How to keep buying in your 401(k)\IRA even if you loose your job?

This is a continuation to my last blog entry -Buy-Low-Sell-High: Getting over your fear.

I truly felt vulnerable and afraid when I was under unemployment for 2 years during the dot-com bust. With no job, I could not contribute to a 401(k). I could have contributed to my IRA, but with tight budget and not know what the future hold, that was a low priority. All my investment activities came to a haul. Big mistake!!!

If you are a true believer and practitioner of buy-low-sell-high, you should be investing during a market recession (the probable cause of you loosing your job), not when the market is doing well (when you probably have a job).

So, how to keep investing when you don't have a job or when you feel afraid? The solution is simple, but it requires some planning ahead and some work.

This is what I do:

1. When I have a job, I contribute to my 401k\IRA with 100% in a money market fund. Yes, 100% in money market fund! Forget about what the investment reps. tell you at your company 401(k) meeting about asset allocations for now.
2. If I loose my job, guess what? It's time to buy (market recession) and I have all the cash I need in my money market fund. At that time, I decide my asset allocations and setup a contribution schedule to exchange from my money market fund to other funds.
   

Sounds simple, right? Yes, but like I said, it requires some rethinking and planning ahead. You don't have to invest 100% in a money market fund, but my point is: you need to make sure you have enough cash to keep buying when the market is in recession and when you are out of a job. How long will a recession last? Nobody knows. But if say the recession will last 2 years, and if I exchange $100 a week from my money market fund, that's a total of $10,400 (2 years * 52 weeks * $100). That's a lot of cash I know, but that's what it take.

Next time I will compare some companies 401k\IRA that work best (tools, fees, etc.) for this strategy.

Buy-Low-Sell-High: Getting over your fear.

This blog entry is rather simple. I want to keep it simple so you can remember it!

There is a big difference between a believer and practitioner of buy-low-sell-high when it comes to investing. The majority of us let our fear get a hold of us.

Fear immobilize our abilities to act, to make changes and to make the right decisions.

Think about watching a fund keeping going down to half of its price, could you still press that buy button?

Well, keep this in mind: Most people are wrong! Most people are not financially secure! So next time you feel fear, don't act like most people. You should be running instead of hiding.

Not convince? Take this "Let's Make a Deal" test (based on The Monty Hall Problem on probability and statistic) and see how fear of change affects your decision making skill. You can go on and read the explanation of the problem.

Still afraid? Next entry I will share my strategy to help me get over that fear.

Time to switch to Quicken as Microsoft discontinued Microsoft Money as of June 30, 2009.

Wow, guess Microsoft can't squeeze out a buck from their Microsoft Money. I can't believe the software giant would discontinue MS Money just like that with years of development down the drain, not to mention the effects on loyal MS Money customers\users. Read the discontinue notice from Microsoft.

Luckily, I don't use MS Money. I have been using Quicken since 1996 and it's been doing a good job. It's been helping me to keep track and give me a big picture of my finance. Quicken has evolved over the years and some of the changes I must say were not really necessary. It's not prefect but it does the job, and with Microsoft discontinuing MS Money, there are really not that many other choices out there when it comes to personal finance management software.

I recommend it if you are shopping for a gift for recently college graduate. It's a gift that's keeps on giving.

Greenberg v E*TRADE: IMPORTANT LEGAL NOTICE – CLASS ACTION SETTLEMENT

Got this in my e-mail today, wondering if this is legit, the following is a excerpt of it:

If you reside in California, Florida, Maryland, Massachusetts, Nevada, New Hampshire, Pennsylvania, or Washington and (1) received a telephone call from E*TRADE FINANCIAL Corporation or its related entities (“E*TRADE”) during the period from September 3, 2003, to May 22, 2009, and/ or (2) you made a call to E*TRADE’s Beverly Hills, California branch office on August 15 or 16, 2006, and your telephone call was recorded without notice or consent (hereinafter, the “Settlement Class”), you are a Class Member and a proposed class action settlement (“Settlement”) could affect your legal rights.

PLEASE TAKE NOTICE that if you qualify to be in the Settlement Class, you are a Settlement Class Member (hereinafter, “Class Member”) and may be entitled to payment of money from the Settlement Funds.

There is now pending in the Los Angeles County Superior Court a lawsuit entitled Greenberg, et al. v. E*TRADE FINANCIAL Corporation, case no. BC 360152, which involves allegations that Defendant E*TRADE FINANCIAL Corporation (“Defendant”) recorded telephone communications without the knowledge or consent of all of the parties to the communication. Defendant has denied and continues to deny any liability and there has been no finding that Defendant has violated any laws.

It goes on to say:

Subject to the approval of the settlement by the Court, if you want to participate in the settlement, you must complete and submit online the Claim Form that is available on the Internet at the following web address: www.GreenbergClassActionSettlement.com no later than September 25, 2009.

If you choose to participate in the settlement by submitting a Claim Form, you will be bound by all of the provisions of the Settlement Agreement and Release, including a full release of claims that will prevent you from separately suing Defendant and its agents.

I stopped once they ask me for my SS#. Who knows where that information going to go? Not worth the risk\trouble and the few bucks I might be getting over the next N years.

The Perfect Alarm Clock!

For god sake this is 2009, you would think they must have developed the perfect alarm clock by now. Well, me and my wife were trying to find one but ended up doing days of research and calling different stores for availability so we can go there to try them out.

We finally bought the perfect one yesterday - Emerson CKS9051 SmartSet Dual Alarm Clock Radio. It got everything we are looking for and more:

• Weekdays\weekends\everyday alarm function for EACH of its 2 alarms. We set up alarm 1 @ 6a.m. on weekdays (for me), alarm 2 @ 7:30a.m. (for her) on weekdays, therefore no alarm on the weekends. No more forgetting turning off the alarm on Fri. night and wake up by the alarm clock Sat. @ 6a.m ever again!
• The most amazing thing is the SmartSet(R) technology. That the clock will set itself to the correct time and date when you plug it in, first time or not, also work in the event of a power outage. The alarm will preserve the alarms' settings. So in case of a power outage in the middle of the night, when the power comes back on, your alarm clock will continue to function as before. What a great idea! You don't have to manually reset it again, and worse, miss your morning alarm.
• Individual settings for each alarm wake up to a gradually increase buzz or radio.
• The clock has a high/low light setting. If you think the display is too bright, set it to low.
• The display is very clear, showing time and day of week and alarms on/off.
• Warning light when the backup "button" battery is low.
• The radio is very clear compare to our existing radio alarm clock.
• Aux input jack for your iPod or MP3 player.
• The price is cheapest given it functions.

I also found this Emerson CKS1702 SmartSet Alarm Clock Radio. It looks exactly the same as CKS9051 but cheaper.

Buying Tips: The backup battery could be dead if the clock has been sitting on the retail shelf for too long. Make sure you take it out from the box, plug it in and set the time zone at the store in order to make sure the backup battery is still good.

These are the other alarm clocks that we researched:

• Emerson Radio Jumbo Triple Display Dual Alarm AM/FM Clock Radio with SmartSet Technology
  Also made by Emerson. I was going to get this one, but I tried it at a store and it can tip forward as you reach in from hitting the snooze button. Also, some of the buttons are small. CKS 9051's design is more stable\sturdy.
  You might also want to consider these Emerson alarm clocks as well.
• Sangean RCR-22 AM/FM Atomic Clock Radio
  Too expensive.
• RiteAlarm Triple Weekly Alarm Clock (R) for Weekdays, Saturday and Sunday, Automatic Extended Daylight Saving Time, Automatic Snooze, Adjustable Volume, Gentle Sound Pattern, Simple Buttons, Pushing Backlight and Battery Operated
  Too small, for travle maybe.
• Timex Nano Color
  This could work, but we prefer larger display and not background lit ones.
• Sony ICFC180 AM/FM Clock Radio
  Could work but couldn't find it at a store (Target\Sears) to try. Dispay might be too small.
• American Innovative Neverlate 7-Day Alarm Clock
  Might work but don't like the dial, display too small, not available at local stores. A little expensive. But if you have one, I would like to know your comment. Let me know if you tried any of the above alarm clocks.

$150 cash bonus - open a U.S. Bank checking account by August 31, 2009

Got a flyer in the mail today for $150 cash bonus when you open a U.S. Bank checking account with direct deposit. Seems simple enough... a $50 minimum deposit is required. Get your bonus when you open a new consumer checking account by August 31, 2009 and setup a recurring direct deposit of at least $100 within 60 days of account opening. Your bonus will be reported as interest earned on IRS Form 1099-INT and will be credited to your new account within 6-8 weeks after direct deposit is established assuming account is open and in good standing. Only one cash offer per household.

Stop by your nearest branch, call 800-720-BANK, or visit usbank.com/checking today.

I went to usbank.com/checking to check out their Free Checking account. It seems like there might be a monthly service fee depends on your zip code, but for my zip code, there is none.

Free money is hard to come by these days, seems like a great offer.

Money lessons learned from Michael Jackson & Ed McMahon

According to this Fox news article:

Yet after selling more than 61 million albums in the U.S. and having a decade-long attraction open at Disney theme parks, the "King of Pop" died Thursday at age 50 reportedly awash in about $400 million in debt, on the cusp of a final comeback after well over a decade of scandal.

Jackson lived like king but died awash in debt. Just days ago, it was Ed McMahon, the co-host of NBC's The Tonight Show with Johnny Carson for 30 some years. They all had talents and opportunities that most of us dream of. However, if you are not in debt, you are richer than both of them and many of the celebrities. Think about it! You can honestly say "I am richer than Michael Jackson." Now that is powerful.

Lessons learned from most celebrities:

1. They spend more than they can afford. Simple: earn $1, spend $2, then you are in debt. People get that rule, but most choose to ignore it.
   
2. They entrusted the wrong people. Mike Tyson & Don King anyone?
   Bernard Madoff, A Con Man for Our Times and all the celebrities and investor entrusted their money with him? Know who to surround yourself with: friends or foe.
3. Finance education is important. It helps you make better money decisions for yourself. Actors\musicians are good at what they do, but not necessary on business\financial decisions.
   

Personally, I also have one rule: I don't lend money to friends. Borrowing money is usually the easy way out and your should be aware of someone who are looking for an easy way out. But that doesn't mean I won't help a friend. I just think there are a lot of other ways to help someone. Help a friend to find a job, help a friend to move... better yet, help a friend to spot troubles before troubles find him.

I like Michael Jackson, he was an icon of my generation. I remember doing the moonwalk as a kid and watching his Thriller video over and over again. Good luck to his kids and may he rest in peace.

Cost of having a baby

My wife and I are talking about having a baby. I saw this video on cost of having a baby today and frankly it sacred the crap out of me with those figures.

Diapers, stroller, car seat and those are just one time expense, adding reoccuring expenses like health care, life insurance, tuition and the numbers are staggering. Not to mention the lost of sleep and stress. I want to know who has that kind of money! People are having kids all around me, are they not telling me the financial situations they are in?

If your kid turns out OK, healthy and smart, that's great, but what if not? Be honest, anyone regret having a baby? Was it worth it? Leave a comment and let me know.

The IRS owns me money, now what?

I got my 2008 tax refund about a month ago, however, it was about $250 short of what I filed on my 1040. Then I received a letter from the IRS attempting to explain the difference.

Turned out that all my calculations were correct, but during my 'copy and paste' process, I missed filling out the number on line 9b (qualified dividends). As you may know, qualified dividends are subject to a lower tax rate, and the IRS simply ignore my qualified dividends which in turn reduced my refund amount.

I called the IRS, after talking to the representative for 30 minutes, this is what she told me to do to reclaim the rest of my refund - fill out Form 1040x and send it to the same address where I sent my 1040, and then wait 8 to 12 weeks!

I guess I can't completely blame the IRS for this one. But 8 to 12 weeks for this? Com'on! Guess I learned my lesson on this one.

P.S. The IRS representative was very nice and patience. :)

Free Fax Service

Need to fax a simple document from your computer but don't have a fax machine around you? That was my problem couple days ago. So I went goggling and found this simple and free fax service from FaxZero (http://faxzero.com/).

For FaxZero free fax service, you can send 2 free faxes a day and up to 3 pages per fax. FaxZero will include advertisement on cover sheet. But that's it! If you need to fax more pages, it is $1.99 (accept PayPal) per fax up to 15 pages.

So if you have something simple to fax, remember to use FaxZero free fax service next time.

Another great tool in your pocket! :)

P.S. Now I think about it, any fax service may/may not sell your 'fax to' number to third party and your 'fax to' number may/may not start receiving junk faxes. Something to think about before you use this kind of service...

Quicken: Washington Mutual (WaMu) to Chase personal account conversion

If you have Washington Mutual (WaMu) checking/saving account like I do, and you are a Quicken user, you will find this post helpful.

Since WaMu checking/saving account moves to Chase, you'll need to modify your Quicken in order to switch your WaMu account to Chase account so that you can continue to download your transactions online.

I did the process tonight and it was fairy quick, took me about 10 minutes. To get complete instructions, go to this link on Quicken customer help web site.

Time is money - FREE Multilingual Speaking Clock for Windows

Time is money.
If you ever had a "Oh my god, I can't believe what time it is" moment because you forgot to look at your clock, then this FREE Multilingual Speaking Clock is for you.

I have been using this speaking clock for over 10 years. It is one of my must have tools on my laptop/PC. It simply announce the time at a user defined interval. You minimize it and it sits quietly in your PC's system tray - until it's time to announces the time. This simple speaking clock has kept me on my feet and saved me numerous times from missing an appointment or meeting.

At times, I also found myself working long hours in front of the computer without any break, but ever since I installed speaking clock on my PC/laptop, I developed a healthy habit of getting off my chair and move around every time I hear a time announcement.

Better time management + More healthy = More opportunities + Less health care cost = more money

Tips & Tricks
I have the alarm set at 4:30p.m., it's time for me to get things wrap up before leaving work.

I have the announce option set at every 55 minutes, then speaking clock announces the time on the 55 minutes of every hour (etc. 1:55, 2:55, ...). So, I will have 5 minutes to spare in case I forgot a meeting. By default, speaking clock also announces the time every hour. Hence, my speaking clock announces time at 1:55 & 2:00, 2:55 & 3:00 and so on.

Download FREE Multilingual Speaking Clock

P.S. I am looking for a programmable bedside alarm clock...
I am getting up at 5:45a.m. these days for work, I am looking for a bedside alarm clock that has following functions:

• At least two alarm settings: one for weekdays and one for weekend.
• Radio alarm (wake up to the radio)
  

Does not need to be fancy (no need for iPid dock or CD player), just needs to work. Unfortunately, my cell phone does not has the alarm settings function. Any good suggestions?

Follow up 8/27/2009: After months of search, I finally found my Perfect Alarm Clock.

$125 bonus from WaMu Free Checking account before 5/16/09

I got this message when I log on to Chase site today. I actually did this a month ago and got a $100 bonus, should've waited to get extra $25.

Expiration Date: 05/16/2009

Get $125 when you open a WaMu Free Checking™ account and set up direct deposit by May 16, 2009. It's easy to get $125! Print this page and take it to your local WaMu branch by May 16, 2009. Open a WaMu Free Checking™ account and set up direct deposit. We'll deposit $125 into your new WaMu Free Checking™ account after your initial direct deposit.

Be aware when someone preaches you on compound interest

Happy April Fools' Day!

I read an article on another blog yesterday titled "The Unrelenting Power of Compound Interest", I almost fell off my chair! I thought it was an April Fools' joke. The article has good intention explaining the power of compound interest, however, the examples in the article are totally base on fabricated, unrealistic assumptions which mislead its readers.

Young investors, be aware of the magical 10% compound example
Here are several quotes from the article:

"Assume you deposited $1,000 in a one-year bank CD that paid simple 7% per year interest..."

"He deposited it in an IRA investment account that earned 10% interest."

"She also earned a 10% compounded return on her savings."

Why 10%? Why not 100%? Why not -50%??? 10% is the magic number salespeople use: small enough to be believable to show the investment's "potential", but not big enough to alarm you as unrealistic, and yet not too small to loose your attention. Investors, especially young ones, if you hear or read advice that "assumes" a 10% return, you can pretty much guarantee that the person who gave that advise:

• Has no idea what the real return is
• He/She has something to sell you
• He/she is just plain lying
  

I have nothing against compound interest but I have problem with "advisors" using the magical 10% to explain investment return or using it to plan your retirement. Investments simply do not grow on a compound line. In addition, those "advisors" usually conveniently leave out or skimp over the risk/lost factor. However, if you factor in potential lost and how long it would take to recover the lost (read my other post "Will the market and your investment ever recover? Do the math."), your investment return will most likely be flat or at a lost. Bye bye year-over-year 10% gain!

Ability to weed out bad advice is a great defense asset on your road to riches (so consider I just put some money in your pocket :), and that ability applies to other parts of life as well.

Well, here is a problem for you if you are bored: what is the difference between 10% (unreal) and 3% (a little bit more real) compound on $5000 over 30 years? Try that on your advisor and do not become an April Fool.

$150 bonus from U.S. Bank checking account before 5/31/09

U.S. Bank is offering $150 cash bonus when you open a U.S. Bank checking account with direct deposit before 5/31/2009. A $50 minimum deposit is required. Direct deposit must be at least $100 within 60 days of account opening. This is by far the best deal of its kind yet. Open your chcecking account at http://usbank.com/checking. You can also call 1-800-720-BANK or stop by your nearest branch.

emigrantdirect.com and dollarsavingsdirect.com websites not responding

I was just checking my accounts and I found that both emigrantdirect.com (Emigrant Direct) and dollarsavingsdirect.com (Dollar Savings Direct) websites were not responding. I also tried to ping the addresses and got no response (ping is just another way to check if a website is working besides typing the web address in browser):

C:\>ping www.emigrantdirect.com

Pinging www.emigrantdirect.com [68.163.112.94] with 32 bytes of data:

Request timed out.
Request timed out.
Request timed out.
Request timed out.

Ping statistics for 68.163.112.94:
Packets: Sent = 4, Received = 0, Lost = 4 (100% loss),

C:\>ping www.dollarsavingsdirect.com

Pinging www.dollarsavingsdirect.com [68.163.112.93] with 32 bytes of data:

Request timed out.
Request timed out.
Request timed out.
Request timed out.

Ping statistics for 68.163.112.93:
Packets: Sent = 4, Received = 0, Lost = 4 (100% loss),

Of course their call centers are already closed. I just hope that they will come back up soon and you bet I will play defense and get my money out after this horrific experience. The more I think about it, it seems like they are running a ponzi scheme: create DollarSavingsDirect.com (high yield at the beginning) to pay customers over at EmigrantDirect.com. I think I am going to move my money somewhere else, if I get the chance that is.

$100 gift card from American Express Starwood Preferred Guest Credit Card

I recently applied for the American Express Starwood Preferred Guest credit card and got 10,000 Starpoints after my first purchase which was enough to redeem for a $100 gift card from one of their merchandise partners including Amazon.com, Banana Republic, Brookstone, Nordstrom, Pottery Barn, Starbucks and more. There is no membership fee for the first year, so you can cancel it after you get the gift card.

If you travel a lot, it's a good card since you can trasnfer your Starpoints to major airlines' frequent flyer programs.

It took me about 3 months to get the gift card. Enjoy!

$250 from Bank of America Keep the Change(R) Program

Bank of America has a program called Keep the Change(R) and you can earn $250 from it. I have been a customer for a while but just recently found this out.

The program is FREE but you have to be a Bank of America customer to take advantage of the program and you will need the following from Bank of America:

1. Checking Account
2. Check Card
3. Savings Account

Let's see an example of how this works:

1. Use your check card to purchase daily item, for example: coffee $1.20.
   
2. Bank of America will round up your purchase amount to the nearest dolloar: $2.00 and move the difference: $0.8 from your checking account to your savings account.
3. Meanwhile, Bank of America will match that difference: $0.8 and credit it to your Keep the Change(R) Program.

Here is the important thing to get that $250 fast: Bank of America will only match 100% of that difference for the first 3 months after you enroll in the program. After that 3 months, they will only match 5% of the difference.

Here's the fine print on their web site:

The matching funds will be credited to your savings account annually, within 8 weeks after the month in which the anniversary of your enrollment in Keep the Change savings service occurs. To receive the matching funds, your checking and savings accounts must be open and in good standing, and you must still be enrolled in the service. Annual promotional match will not exceed $250.

So, it will take at least a year to claim your $250, but hey, it's free money, right?

Now, following are my ways to max. out that $250 in first 3 months:

1. Use the check card to pay cell phone bill in $1.01, $2.01, $3.01... I have T-Mobile and their online payment system won't allow same payment amount within 24 hours.
2. Use the check card to pay utilities bills.

If you do 5 transactions of $1.01 a day, you'll earn $4.95 ($0.99 times 5) in your Keep the Change Program. Repeat for about 50 days (less than 2 months) and you will max out the $250!

Be careful not to overdraw your checking account, otherwise you will be slap with those nasty overdraft fees.

Hey, what do you know, I have earned $25.74 this month already!

Click here to enroll or find out complete details on Bank of America Keep the Change(R) Program.

Be Vigilant During Unemployment Time

I personally know several people who have been laid-off recently due to company bankruptcy, merger and downsizing. I personally also went through unemployment for more than 1 year after the dot-com bubble bursted. It was devastating, not only on emotional level but also on my saving. Luckily, I was single, had a roommate, and have always been a big saver, those per-conditions helped. However, what I have learned from my unemployment experience is that you have to be vigilant during your down time.

Without a job, I lost sense of direction. I eventually stopped doing other things that I would normally do outside my job. Looking back, these things are important:

1. Be vigilant - Keep you friends and family close. Make sure you talk and keep in touch with them. They provide emotional support. In my case, I met my wife through a friend during my unemployment days. She gave me new direction in life and motivated me to find a new job and got me out of the slump. So the moral is, do not close yourself in, stay in constant contact with your family and friends.
   
2. Be vigilant - Check up on your 401(k). When money stopped coming in, I also stopped checking up on my 401(k) - big mistake. Since I do not plan to touch that money until I retire anyway, I should have re-balance my 401(k) portfolio and buy funds that were undervalued. That lesson really taught me the meaning of 'buy-low-sell-high'.
3. Be vigilant - Check up on you credit report. During bad economic times, you can bet that crime rates are going to go up. To protect yourself from identity theft, check your credit report. The web site www.annualcreditreport.com provides you access to three credit rating agencies: Experian, Equifax and TransUnion. You can pull your credit report from each agency for FREE once a year. I set a repeat reminder on my Yahoo! Calendar every 4 months (example: April-Experian, August-Equifax & December-TransUnion) to check up on my credit report. They do charge a fee if you want your exact credit score.
4. Be vigilant - Keep yourself busy. There are only limited number of jobs out there on Monster.com or CareerBuilder.com and you will pretty soon find yourself looking at the same jobs over and over again. Limit the number of hours for job hunting, because it is really no good wasting time staring at the computer screen and feel depress. Read books that you have always wanted to read (borrow books from public library), volunteering, exercising and hanging out with friends are all good ways to spend your non-job hunting time. The goal is to keep yourself busy.

Did you just got laid-off? Did you go through one? What are you doing\did to stay positive?

Will the market and your investment ever recover? Do the math.

I read this article Major stock market indexes fall to 1997 levels today and it was deja vu all over again like the dot-com bubble crisis.

For the dot-com bubble, NASDAQ dropped from its highest ~4,700 points on Feb. 2000 to ~1,300 points on Oct. 2002. A drop of 3,400 in 32 months that send the NASDAQ back to May 1997 level. What took 33 months to build (May 1997 to Feb. 2000) took 32 months to destroy. Meanwhile, during that period of 65 months, if you apply 'buy and hold' or 'buy it and forget it' strategy like those so called 'experts' or 'advisors' suggested you to, you would have lost money. What's worst, NASDAQ never recovered to the highest level to this day. It took NASDAQ 5 years (Sep. 2002 to Sep. 2007) just to reach 2,700 and then it went downward again.

Today, DOW ended at around 7,100, about the same level in Apr. 1997. Same scenario here, if you bought anything between Apr. 1997 and now and never sold it, you would have lost money. Just imagine that, 10 years of investing all lost in just 5 months (Dow reached its high at Sep. 2008). In other words, if you put 100% of you saving into money market saving accounts or money market funds in your 401(k)/IRA accounts that paid 3% APR, you would have done better.

OK, so you are young and think you have time to recover, think again. A sharp decline like this will take ages to recover. Here is the math: A x% decline will take a lot more than x% gain to recover.

Let's see an example: Bought a stock at $10, then it lost 40% of its value to $6. What percentage gain will it take to recover? 40% you say. Nope. It will take 250% increase to reach $10 again ($4 * 250% = $10)! So, for the stock market to recover, it will take a LONG time. In best case scenario, the DOW grew at a pretty quick rate of 3 years to double from 1995 to 1998 (4500 points to 9000 points), so it could potentially take 7.5 year (3 years * 250%) for the DOW to recover. How likely is that going to happen, not likely. The same calculation would explain why NASDAQ never reached its high again (to this day).

Personally, I think the 'buy and hold' strategy needs to be re-evaluated. Just how long do you hold? I suggest you ask your broker (or not). Also, I think that the investment landscapes have changed a lot since Peter Lynch and Warrant Buffet era, technologies (e.g. easy access to information) have induced new risks and volatilities to today's market.

How did your portfolio perform between 1997 and now? If you re-balance your portfolio, how did it work out? I would like to know.

$50 Lending Club Sign-up Bonus

Lending Club is a peer-to-peer (P2P) lending platform. The concept is pretty simple, instead of borrowing money from a bank, you borrow money from lenders on Lending Club. Pretty simple.

I've joined Lending Club and think you might want to hear about it.

Lending Club brings together individual investors and well-qualified borrowers who want fair credit (for everything from paying off high-interest credit cards to growing a small business).

With Lending Club you can diversify across many borrowers with good to excellent credit ratings. Lending Club lenders have earned annual returns that average over 9% in the past 18 months. Borrowers with excellent credit have been able to borrow at rates as low as 7.88%.

I have a word of advice, P2P lending is not a risk-free way to earn extra income. Always know your risk before bidding on any loan. If you stick with loan with higher rating (A level), you are more likely to come out ahead. I guess I don't need to remind you what got us into today's credit crisis mess, yes, all the sub-prime loans that the banks made. To me, P2P lending make sense, profit people directly instead of banks' CEOs.

Click this link to sign-up to become a lender (NOT borrower) through my referral and get $50 cash bonus. FYI, I don't get anything from this. You can take the $50 and run, or you can make 2 loans (for free) and try Lending Club out (Lending Club has a $25 minimum to bid on a loan). But if you decide to become a borrower and take advantage of the low rates, I get $25. Win-win. Sweet deal!

Manage passwords with FREE KeePass password safe

Passwords driving you crazy? Do you forget your passwords often? More importantly, if you die, does you spouse has a way to retrieve all your passwords so he or she will be able to access your online accounts (bank accounts, retirement accounts, investments accounts, etc.)? Don't worry, now you can end your passwords nightmare and put your mind at ease with KeePass (http://keepass.info).

KeePass is a free, secure and easy-to-use password management program. I have been using KeePass for 3 years now and it has quickly became one of my absolutely must have tools. Google "password management" and KeePass shows up as the #1 link, you can rest assured its popularity.

I don't want to repeat what's already on KeePass web site so I will just dive straight in. Once you have KeePass install on your computer, create a password entry for a web site, go to the web site and then press 'CTRL-ALT-a' and KeePass will automatically fill in the user name and password for you. Sweet!

To safeguard your KeePass database, you can follow what I do, or however make sense to you:

1. Backup KeePass database file (with extension .kdb) monthly to a flash drive
   
2. Print out your KeePass database and put it in safety deposit box every 6 months (this I plan to do)
   
3. Share the master password with your spouse

Now if you die, your spouse has access to all your passwords. One less thing to worry about.

I also want to share some KeePass option settings I found helpful:

• Security - set automatically lock workspace after 180 seconds
• Security - lock workspace when locking windows, switching user or sleeping
• Interface (GUI) - minimize to tray instead of taskbar
• Advance - start and exit - Start minimized and locked

To deal with web sites with unusual login screen, KeePass has a scripting language which you can use in the 'Notes' area of each entry to customize your input sequence. Here is an example:

Auto-Type-Window-1: *google*
Auto-Type-Window-1: *yahoo*
Auto-Type-1: {USERNAME}{AT}mycompany.com{TAB}{PASSWORD}{TAB}{ENTER}
Auto-Type-Window-2: CNN*
Auto-Type-2: {USERNAME}{TAB}{ENTER}{DELAY 5000}{PASSWORD}{TAB}{ENTER}

Tips: First, it took me a while to find that KeePass doesn't regonize '@' character, you have to replace '@' with '{AT}'. Second, use '{DELAY 5000}' (meaning delay 5 seconds) to put a delay in input sequence.

With KeePass, you can now sign up as many web sites as you like and don't have to ever worry about forgetting your passwords.

I encourage you to give KeePass a try and let me know what you think. You can find out much more information on KeePass web site at http://keepass.info. If you are already a KeePass user, please share your experience, do you find KeePass useful?

High Yield Money Market Saving Account (MMA) - 3.05% APY

One of the best thing you can do with you cash is put it in a high yield saving account. I like it because it has a good rate and I can get the cash whenever I want, unlike a certificate of deposite (CD).

I have been putting my extra cash to EmigrantDirect (www.emigrantdirect.com) since July 2005, but since they dropped their rate back around Oct. 2008 (currently at 2.40% APY), I have moved my cash to DollarSavingsDirect (www.dollarsavingsdirect.com). The current APY for DollarSavingsDirect is 3.05%. It is the highest I can find among high-yield MMAs. It has a minimum opening balance of $1000, no montly service fee. It is also FDIC insured. You can fund the account with an exiting checking account or send them a check. I prefer the first method because it is faster. It took me several days to complete my fund transfer. Pretty easy. Interest is credit at the end of each month. One thing to be aware of, a transfer from DollarSavingsDirect back to your checking account can takes 4-5 days. For example: initiate transfer from DollarSavingsDirect on Monday, get your cash in checking account on Friday.

I know people who do nothing with their saving/cash (often 10K or 20K), they leave it in a bank regular saving/checking account with VERY low interest rate, often less than 0.5%. To me, this is the easiest way to preserve your cash. Don't let the bank profit from your hard earned money.

Welcome to Personal Money Finance Blog!

I created this blog to collaborate with reader like you on the subject of personal finance. I hope to share, from my personal experience, strategies that worked, and those that didn't. Feel free to leave comments, or subscribe to this blog if you find the information on this blog useful.

I am going to label my posts into following 4 major categories so you can find articles quickly:

• offense - making money
  
• defense - preserving, protecting and saving money
  
• tools - things that make your life easier
• others - occasional updates
  

I will see how this method goes and make changes as this blog evolve.

Happy Reading.