Wednesday, February 13, 2008

Has the market reached the bottom?

With warren buffett coming out of hiding and willing to invest money in the stock market, i wonder whether market has reached its bottom. After all he is more seasoned and has lot of wisdom and understanding about the market than me.

It is true that the recent trends in the market shows relative calmness, which i attributed to the government's policies. Some how i still feel the market is going to head down for some more time and i am holding to the bearish view for the entire year.

Wednesday, February 06, 2008

A stock to watch

As listed here, for year 2008, i had considered buying the following stocks: Tata steel (TTM), INP, Visa (when IPO comes out) and AMGN.

Well change of plans - instead of buying INP and AMGN, my attention has shifted to TSM and COH. Coach is something i am interested because of their strong financial results. I believe the company is good - it has consistently produced profit for 8 years - sustained growth, low PE and good growth rate. With recession looming, i suspect there would be a lot of fear in the retail sector stocks. When everyone else is afraid get greedy. TSM is more of a bet that electronics and chip marker giant are going to have stronger growth in the future. I am not going to buy these stocks soon, still waiting to see how the stock market is behaving.

Tuesday, February 05, 2008

The market crash continues

The year 2008 is going from bad to worse. Just today alone i lost about $2K from my investment. I had invested in vhgex starting early 2006 @21.98. today (early 2008) it is at 21.00. In fact the 52 week high and low gives you a picture of the roller coaster. between $20.58 to $27.78. but i am not really worried. Today i decided to invest another $1400 into the fund. I am for the long run...and i sure dont mind the roller coaster ride.

Sunday, February 03, 2008

The fall of interest rates

Although old news, the rate at which Feds are reducing the interest rate has a tell tale sign on the rate of CDs. unfortunately one of my CDs is maturing this month end and i am struggling to find a good enough rate. The CD was for 6 months and it had 5.50% APY. In six months time i cannot find that rate anymore. Things have changed so quickly. Lesson: Next time around, when the rates are higher, i will lock down the money for a longer period of time (at least for two). As for the CD that is maturing, i will put it again for a 6 months CD at what ever rate i get.

Thursday, January 31, 2008

Jan 2008 review

January ended without any problem, well within the budget. Here is how we spend the money in Jan

39.2% - Saving
23.0% - Other saving funds ( fund ofr home, buying a new car, for travel and emergency fund)
22.4% - tax
7.6% - Rent
7.8% - Other expense

Of the close to 40% of savings about 10% was saved for buying stocks in taxable account, rest were investments in HSA and 401Ks. The tax rate of 22.4% might be a bit high, we plan to readjust the W4 around june. I want to make sure by year end i owe the government about $500. About expenses, they come to about 15% of the entire salary, of which rent takes away about half. But really the rent is only average for the area i stay. So all in all a good month for the books. Its a good start, i hope we can maintain the above 60% saving rate all through this year.

Monday, January 21, 2008

Time to buy mutual funds?

As a general rule, I think when the market is down, it is a good time to invest in the index mutual funds. Since these funds track the overall market, buying the fund during recession gives you a chance to invest in the sector the index fund is tracking. Investing in stocks during recession is harder as such decision really depends on the condition of the company more than the condition of the sector. Hence towards the end of this year (by which time i think recession would have had a painful effect), i plan to increase my investment into the index mutual funds.

Sunday, January 20, 2008

Choosing the Right HSA option

Health Savings Accounts (HSAs), created on December 2003, is designed to help individuals save for future qualified medical and retiree health expenses on a tax-free basis. With both of our employers offering HSA, we had to work out the math to figure out which option to go with. The details of the plan are as follows:

Employer 1
Deductible (employee/employee+1/employee +2): 1200/2400/3000
Max out of Pocket expense (90% covered after deductable): 2000/4000/5000
Employer contribution (employee/employee+1/employee +2): 700/1400/1800
Immunization and preventative exams are 100% covered

Employer 2
Deductible (employee/family): 1500/3000
Max out of Pocket expense (100% covered after deductable): 1500/3000
Employer contribution: Nil
Immunization and preventative exams are 100% covered

Maximum HSA Contribution for Year 2008: $2900 for individual, $5800 for families

We didn’t spend much on health expense, so using that as the guideline the min expense is kept at 500 and max as the maximum out of pocket expense.

Option one (going with employer 1 alone). The employer 2 does not give any money for not using their health plan, so the savings is basically the amount you save from tax and the contribution from employer 1.
Tax deductible savings = 4400 * .28 = 1232
Employer contribution = 1400
Min spending = 500
Max spending = 4000.
Total savings = 2132 or -1368

Option two (going with employer 2 alone). The employer 1 gives about 36o for a year for not using their health plan, that can be considered as employer contribution.
Tax deductible = 5800 * .28 = 1624
Employer contribution = 360
Min spending = 500
Max spending = 3000
Total savings = 1484 or -1016

Option three(going with employer 1 and employer 2)
Tax deductible = 5100 * .28 = 1428
Employer contribution = 700
Min spending = 500
Max spending = 3500
Total savings = 1628 or -1372

So looks like taking option one is better because of the employer contribution. However if we look at the max expense then option two looks better because the employer's deductible.