Financial Plan, Part 3: Investing

Today, as per promised as one of my goals for financial health, I continued researching investment options. At the moment, the only real investment experience I have is with Kiva, a micro-loan organization (and a topic for a future post!) I was planning on purchasing into a mutual fund and showing you all the process, but since the market closes in approximately a half an hour,  I decided to not  rush it.

First things first: I want my first investment to be in a mutual fund because they typically offer good returns with less risk. They’re professionally managed, and offer a diverse portfolio with a single investment.

I had to find one that I could feel good about. Thanks to my good friend, Google, I found a few lists of mutual funds that promised to be environmentally and socially responsible. I picked one, Appleseed, and then turned to Morningstar and Scottrade to find out what I could about it. (No, Morningstar is not the veggie burger manufacturer, though I did think it was the first time my dad mentioned it!)

Here is the information I found from Morningstar:

You have to be a premium member to get any analysis worth anything on Morningstar, it seems. Phooey!

I do like the one bit I can see--fund managers buy into their own account. I don't know a lot about investing, but that seems promising.

I also got this graph, which was constant from all the sites I saw:

I see green, growth, and stars. That's good, right?

Everything I saw seemed promising. I googled APPLX some more, and found a website called The Street which gave APPLX an A+, BUY! rating. Since I honestly don’t really know anything about this and didn’t want to be rash, I called the one person I knew would give me solid advice: my father.

Daddy? I’m trying to purchase into a mutual fund, and wanted your advice before I did anything rash. Morningstar gave me nothing.

Have you looked at its individual holdings?  From my silence, he inferred that my answer was a no, so he directed me to Market Watch.

For those of you that know anything about investing, suspend judgment for a moment!

Do you see the individual holdings tab? Yes, but those are just the top investors, right? Not the ones the company is investing in?

No, Michaela, those are the investments, not the investors. You see why I called him? Noble corp is a gas and oil company. Avon, you know what that is. The makeup company? Yep. Now let’s look up Mabuchi. I have no idea what they are. We clicked it, and it had no information. So, I went back to ever trusty Google, from which I found their website. They are a small motor manufacturer who purports to be environmentally friendly.

So, should I buy it now? Since the market closes soon? At 12.88, and it’s 2,500 minimum buy in… Well, you won’t necessarily get it at that price. You get it at market closing price, which is called NAV or Net Asset Value. 

Hold on, pops. I’m writing this down. But it still looks pretty good, right?

Hold on. Look at the Lipper Rankings. Do you see them? 

Yes. Ok, so right now it has a 9.62% return, which translates to a 7.62% return because they take two percent for fund management. It has a good ranking. Look at the one year: it lost a little less than half a percent, but the other funds in its category lost almost 7.5%. Ok. So that’s good!

Yep. But, look at it compared to the S&P. It’s trailing in pretty much every category. Bless my patient father: What’s the S&P? The S&P is comprised of 500 stocks that are meant to mirror the US economy. But, it’s still ok that it’s not better, right?

Yes, but we want to get you a fund that does at least as well as the S&P. But, does that mean it’s riskier? Higher return on investment, higher risk? Typically, yes. But not necessarily. How do I find one? We’ll talk about it later. I have to get back to work. 

 I still don’t understand half the symbols or indices or graphs . . . but I’m learning!

If you’re an investor, how did you first learn to understand all of the abbreviations and different terms? 

If you don’t invest, are you considering it? 

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Financial Plan, Parte Dos

Afternoon,

I’ve tackled one of the goals set forth in my last post: creation of a budget.

This will probably change, as the month of May I won’t be in school! Woop! I will be living in a house for intentional Christian community located about a mile off of campus, and will be paying rent and purchasing all my own food. I have to talk to the parentals about finances and see if I’m going to be completely fiscally independent this summer, or if they’ll be helping out and in what capacity.

This budget makes more sense for the school year, so I’ll have to see in what ways to modify it this summer when I won’t be on any type of meal plan.

I think this is realistic for a month when I’m in school. After talking to my parents, I’ll be changing this! After looking through my spending habits, I decided that $150/ month is realistic. Out of this, food accounts for about the most: $65 between restaurants, coffee, and groceries. I allotted $40 for my compassion international young woman, Archana. Miscellaneous refers to exactly that: toiletries, clothing, books, gifts, etc.

This budget makes sense for me. I’m not out on my own yet–I’m at school with a meal plan, no rent, parents who pay for insurance and gas on my car. I am very blessed in this sense. Practicing making a budget now, however, while I have limited expenses and limited income will help make it simpler when I do have that control.

I’ll let you know about the evolution of the budget, as I’m sure it will for May/June-August.

Next on my list? The other goal from last time . . . investment options!

Do your budgets ever vary? 

Financial Plan, Part 1

Sorry for the long lapse between posts, readers. I am a weary traveler this week.

I have, however, been evaluating my financial fitness [so to speak] to try and figure out how to obtain better money-handling skills. First things first: to see how much I have in the bank, and where I’m spending it. I hate to confess, but I haven’t looked at my accounts . . . in awhile.

Since January 1st, my biggest expense has been travel. Plane tickets are pricey!

After travel, my next biggest expense seems to be “merchandise.” This seems to include miscellaneous expenses, such as food and cosmetic purchases from Wal Mart, as well as online expenditures [gifts from Etsy :)], and I think different expenses I’m going to put in a category of ‘charity.’ Food, all totaled, probably accounts for about a fifth of my purchases. This isn’t necessary, since I’m on an unlimited meal plan.

The above graph is only my personal credit card spending. I made my own graph in excel that includes my debit card, and is broken down more in depth for the past 3 months:

Don’t worry–the HUGE blue one isn’t coffee (though it might as well be!), it’s “miscellaneous.” Travel is again the biggest chunk of my money, followed by ‘miscellaneous’ (which includes cash drawn out), then, surprisingly, charity. I sponsor a young woman named Archana through Compassion international, which is a sizable expense every month.

Since I’ve had my student credit card, my largest expense has been something I’m a bit embarrassed to share about. It was a one, lump sum purchase that accounts for the most money I’ve spent. Ever. I thought long and hard about it, and decided to do it. . . but I’m still a bit nervous to share, since it seems like such a silly thing. Let’s just say it rhymes with ‘maser lair shemoval.’

Yep, it’s the big one in orange, back from December.

I have to say, however, that doing this analysis of my spending makes me feel much more in control than I have before. Now that I know where my money is going, and how much I’m spending, I feel equipped to make a budget and stick to it.

My goals for the rest of this week and the next?

Make a budget

Research different mutual funds and stock options and invest! 

Two small lines of text, two big undertakings! I’ll keep you all clued in. This ‘Pit Stop’ is going to be a two week endeavor.

Now, let me know:

What is your biggest expense/splurge?
Do you use any online tools to track your money?
Have you ever invested? How did you decide where to invest?  


Clearing Up the Financial Jumble

Confession: I’m not good with money.

I don’t feel like I have a good grasp of money or finances, or an appropriate attitude towards them. Budgeting is a skill I’ve never learned; when I asked my parents if they budget and why it wasn’t transparent to us kids my dad told me that his “budget is to always make more than I spent.” I’ve spent several years trying to figure out what a healthy attitude towards money is, and I haven’t reached it. This is further complicated (though not badly so) from my perception that everything I have really does not belong to me, and that Jesus talks very specifically about money. Some of his teachings (or my reading of the teachings) have me undulating between seeing money as a useful tool, and wanting to simply give it all away and live meagerly.

“We do need to be born again, since Jesus said that to a guy named Nicodemus. But if you tell me I have to be born again to enter the Kingdom of God, I can tell you that you have to sell everything you have and give it to the poor, because Jesus said that to one guy, too. But I guess that’s why God invented highlighers, so we can highlight the parts we like and ignore the rest.”  Shane Claiborne, The Irresistible Revolution: Living as an Ordinary Radical. 

“No one can serve two masters. Either you will hate the one and love the other, or you will be devoted to the one and despise the other. You cannot serve both God and money.” Luke 16:13 

I also spent time last semester reading:

The discussion group that accompanied the book was helpful, but I feel like I didn’t really change. Ultimately, the conclusion we all came to was that in intentional community, our attitudes towards money would change. If we love people and not ideas, and people are in need, we will help those people with the resources we have.

But here’s my problem: I’m not involved in community with a range of people in different socio-economic statuses. My friends are all pretty similar to myself, and spending money goes hand in hand with our social outings. Hopefully this summer working with a ministry in our downtown will help change some of this. I have a lot to learn about money, its role, and my handling of it. Because I’m in school without a job, I sometimes feel like I don’t control the money I have, but I do.

This week’s Pit Stop (which is occurring on a Tuesday) involves a re-evaluation of my finances, the creation of a budget, and decisions about what and where I will spend. I typically don’t even look at my balances in different accounts, and I opened an investment account months ago and have never used it. Now, let me know:

Do you budget? 

Do you ever struggle about the role of money in your life?