (Back in those days it was similarly valuable, although relative prices have changed so much it's pretty hard to compare. The historical record shows <a href="http://info.goldavenue.com/info_site/in_arts/in_civ/in_civ_romans.html">8 aurei buying 23 acres of woodland in Kent</a>.) That's a lot of wealth to carry around in a short stack of small coins.</p> <p>Paper money was invented (gradually, with various intermediate forms) to solve some of the problems with gold coins.</p> <p>In the heyday of the gold standard, banknotes were issued by banks against gold held in their vaults and circulated in parallel with gold coins. If you had a banknote, you could go to the bank that issued it, present the note, and receive gold coin in exchange. Contrariwise, you could deposit your coins at the bank and receive banknotes in exchange.</p> <p>There were lots of reasons to go with banknotes. For one thing, you could have a $1 (or smaller) note &mdash; smaller than any practical gold coin. You could also pack very large sums into a reasonably small case &mdash; a bundle worth $50,000 could fit in your coat pocket. That amount in gold coin would weigh a couple hundred pounds.</p> <p>That sort of gold standard worked pretty well over a fairly long period. It doesn't prevent inflation (you'd have inflation any time the gold supply was growing faster than the economy), but it limited inflation. Importantly, it kept inflation from being a political tool.</p> <h2>An Inconsistent Standard</h2> <p>The downside of banknotes was that you were relying on the bank to be sound. Sometimes banks are, but the temptation to issue more banknotes than they have gold on hand is irresistible.</p> <p>Still, the real problem with a gold standard isn't unsound banks. That would be easy enough fix &mdash; a regulator could track the issue of banknotes and audit the gold supplies in the vault. The real problem is that there isn't one, true gold price.</p> <p>The price of gold is set by the market &mdash; and the market is strongly influenced by psychology. During good times, the price of gold is modest. (For example, during the 1990s &mdash; after the previous decade's inflation had been squelched and before the dotcom boom popped &mdash; the gold price hovered around $300 a troy ounce.) During bad times, the price of gold spikes up toward infinity.</p> <p>Since we're not on the gold standard, those price changes show up as changes in the price of gold. If you're on a gold standard, they don't show up that way. But that doesn't mean that they don't happen. It just means that the price change shows up as change in the value of the currency.</p> <p>Over the last decade, the price of gold has spiked up more than 460% (an annual rate well above 19%). That's a lot higher than the inflation rate over the same period. (The CPI is only up 27% over the same period, an annual rate of less than 2.5%.)</p> <p>Imagine that the value of your money had spiked up by that much! Of course, it'd be great if you had a lot of money. (I expect this is why gold bugs don't tend to worry about this scenario &mdash; in fact, with a bunch of gold in their portfolios, they're positively yearning for it.) But what if you didn't? What if you were a businessman who had to sign long-term contracts with customers and vendors? When the value of the money jumps around like that, you're totally screwed. Worse yet, what if you're in debt? If the value of the money spikes up, the cost of making your loan payments spikes up as well. Could you pay your mortgage if it took you a week to earn what you'd earned in a hour a few years ago?</p> <p>The gold bugs counter that we wouldn't see scenarios like that. The spike in the price of gold is due to a collapse in confidence in paper money. If the money were as good as gold, confidence wouldn't collapse and values would be relatively stable.</p> <p>There's some truth to that, but we know it's not completely true. During the gold standard in the 1800s and early 1900s, prices were pretty stable &mdash; but only on average, only over the long term. But short-term price swings produced just the sort of effect I'm describing.</p> <p>It could happen due to ordinary market forces. The supply of gold would fluctuate as new mines opened and old mines closed. The demand for gold would fluctuate as well &mdash; in particular, as exciting new overseas markets heated up, gold would flow to those countries to invest in the hot new thing. The result was a flow of gold out of established markets, producing just the sort of jump in the value of gold that I'm describing. Of course, it didn't show up as a price spike, but rather as <a href="http://www.wisebread.com/all-about-deflation">deflation</a>.</p> <p>So, it wasn't just a theoretical problem. It actually happened, over and over again.</p> <p>All these things &mdash; wars, financial disruptions of all kinds, inflation or deflation due to changes in the gold supply or changes in the demand for gold various places around the world &mdash; made the gold standard problematic. The worst was a particular kind of financial crisis called a panic.</p> <h2>The Problem of Panics</h2> <p>Panics happened when people began to doubt the soundness of their banks or their money and decided that they'd better turn in their paper and get actual gold coins instead. Because there was rarely as much gold in the vaults as there was paper in circulation, the result was a crisis.</p> <p>During the days of the gold standard, panics were perfectly ordinary &mdash; there'd be one every ten years or so. (We had something pretty close to a panic in 2007&ndash;2008, our first in something like 70 years. I wrote about it at the time in a post called <a href="http://www.wisebread.com/credit-squeeze-formerly-know-as-a-panic">Credit Squeeze (Formerly Known as a Panic)</a>.)</p> <p>Having sound banks that don't issue paper beyond the gold in their vault would reduce the severity of a panic, but that turns out to be a poor solution. There are reasons why banks issue more paper than they have gold, and it's not just because it's like printing money. Rather, it's because during good times, the amount of money that the economy can put to good use is larger than the value of the gold stock. The only way to have that much money in the economy would be to set the value of gold to be much higher &mdash; rather like setting the price of gold to levels that are only typical during a panic. That sounds great to a gold bug (who probably has a bunch of gold), but it doesn't work, because <em>that's not the price of gold</em>. The price of gold &mdash; the real, market price &mdash; is almost always much less than that.</p> <p>You <em>can</em> set a different price. You could, for example, set the price of a new gold dollar by dividing the US government's gold reserves (about 261 million troy ounces) into the total supply of currency in circulation (about 10,000 billion dollars) and suggest that a new gold dollar should be valued at $4,000 a troy ounce. Except that's not what gold is worth.</p> <p>You could set the current market price (about $1,600 a troy ounce), but even that is the price level based on the current near-panic conditions about the value of the dollar.</p> <p>If people weren't worried about the future of the dollar, the global economy, the deficit, the debt ceiling, the European debt crisis, etc., I suspect the price of gold would be pretty close to the $300 a troy ounce that we saw through most of the 1990s.</p> <p>(You'd think that gold bugs of the libertarian sort would understand that prices are set by the market, rather than by government fiat. But for all they rag on fiat currency &mdash; that is, money that only has value because the government says it does &mdash; they seem utterly oblivious to the notion that denominating gold in dollars is another fiat decision.)</p> <p>And that's the problem with a gold standard. There isn't one true price for gold. The right price &mdash; the market price &mdash; surges and collapses with the psychology of the market. You can let your whole economy get dragged around by that &mdash; most of the world did for centuries &mdash; but don't imagine that they did so without difficulty. They had panics, they had inflation, they had deflation, and they had all manner of crises when gold flows caused by booms in far off parts of the world threatened to crush local economies.</p> <h2>The End of the Gold Standard</h2> <p>When things got particularly bad &mdash; usually either a war or some sort of financial crisis &mdash; banks or governments would suspend convertibility into gold. If both the country and the currency survived, convertibility would eventually be restored. If just the country survived, a new convertible currency would be introduced (the old currency by then being nothing but waste paper).</p> <p>In the depths of the Great Depression, the U.S. took a slightly different path. In 1933, instead of suspending convertibility, the government banned the private ownership of gold, requiring citizens to turn in their gold in exchange for banknotes at the then current gold price of $20.67 per troy ounce. Shortly thereafter the value of the dollar was changed to a new parity of $35 per troy ounce. Convertibility was preserved (although only for foreigners), but at the new parity gold flowed into (rather than out of) the United States.</p> <p>Gold ownership by U.S. citizens wasn't legalized until 1974.</p> <p>In the run-up to World War II, the last few countries that had tried to stay on the gold standard had to suspend convertibility. Since then, essentially no currency has been convertible into gold &mdash; they're all fiat currencies. (For a few decades after the war, the U.S. dollar was technically convertible &mdash; but only for foreign central banks).</p> <p>It turns out a good fiat currency can avoid most of the problems of a gold standard. Our fiat currency hasn't always been good, but it's been doing sorta okay for a long while now.</p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/philip-brewer">Philip Brewer</a> of <a href="http://www.wisebread.com/understanding-the-gold-standard">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-1"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/behind-the-times-i-learn-about-keep-the-change">Behind the Times - I learn about Keep the Change</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/how-one-mediocre-investor-prospered-after-the-market-crash">How One Mediocre Investor Prospered After the Market Crash</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/5-times-its-ok-to-pause-saving-and-investing">5 Times It&#039;s OK to Pause Saving and Investing</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/4-foolproof-ways-to-protect-your-money-from-inflation">4 Foolproof Ways to Protect Your Money From Inflation</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/6-ways-to-get-paid-for-saving-money">6 Ways to Get Paid for Saving Money</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Banking Investment financial crisis gold history Tue, 26 Jul 2011 10:00:05 +0000 Philip Brewer 631641 at http://www.wisebread.com Things Don't Cost What They Used To: 10 Major Price Shifts in 2010 http://www.wisebread.com/things-dont-cost-what-they-used-to-10-major-price-shifts-in-2010 <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/things-dont-cost-what-they-used-to-10-major-price-shifts-in-2010" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/iStock_000013173328XSmall.jpg" alt="Corn" title="Corn" class="imagecache imagecache-250w" width="250" height="166" /></a> </div> </div> </div> <p>With 2010 coming to a close, it's interesting to check out just how much more it costs to buy common goods and assets compared to the beginning of the year. We hear conflicting stories about the Fed printing money, which should lead to inflation, contrasted with two straight years of no cost-of-living increases for Social Security. While the &quot;official&quot; inflation gauges seem to indicate we have very little inflation in the system, take a look at these everyday items and form your own conclusions:</p> <h3>Oil: Up 25%</h3> <p>The rise in oil prices has been the sleeper inflation story of the year. With Americans practically shrugging off oil under $100 when we saw a superspike over $140 just a few years back, oil has been steadily rising all year without much fanfare.</p> <h3>Gasoline: Up 24%</h3> <p>The big move in oil prices this year carried through into gasoline prices. While there's more involved here, from refining capacity to varying state taxes, for 2010, gasoline prices roughly kept pace with oil. We're only at $3 gas now compared to the <a href="http://www.wisebread.com/what-will-you-do-when-gas-hits-4-per-gallon">$4 gas nightmare</a> still burned into our psyche.</p> <h3>Corn: Up 53%</h3> <p>Corn is just one of the &quot;soft commodities&quot; that saw a spike in 2010.&nbsp;</p> <h3>Sugar: Up 29%</h3> <p>Another key staple, we saw a rise in sugar prices over the year, especially as of late.</p> <h3>Cotton: Up 109%</h3> <p>There was a huge move in cotton this year, which should certainly be showing up in clothing prices in 2011 if this doesn't subside.</p> <h3>Coffee (Arabica): Up 64%</h3> <p>Coffee is hot. Consumption is increasing virtually everywhere as emerging markets form a new middle class and switch over from tea. &nbsp;Just when you thought a town or city couldn't sustain another coffee shop, another one pops up &mdash; kind of like banks and pharmacies. Have you ever calculated&nbsp;<a href="http://www.wisebread.com/how-to-save-1500-on-coffee">how much you spend on coffee each year</a>? Scary!</p> <h3>Lumber: Up 47%</h3> <p>It's not like we're building a ton of houses this year, but we've seen lumber spike significantly.</p> <h3>Gold: Up 26%</h3> <p>Gold was the story of 2010. From late-night infomercials to new ATM machines spitting out gold coins, consumers were bombarded with commercials and &quot;experts&quot; telling us we should buy gold now (check out this <a href="http://www.wisebread.com/so-will-cash4gold-offer-me-cash-to-kill-this-story">Cash-4-Gold expose</a> for instance).</p> <h3>Silver: Up 73%</h3> <p>What many people didn't catch on to until later in the year was the silver story (poor man's gold). For various reasons, silver is more volatile than gold and this year, we saw silver almost double.</p> <h3>Euro: Down 9%</h3> <p>One of the few positive stories for Americans was the decline in the Euro. This makes it that much cheaper to travel to Europe in 2011, as well as to import European goods. This is primarily due to Europe's folly, not a robust U.S. Dollar though. The bailouts of Greece and Ireland, with rumors that Portugal and Spain are soon to follow, have set off jitters in the currency markets, making the U.S. Dollar look a little less risky.</p> <p>So, while there's talk of deflation and Ben Bernanke told us on <em>60 Minutes</em> that he's 100% confident he can control inflation, chances are you are a routine consumer of at least some of the items on the list above...do you feel like things are getting cheaper? I don't. There are tons of different <a href="http://www.wisebread.com/etfs-offer-incredible-benefitswith-a-dark-side">commodity ETFs</a> to trade or hedge costs in many of these assets, but that may be best left to the pros unless you're actually in the business of purchasing these items &mdash; or you have a serious coffee addiction!</p> <p><em>Don't you feel like life is getting more expensive?</em></p> <p><em>Sources: <a href="http://markets.ft.com/ft/markets/commodities.asp">Financial Times</a> , <a href="http://www.bloomberg.com/markets/commodities/futures/">Bloomberg</a> </em></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/darwins-money">Darwins Money</a> of <a href="http://www.wisebread.com/things-dont-cost-what-they-used-to-10-major-price-shifts-in-2010">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-1"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/could-trump-bring-higher-interest-rates-and-inflation-consider-these-money-moves">Could Trump Bring Higher Interest Rates and Inflation? Consider These Money Moves</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/can-a-little-inflation-be-good">Can a Little Inflation Be Good?</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/how-to-live-with-inflation">How to live with inflation</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/why-inflation">Why Inflation?</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/gold-as-an-investment">Gold as an investment</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Financial News euro gold inflation Mon, 27 Dec 2010 13:00:08 +0000 Darwins Money 410391 at http://www.wisebread.com Money making hobby: panning for gold http://www.wisebread.com/money-making-hobby-panning-for-gold <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/money-making-hobby-panning-for-gold" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/gold.jpg" alt="Gold flakes" title="gold flakes" class="imagecache imagecache-250w" width="250" height="188" /></a> </div> </div> </div> <p>Lately many Californians have been heading to the rivers and streams to prospect for gold. The increase in people taking up this activity has some newspapers writing about &quot;<a href="http://www.usatoday.com/news/offbeat/2009-04-02-goldpanning_N.htm">the new gold rush</a>&quot;.&nbsp; Although very few people can make a living off of finding gold, it is a decent money making hobby since gold is worth around $900 an ounce currently.&nbsp; Here is how you can get in on the action.</p> <p> First of all, you need to find out where you can legally prospect for gold.&nbsp; National&nbsp; parks are off limits, but there are still lots of public land where you can look for minerals.&nbsp; You should research mining records and public land records at your local Bureau of Land Management if you are serious about finding gold.&nbsp; You can also stake a <a href="http://www.theprospector.com/html/howtostakeclaims.html">mineral claim on Federal lands</a> in 19 states to prevent others from digging in your spot.&nbsp;&nbsp;&nbsp; Usually other prospectors will not tell you where they hunt for gold so it is up to you to find your own sweet spot. An easy way to get started is to join a prospecting club that already has mineral claims on lots of land.</p> <p>Next, you would need some tools.&nbsp; A simple gold pan is enough for sifting gold from streams.&nbsp; You also need a plastic container to hold the gold you find.&nbsp; A magnifying glass and a pair of tweezers would also help&nbsp; with extracting the tiniest pieces of gold. A shovel also helps in digging up sediment.&nbsp;&nbsp; More serious gold hunters also use metal detectors and dredges to suck up gravel.&nbsp; However, if you are just starting out you probably would not want to invest heavily in machinery, yet.</p> <p>As a final step you would head out to the site to pan for gold as the weather allows.&nbsp; This activity is actually pretty labor intensive and requires a lot of patience. You should not expect to find a lot on the first outing, but it is good exercise and you will most likely be somewhere with fresh air.&nbsp; Your gold yield&nbsp; may get better as you learn more about prospecting, but as long as you enjoy the adventure the monetary rewards will probably come second.&nbsp; Many <a href="http://www.sheboyganpress.com/article/20090325/SHE0101/903250385/1973/SHE0204">weekend prospectors have met good friends</a> through the hobby, and those friendships are&nbsp; more valuable than the little shiny specks they find.</p> <p><em>Have you ever gone out to hunt for gold and other treasures?&nbsp; What is the most rewarding part of your hobby?</em></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/xin-lu">Xin Lu</a> of <a href="http://www.wisebread.com/money-making-hobby-panning-for-gold">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-2"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/make-your-hobby-pay-its-way">Make Your Hobby Pay Its Way</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/if-youve-got-an-area-of-excellence-rich-can-be-arranged">“If you&#039;ve got an area of excellence…rich can be arranged.”</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/hoopde-for-sale-starting-price-500-winning-bid-226521">Hoopde for sale. Starting price - $500. Winning bid - $226,521.</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/the-secret-really-does-have-a-secret-or-ten-tenets-for-arranging-your-rich-part-3">The Secret Really Does Have A Secret (or Ten Tenets for Arranging Your Rich - Part 3)</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/my-disgusting-fake-game-show-asks-what-would-you-do-for-money">My disgusting fake game show asks &quot;What would you do for money?&quot;</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Lifestyle gold hobby Making Extra Cash money treasure Thu, 09 Apr 2009 20:49:28 +0000 Xin Lu 3030 at http://www.wisebread.com So, will Cash4Gold offer me cash to kill this story? http://www.wisebread.com/so-will-cash4gold-offer-me-cash-to-kill-this-story <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/so-will-cash4gold-offer-me-cash-to-kill-this-story" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/1565420749_283e7c15ed_b.jpg" alt="Pirate gold" title="Pirate Gold" class="imagecache imagecache-250w" width="250" height="219" /></a> </div> </div> </div> <p class="rteindent3">You&rsquo;ve seen the tacky ads; you&rsquo;ve been entertained by Ed McMahon and MC Hammer; but hopefully, you haven&rsquo;t fallen for any of it. Cash4Gold has a simple promise; send them your unwanted gold (and we all have a ton of unwanted valuables lying around I&rsquo;m sure) and in return they&rsquo;ll pay &ldquo;top dollar&rdquo; for it.&nbsp; But as you&rsquo;ll see from over 260 complaints to the <a href="http://www.seflorida.bbb.org/BusinessReport.aspx?CompanyID=16000679">Better Business Bureau</a>, top dollar certainly doesn&rsquo;t mean what it used to.</p> <p>The Cash4Gold operation is at best misleading, and at worst is more like a sophisticated version of highstreet robbery. What they ask you to do is hunt around in your home for gold that you no longer have a use for, and pop it into an envelope. In return, Cash4Gold will estimate its value and send you an offer for it. You can choose to accept it or turn it down. And as the offer is usually well below market value, most people reject it and get a slightly better offer. <a href="http://www.insideedition.com/news.aspx?storyID=2588">This from Inside Edition</a>:</p> <p><em>INSIDE EDITION's Senior Investigative Correspondent Matt Meagher asked master appraiser and jewelry expert Don Palmieri to assemble a collection of gold, 23 pieces in all, to sell to the company Cash4Gold. Each piece was weighed and analyzed with precision instruments to determine exact gold content, and laser etched for identification purposes. Based on the going rate for gold at the time of INSIDE EDITION's investigation, Palmieri and a second independent expert said we should get between $975 to $1,200 for the 23 pieces of gold in our collection. So we sent the gold off to Cash4Gold to see how much they would pay. About a week later, a check came for just $209.81. Expert Don Palmieri laughed when he saw the amount. &quot;It's not a very good offer,&quot; he said. When INSIDE EDITION called to turn down the offer, Cash4Gold nearly doubled it instantly to more than $400, still much less than the experts said it was worth.</em></p> <p>The ads are generally aimed at certain sectors of society, which is clear from the times and channels where their advertising appears. They want people who are at home during the daytime, usually retirees or people down on their luck. And they&rsquo;re hoping people will be ignorant to the current market value of gold. A great story I read at <a href="http://www.cockeyed.com/citizen/goldkit/cheat.shtml">Cockeyed.com</a> highlights one guy&rsquo;s encounter, Brent, with the Cash4Gold lowballers. Here&rsquo;s an extract: </p> <p><em>The pawn shop prices were as follows:
$10 per DWT for 14K gold.
$8 per DWT for 10K gold. With these prices, Brent's booty was worth $198.
He had $110 worth of 14 K gold plus $88 worth of 10 K gold.<br /> Brent had initially noted prices on the Cash4Gold site as:
$15 per DWT for 14K gold.
$13 per DWT for 10K gold. Better, but all any prices had been removed from the Cash4Gold site by the time he was ready to send in his gold.<br /> Cash4Gold operates in a manner similar to GoldKit. They send you an envelope, you send your gold to them in it. They determine the value and cut a check for that amount. If the amount meets your expectations, you cash it. If not, you have 15 days to return the check and get your gold back. Your satisfaction is guaranteed. He also noticed that Cash4Gold offers a &quot;fast cash&quot; scheme to forego the paper check and deposit their payment directly into your checking account within 24 hours. This setup would be faster, but gold sellers would give up their chance to examine and renegotiate their offer. And that, it turns out, would be a huge mistake for anyone selling gold to Cash4Gold. Brent did not use the FAST CASH option, he wanted to see what they would offer, and was willing to wait to see how much it was. The offer check from Cash4Gold arrived, for $60! Brent called Cash4Gold and immediately and asked for his stuff back. They made a new offer on the phone: $178!</em></p> <p>I think the phrase that resonated most strongly for me from the article was this one; &ldquo;How can you offer someone one price, then TRIPLE it, and not call the first offer a rip-off?&rdquo;</p> <p>How indeed?</p> <p>At this point I would usually warn you all to stay as far away from Cash4Gold as you can, and bid you a good day. But there&rsquo;s now an interesting new twist to this sordid tale. As it turns out, some of the many people out there who are writing bad things about this shady outfit are getting noticed; they&rsquo;re appearing in the top searches on Google. And in turn, that has the Cash4Gold guys getting pretty nervous. </p> <p>An article I found on <a href="http://www.boingboing.net/2009/02/03/rob-cockerham-writes.html">BoingBoing </a>tells the story of a guy, not unlike myself, who tries to keep consumers informed. And his story on Cash4Gold was met with an offer from them to pull his story in exchange for cold, hard cash. I wish I were making it up. Here is one of the letters Rob Cockerham received:<br /> <em><br /> Rob,<br /> I work with Cash4Gold on the reputation management. Your article is ranking #3 on their brand term. They would really like to make it worth your while to take it down or make it more positive. They did something similar by joining (OTHER CONSUMER AFFAIRS WEBSITE)&rsquo;s advocacy program. Is it worth a few thousand to take it down? If not, maybe a donation to your favorite charity is more to your liking?<br /> Feel free to call me anytime to discuss further.</p> <p>Thanks, <br /> Joe Laratro 
<br /> President 
<br /> Tandem Interactive - Trendy Online Marketing Solutions <br /> Hollywood, FL 33020</em></p> <p>This is a new low. And what&rsquo;s even more concerning is that other sites with your interests at heart have taken the bribe and pulled the story. Outrageous is too small a word. I popped over to The Consumerist to see what they had on Cash4Gold. And yes, they had plenty, including <a href="http://consumerist.com/5144296/10-confessions-of-a-cash4gold-employee">this article in which a former Cash4Gold employee tells all</a> (no doubt to repair a very bruised conscience). I advice you to read the full article, but here's an extract:</p> <p><em>I am a former employee of Cash 4 Gold. I did not know much about the company before being hired. On my first day of being hired, I was taught the &quot;Cash 4 Gold Scam&quot; from beginning to end. </em></p> <p><em>5. We do offer a 100% Satisfaction Guarantee or your jewelry returned, BUT THE CATCH IS, that the guarantee is to contact us within 10 DAYS from when your check is DATED. (This begins with the time it took for the accounts payables dept. to ISSUE the check and also including the TRANSIT TIME for you to receive your check in the mail. **** NOTATE THE COMMERCIALS THAT INSINUATE THAT YOU GET YOUR CASH IN 24 HRS.*** If you request (sign) for FAST CASH (direct deposit) you automatically WAIVE your rights to have your items returned, EVEN if you are not satisfied with amount of your deposit.</em></p> <p><em>6. You generally receive your check around the &quot;7th-10th&quot; business day, AND majority of the time Customers are outraged when they lay eyes on the amount of their check. Some Customer's even receive a check for 0.01 cents.</em></p> <p>So, Wise Bread readers, spread the word. Let everyone you can know that Cash4Gold is not only a very shady organization with whom you shouldn&rsquo;t trust you valuables, but it&rsquo;s also one who will attempt to pay off people who try and tell the truth. If I do get an offer from the Cash4Gold people to pull my article, I'll let you know. And of course, I would never take it anyway, even for my favorite &quot;charity!&quot;</p> <p>And folks, if you want money for your gold, try your local pawn shop. If you don&rsquo;t like their offer, walk away with your gold; perhaps sell it on eBay or Craigslist. But never pop it in an envelope and mail it to this company&hellip;you may never see it again, or be offered a paltry amount of money in return. <br /> &nbsp;</p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/paul-michael">Paul Michael</a> of <a href="http://www.wisebread.com/so-will-cash4gold-offer-me-cash-to-kill-this-story">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-3"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/beware-the-nasty-secret-of-the-craigslist-free-section">Beware, The Nasty Secret Of The Craigslist Free Section</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/the-mystery-shopping-scam-that-could-cost-you-a-fortune">The mystery shopping scam that could cost you a fortune.</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/five-quick-and-simple-scams-that-could-happen-to-you-today">Five quick and simple scams that could happen to you today</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/the-jury-duty-scam-coming-to-a-phone-near-you">The Jury Duty Scam – coming to a phone near you?</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/the-vicious-home-rental-scam-dont-get-conned">The vicious Home Rental Scam – don’t get conned.</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Consumer Affairs Cash4Gold con gold money scam warning Thu, 05 Feb 2009 17:49:37 +0000 Paul Michael 2816 at http://www.wisebread.com Book review: Game Over http://www.wisebread.com/book-review-game-over <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/book-review-game-over" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/game-over-cover.jpg" alt="Cover of Game Over by Stephen Leeb" title="Cover of Game Over by Stephen Leeb" class="imagecache imagecache-250w" width="250" height="377" /></a> </div> </div> </div> <p><a href="http://www.amazon.com/gp/product/0446544809?ie=UTF8&amp;tag=wisbre08-20&amp;linkCode=as2&amp;camp=1789&amp;creative=390957&amp;creativeASIN=0446544809"><em>Game Over: How You Can Prosper in a Shattered Economy</em></a> by Stephen Leeb.</p> <p><em>Game Over</em> makes that case that we're running into resource limits on every front--energy, metals, water--and that this problem is going to affect everything we do. Then, it looks at what can we do about it, as individuals and as a society.</p> <p>The book breaks down into four sections.</p> <p>The first lays out the case that we're running into resource limits on every front. The second suggests that we, as a society, may well be able to do something about this--but only if we're clever and foresightful. The third looks at some issues related to the way we've been running the economy for the past few years. The fourth suggests a bunch of things individuals might do, to position themselves so that their finances don't get too beaten up by the problems.</p> <h2>Peak oil (and peak lots of other stuff)</h2> <p>Part one begins with peak oil, but then expands on that issue by pointing out that we're hitting limits with many other resources as well--metals, water, etc.</p> <p>It's no surprise that we're hitting so many limits at once. For almost any resource there are partial substitutes. The end result of going down that path, though, is that the substitutes get used wherever they're adequate--meaning that eventually they'll hit a limit as well. If you aggressively substitute the cheapest alternative in every case--which is exactly what happens in a free market--pretty soon all your resources will be pushing up against their own limit.</p> <p>Leeb lays out the case for peak oil pretty well. At some point--roughly at the point when half the oil has been produced from a field--that field hits a peak: it produces more oil than it has ever produced before or will ever produce again. This is clearly true of individual fields--we've seen it over and over again, all over the word. It is also clearly true of countries. The United States hit its peak in 1970. Since then, even with the addition of oil from Alaska, we've never produced as much oil again. It is true of the world as a whole as well--add up all the production from all the fields, each one eventually hitting its own peak, and at some point the planet hits a peak. Every year after that, the world will produce a bit less oil than the year before.</p> <p>Besides laying out the case for peak oil, Leeb introduces another concept that he calls &quot;absolute peak oil,&quot; by which he means that point at which it takes more energy to produce a barrel of oil than you'll get by burning the oil. It's an important concept, although I don't think Leeb develops it very well.</p> <p>The concept he's referring to is the &quot;energy return on energy invested,&quot; usually abbreviated EROEI. When your EROEI is less than one--when the energy produced is less than the energy it took to produce it--whatever you're doing is no longer an energy source. Of course, that doesn't make it worthless. Batteries, for example, have an EROEI of less than one--it takes a lot more energy to construct a battery and deliver it to you than your battery-powered device will ever get out of it. But that's okay. Batteries are an energy <strong>delivery</strong> mechanism, not an energy <strong>production</strong> mechanism. As long as people will pay more for a battery than it costs to make it, people will keep making batteries.</p> <p>Peak oil will start to bite long before we hit that point. Once we hit the peak, the world as a whole will have to burn a bit less oil each year than the year before. The consequences for how people live will be enormous.</p> <h2>Alternatives</h2> <p>Part two talks about the development of alternative sources of energy, and the key message is that many alternatives that look possible simply don't scale, because of limits in other resources.</p> <p>Wind, for example, could replace most of the energy that we get from oil. The EROEI for a wind turbine is pretty good. But there's a huge capital investment--you need to build towers, turbines, and generators. You can build hundreds of wind turbines no problem, but if you tried to build enough wind turbines to replace the energy we get from fossil fuels, you start running out of things like steel to build them out of.</p> <p>All the alternatives have similar issues. Try to replace oil with ethanol and you start running out of land and water (and, in the shorter term, food). Try to replace oil with tar sands, and you run out of natural gas and water.</p> <p>The key take-away from part two of Leeb's book is that there are many possibilities for alternative energy production, and that many of them will work to some extent, but that we need to look very seriously at which ones can be scaled up to produce enough energy to make a difference without hitting other resource limits.</p> <p>I should add that this part of the book has Leeb's worst misstep. He talks about conservation as part of the basket of choices to get us through the rough patch where resource limits really start to bite--and then thoughtlessly dismisses the notion on the grounds that our conservation probably just makes the energy cheaper, so other people will use it up all the faster.</p> <p>The point he misses (and he's certainly not the only person to make this mistake) is that the goal of conservation is not to &quot;stretch out&quot; the depleting supply for a while longer. The point is to find a balance between the production of energy and the use of energy.</p> <p>It's sad that he couldn't take this step, as it follows rather directly from his previous point--that if we try to build enough windmills to replace the energy we get from oil, we run out of steel. Suppose, though, we could build some windmills--enough to replace a fraction of the energy we get from oil. Suppose we could also get modest-but-significant amounts of energy from other renewable sources (photovoltaics, biofuels, geothermal). The point of conservation is to find a way to live comfortably <strong>using only that much energy</strong>. Duh!</p> <h2>Inflation</h2> <p>The third section talks about the economy, making the case that inflation will be the big economic problem over the next few years, and that it won't be easy to deal with.</p> <p>The central banks have made the determination of late that inflation is the safer risk. We know how to end inflation, so it's safe to risk a little inflation in an effort to avoid a depression. Leeb says that this isn't going to work. Yes, we know how to stop inflation--but only by causing a recession. If the economy is already in a recession, the central banks will never make that worse just to end inflation.</p> <p>There is, of course, the key counter-example of the policies of the Federal Reserve under Paul Volker in the late 1970s and early 1980s. Leeb's analysis, though, is that we were in better shape then to tolerate the disinflation, but that we're not now.</p> <p>Personally, I hope he's wrong--and I think there's a good chance he is. In a recession, the pain hits some much worse than others--business owners suffer, workers who lose their jobs suffer. In an inflation, the pain hits everybody, but it especially hits people with money. To the extent that &quot;people with money&quot; have power within society, I think eventually the pain of a bad inflation will push policy maker's to grind the inflation out of the system, even at the cost of a recession.</p> <h2>Investments</h2> <p>The last section of the book is on investments. It's informed by his thinking on inflation, so one key suggestion is gold. He suggests a variety of companies that should make money as we try to build out alternative energy production facilities, and he suggests some companies that will thrive as developing countries (where they use less energy than the rich countries do) continue to grow.</p> <p>On balance it's a good book. Certainly it's right about the problem. It also has a thoughtful (if limited) look at the range of possible solutions. His economic analysis is different from mine, which leads to different investment suggestions than I would make, but that's really the least important part of the book (and time may yet prove that he's hit closer to the mark than I).</p> <p>If you're interested in learning more about how limits in energy and other resources are going to affect us, and how we might address those problems both as individuals and as a society, <a href="http://www.amazon.com/gp/product/0446544809?ie=UTF8&amp;tag=wisbre08-20&amp;linkCode=as2&amp;camp=1789&amp;creative=390957&amp;creativeASIN=0446544809"><em>Game Over</em></a> is a good place to start.<br /> &nbsp;</p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/philip-brewer">Philip Brewer</a> of <a href="http://www.wisebread.com/book-review-game-over">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-4"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/book-review-farewell-my-subaru">Book review: Farewell, My Subaru</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/book-review-cash-rich-retirement">Book review: Cash-Rich Retirement</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/book-review-the-only-investment-guide-youll-ever-need">Book review: The Only Investment Guide You&#039;ll Ever Need</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/book-review-in-defense-of-food">Book review: In Defense of Food</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/book-review-the-little-book-of-common-sense-investing">Book review: The Little Book of Common Sense Investing</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Green Living Investment book review books energy gold investing peak oil review sustainability sustainable living Sun, 11 Jan 2009 18:45:29 +0000 Philip Brewer 2734 at http://www.wisebread.com Why invest in the stock market? http://www.wisebread.com/why-invest-in-the-stock-market <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/why-invest-in-the-stock-market" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/nyse_1.jpg" alt="New York Stock Exchange" title="New York Stock Exchange" class="imagecache imagecache-250w" width="250" height="235" /></a> </div> </div> </div> <p>The conventional reason for investing in the stock market--perhaps offered with a bit less confidence now that we're in the midst of a stock market crash--is, &quot;It offers higher returns.&quot;&nbsp; But that gets us ahead of ourselves.&nbsp; We can learn a lot by taking a couple of steps back and looking first at our financial goals.</p> <p>Most people have a long list of financial goals, starting with things like paying the rent, putting food on the table, keeping the lights turned on, and so on.&nbsp; Work your way down the list and you get to things like replacing the old car, buying a house, putting the kids through college, and (sooner or later) retiring.</p> <p>Most people's wants, if you list them all out like that, will exceed their expected lifetime earnings (even before including the Ferrari, apartment in Paris, yacht, and private jet).&nbsp; And <strong>that's</strong> why people so automatically shoot for investments that offer the maximum returns--outsized returns are their only hope of satisfying all their wants.</p> <p>That thinking, though, leads people to make all sorts of poor choices.</p> <p>As a thought experiment, imagine someone whose wants could be comfortably satisfied by his or her income.&nbsp; (Since wants tend to expand without limit, I admit this is a bit tricky, but give it a try.)&nbsp;&nbsp; Such a person wouldn't need to invest at all (beyond establishing an emergency fund).&nbsp; In fact, investments would only make sense in the context of some particular goal--leaving a legacy for example.</p> <p>I'd like to suggest that this is really true of everyone.&nbsp; You just lead yourself astray if you line up all your wants on one side, and then create an aggressive portfolio on the other, hoping for some big wins to bridge the gap between your income and all the stuff you want.</p> <p>Note that I'm <strong>not</strong> suggesting that you <a href="http://www.wisebread.com/the-one-big-lump-theory-of-your-money">target particular investments to specific goals</a>--that's definitely the wrong approach.&nbsp; Your entire investment portfolio supports all your goals.&nbsp; Rather, the defect is in letting your wants grow without bound, putting you in a situation where the sum of your income and the return to ordinary saving still doesn't add up to enough to satisfy them.</p> <p>Now, it's fine to have some out-of-reach desires.&nbsp; (For example, I'd like to have a private rail car, which although much cheaper than a private jet, is still likely to be forever beyond my means.)&nbsp; The problem is letting them get out of control in a way that distorts your entire investment strategy.</p> <p>My suggestion is that you classify your wants into the important ones and the unimportant ones--and that the portion of your portfolio that's going to fund the important ones needs to be conservatively invested.</p> <p>Lots of people have made the point that the stock market is no place for money that you expect to need in the next 5 years.&nbsp; The events of the past year suggest that maybe an even longer period is in order.&nbsp; If you're prepared to delay your retirement by 5 or 10 years in order to have a shot at retiring 5 or 10 years early, then an aggressive investment strategy may be in order.&nbsp; The same sort of thinking is probably not appropriate for your college savings or the down payment on a new car.</p> <p>Here are some thoughts on some specific categories of investments:</p> <ul> <li><strong>Cash</strong> isn't much of an investment--but it's what you actually need when you're ready to spend.&nbsp; Your emergency fund should be in cash (money market fund, high-rate savings account, t-bills, etc.).</li> <li><strong>Short-term bonds</strong> rarely yield much more than cash--but they're a good choice for money that you're going to need at some particular time in the near future.&nbsp; (For example, as your kid approaches high school, it might make sense to start moving his college savings into short-term bonds with maturity dates that match the tuition bills.)</li> <li><strong>Long-term bonds</strong> are very vulnerable to inflation, but can be a great investment when the coupon is high enough to provide a good return over whatever inflation turns out to be.</li> <li><strong>Inflation-adjusted bonds</strong> are an excellent investment, except when the after-inflation return is very low--which it had been for the past several years.&nbsp; Happily, the return on <a href="/tips-and-i-bonds">TIPS</a> has surged in just the past few weeks, making these an investment well worth considering.&nbsp; (They are vulnerable in a deflation, which is probably why the return has shot up.)</li> <li><strong>Gold</strong> is a store of value.&nbsp; There's good reason to hope that your investment in gold will maintain its value, but little reason to hope that it will grow in value.&nbsp; (Although the gold price will go up if there's inflation--and just staying even with inflation can be tough with other investments.&nbsp; Still, don't expect a return from gold that will fund any of those wants on your list.)</li> <li><strong>Stocks</strong> are the classic investment.&nbsp; Prices are down right now, but the looming recession will probably mean that profits will be low as well.&nbsp; If you've got a 10-year time horizon, stocks are a good choice.</li> <li><strong>Real estate</strong> is another classic investment, but be careful not to delude yourself.&nbsp; As an investment, your home is worth whatever it lets you avoid paying in rent.&nbsp; Properties that you rent out are definitely investments--but being a landlord is as much like having a second job as it is like owning an investment like stocks or bonds.</li> </ul> <p>To answer the question I started with, the reason to invest in stocks to earn a higher return is that it lets you <em>satisfy wants that you couldn't otherwise afford.</em>&nbsp; But those higher returns come with higher risks--risks that mean that maybe those wants won't be satisfied at all.</p> <p>As recent events have made clear, the average return for the stock market may be higher than the average return of most other investments--but that doesn't mean that you can plug the average return into your plans and have any expectation that you'll get that return in any particular year.&nbsp; Even if you have a long time horizon, stocks may be down right when you're ready to spend the money.</p> <p>I guess you don't need me to tell you that. </p> <p>Do some thinking about your wants.&nbsp; A shot at high returns in the stock market makes good sense for funding some of your wants--especially the less important ones (the sports car) and the longer-term ones (early retirement).&nbsp;&nbsp; But for the important ones, and the ones with shorter time horizons--arrange to cover those without relying on outsized investment returns. &nbsp;</p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/philip-brewer">Philip Brewer</a> of <a href="http://www.wisebread.com/why-invest-in-the-stock-market">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-1"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/8-ways-to-prepare-for-a-stock-market-dive">8 Ways to Prepare for a Stock Market Dive</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/how-to-make-sure-you-dont-run-out-of-money-in-retirement">How to Make Sure You Don&#039;t Run Out of Money in Retirement</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/how-the-risk-averse-can-get-into-the-stock-market">How the Risk Averse Can Get Into the Stock Market</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/7-reasons-youre-never-too-old-to-buy-stocks">7 Reasons You&#039;re Never Too Old to Buy Stocks</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/what-you-need-to-know-about-the-easiest-way-to-save-for-retirement">What You Need to Know About the Easiest Way to Save for Retirement</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Investment bonds gold mmf money market funds needs real estate stocks wants Mon, 27 Oct 2008 12:24:01 +0000 Philip Brewer 2547 at http://www.wisebread.com How to live with inflation http://www.wisebread.com/how-to-live-with-inflation <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/how-to-live-with-inflation" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/balloon-inflation_1.jpg" alt="Balloon inflating" title="Balloon Inflating" class="imagecache imagecache-250w" width="250" height="227" /></a> </div> </div> </div> <p>Of the various ills the economy can face, inflation is simultaneously the worst for society as a whole, and yet the easiest for individuals to deal with successfully. The strategies for dealing with inflation are pretty straightforward. </p> <p>In theory, inflation shouldn&#39;t matter at all, as long as it is predictable. If you know that inflation is going to be 10% next year, you demand a 10% raise (and your boss gives it to you, because he knows that 10% inflation means that the raise doesn&#39;t cost him anything). Everybody else does the same and prices, wages, interest rates, stock market returns, etc. are all 10% higher, even though in real terms everyone is standing still.</p> <p>In practice, of course, it isn&#39;t so simple:</p> <ul> <li>Just because you demand a raise that matches inflation doesn&#39;t mean you&#39;ll get it.</li> <li>When inflation is bad, prices go up every month (maybe every week), but wages and salaries generally only go up once a year. People are always feeling like they&#39;re playing catch up.</li> <li>Inflation is never really predictable. Everybody has their own guess about what inflation will be, and most of them will be wrong. Whether your estimate is high or low, you&#39;ll have problems to the extent that you&#39;re wrong. Even if you&#39;re wrong in a good way, such as having negotiated a 10% raise when inflation turned out to only be 8%, you&#39;re still in trouble (maybe your company has to lay you off).</li> <li>Taxes are imposed on nominal returns, so you can find yourself in the perverse situation of losing money in real terms, and yet still paying taxes on supposed profits.</li> </ul> <p>For individuals, the strategies for dealing with inflation are:</p> <ol> <li>Be careful about holding cash. This is a big change for people who have come of age since 1981 or so--since then, holding cash has been a perfectly reasonable thing to do. People whose saving and investing experience includes the 1970s, though, remember having a bank account that was earning 5% interest rates that was nevertheless worth 5% <strong>less</strong> at the end of the year.</li> <li>Don&#39;t make long-term, fixed rate loans. Until the inflationary period is over, don&#39;t buy bonds. High inflation rates completely destroy the value of long-term bonds. The flip side of this is that borrowing money on a long-term, fixed rate basis (such as a mortgage) can make good sense, if you can get good rate. There are a lot of people who bought a house with a 30-year mortgage at a fixed 6% or 7% and held as rates went up to 14% or higher. They made out like bandits.</li> <li>Invest in &quot;stuff&quot; rather than in money. This can be gold (although I&#39;d hesitate to establish a position at these prices). Even better is <a href="/huge-tax-free-investment-returns">stuff that you&#39;re going to use anyway</a>. If you&#39;re going to use it anyway, and you can get it at a good price now, it makes a great deal of sense to buy stuff now, rather than save cash and then buy it later.</li> <li>Invest for long-term capital gains. Inflation tends to produce illusory profits: you look like you&#39;re making a profit even when you&#39;re just keeping up with (or even failing to keep up with) inflation--and you have to pay taxes on those profits. This makes investing for income (where a large fraction of the income is really just keeping you even with inflation) a bad deal. It also makes short-term capital gains a bad deal for much the same reason--you have a big (taxable) gain, even if in reality you&#39;re just breaking even. Investing for long-term capital gains helps with these issues.</li> <li>Use barter and the informal economy. If your neighbor hires you to help him create a website and you hire him to help you cut down a diseased tree next to your driveway, you both owe income taxes on whatever you&#39;re paid. If you instead swap these services informally, you <strong>still</strong> owe the taxes, but you&#39;re expected to declare the income at its fair market value. It&#39;s perfectly reasonable, though, to declare the income at what the service would have been worth the previous year.</li> </ol> <p>For businesses, the strategies are similar, except that it&#39;s possible to greatly expand on that last point--use barter and the informal economy--by vertically integrating the company so that the steps of producing your product are all internal transfers rather than cash transactions with another company.</p> <p>If company A produces raw materials, company B refines them, company C builds sub-assemblies, company D makes consumer goods, company E ships them, company F wholesales them, and company G sells them to consumers at retail, imagine what happens as inflation forces prices up at each step along the way--producing illusory profits that each company has to pay taxes on. On the other hand, if <strong>one company</strong> handles the entire production chain, the only cash transactions are things like salaries and rents--that can be fixed for a year at a time. All the other transactions can be dealt with as an internal accounting matter, with no taxes due.</p> <p>In addition to vertically integrating, it also makes sense for businesses to reverse the trend toward outsourcing--instead of paying someone else to haul the trash away (a taxable transaction), haul your own trash away (an internal transfer that doesn&#39;t incur any taxes). Likewise, in-source anything you can--accounting, legal, maintenance, facilities, etc.</p> <h2>Damage to the economy</h2> <p>Inflation works its harm on the economy in several different ways. None of them are really due to the inflation itself, which is why economists always insist on pointing out that mere inflation does little harm. The harm is done, though. It&#39;s just one step removed.</p> <p>We&#39;ve already talked about the damage done when taxes are owed on the illusory profits on transactions that were break-even or worse. This drains money out of the economy at every transaction. The government can mitigate this harm in several different ways (cutting tax rates being the easiest, but also through any of a large variety of tax indexing or tax rebate schemes, special allowances, deductions, credits, etc.), but the capricious nature of where the harm lands (on transactions between parties, rather than on the economic activity itself) produces perverse incentives to agglomerate businesses together. This is not invariably bad, but it is often bad--you generally get maximum efficiency when each entity specializes, but you don&#39;t get enough efficiency to outweigh the tax disadvantages when inflation rates are high. </p> <p>Another way that inflation hurts the economy is that governments are highly prone to try to attack the <strong>symptom</strong> of inflation (rising prices) rather than the <strong>cause</strong> (money becoming less valuable). The usual tactics are price controls, wage controls, and various kinds of tax policies designed to punish wage and price increases (or reward companies that &quot;hold the line&quot; on prices and wages). These all harm the economy, because the price changes are just symptoms. All price ceilings do is produce shortages, because the market doesn&#39;t stop functioning just because the government creates a rule.</p> <p>The third big way that inflation harms the economy is that it creates uncertainty. The &quot;positive&quot; effects of inflation (increasing business activity) only come when inflation is higher than expected, so inflation rates tend to keep rising until they get so high that the negative effects become unbearable, at which point inflation gets ground out of the economy through a recession. Since no one knows just when that recession is coming or how bad it will be, people tend to be more cautious. The result is slower growth, less long-term thinking, and less long-term investment.</p> <h2>Ending inflation</h2> <p>Governments (through the central bank) cause inflation, and governments can end it anytime they want, by ensuring that the money supply doesn&#39;t grow faster than the economy. But, of course, it&#39;s not that easy.</p> <p>First, nobody knows how big either the money supply or the economy actually is, and the tools for controlling it are blunt instruments. There are statistics that give people a clue about how big each was as of a few months ago, but that&#39;s only a partial indication and it&#39;s already out of date. Back in the 1970s economists liked to use the analogy of driving a car while looking in the rear-view mirror by alternately stomping on the accelerator and then on the brake.</p> <p>Second, if the money supply has already outstripped the growth in the economy (which it has, for many years now), then the effects will inevitably work their way through the economy, producing however much inflation is necessary to bring things back into balance, no matter what the central bank does now.</p> <p>Still, all periods of higher inflation end. Some end with the inflation rate coming back down to the rate where it doesn&#39;t do much harm to the economy (basically, to where it&#39;s small enough that things like changes in relative prices and changes in standards of living are more important than inflation, and the inflation component just vanishes in the noise of the economy). Others end with hyperinflation making the money worthless, at which point it is replaced with something else.</p> <p>Based on the experience in the US so far and the current situation, I don&#39;t think the hyperinflation scenario is likely. So that means that your strategies for living with inflation need to handle the situation where money supply growth slows and the inflation rate drops--a scenario that usually involves a recession.</p> <p>Once the central bank moves to stop inflation in a serious way you need to turn around the strategies you used for surviving it and instead <a href="/preparing-for-a-recession">prepare for a recession</a>.</p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/philip-brewer">Philip Brewer</a> of <a href="http://www.wisebread.com/how-to-live-with-inflation">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-3"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/more-than-just-inflation">More than just inflation</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/inflation-is-going-away-for-a-while">Inflation is going away for a while</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/stag-hyperinflation">Stag-hyperinflation?</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/does-living-frugally-hurt-the-economy">Does living frugally hurt the economy?</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/why-inflation-isnt-as-bad-as-you-think">Why Inflation Isn&#039;t as Bad as You Think</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Personal Finance depression gold inflation price recession rising prices Fri, 18 Jan 2008 08:10:26 +0000 Philip Brewer 1645 at http://www.wisebread.com