Joe Saul-Sehy, Author at The Free Financial Advisor

Joe is a former financial advisor and media representative for American Express and Ameriprise. He was the “Money Man” at Detroit television WXYZ-TV, appearing twice weekly. He’s also appeared in Bride, Best Life, and Child magazines, the Los Angeles Times, Chicago Sun-Times, Detroit News and Baltimore Sun newspapers and numerous other media outlets. Joe holds B.A Degrees from The Citadel and Michigan State University.

The Worst of the Free Financial Advisor Episode #12: Top 5 Ways to Save Money at the Gas Pump

June 11, 2012 by Joe Saul-Sehy 7 Comments

Word for today: Splurge.

If you save pennies at the gas tank and don’t blindly submit to brand loyalty, you’ll have extra money to splurge on whatever you please.

That’s our theme this week. Sound good? Wait until you hear it…it’s even better!

Here are the show notes:

<Open> Japanese toilets might improve Nomura…or not.

<> On the Blog: OG talks about his comparison of golf and financial prowess: here’s the piece: How Did You Golf Today? Ask Me About My Portfolio….

<> Fractured Cents: PK on Blind Loyalty…and how to score more from your favorite brands.

<> Roundtable:

We tried a new format this week. I got out of the way and let the team talk (like it’s really a roundtable!). That creates a few dead spots, but also much better interaction, I think. Let me know how you like it!

<> Giveaway! Holy cow, we can’t stop giving stuff away! This time? Larry Wingett’s financial book: You’re Broke Because You Want To Be

<> Top 5 Ways to Save at the Gas Pump

OG saw the Avengers. (thumb sorta up), Joe saw Snow White & the Huntsman (thumb way down)

A special thanks to our contributors. Here are their sites and some of the great stuff going on at each one. Please visit them and let them know you heard them first on our show!

PK is at DQYDJ.net – a good one last week: Things That Don’t Matter: Congressional Approval Polls

Carrie can be found at CarefulCents – a favorite: Summer Reading List: 10 Ways to Save Money on Books

Dr. Dean operates the Millionaire Nurse Blog – I think you’ll enjoy: Finding Solutions to Problems

Dom owns YourFinancesSimplified (not Carrie….) – try out – I Was Asked To Teach Two Personal Finance Classes

And Crazy “Hockey Buff” Penzo can be found at the aptly monikered Len Penzo dot Com – you’ll love: I Just Made the Biggest Impulse Purchase of My Life (but it’s okay)

As always, more fun and surprises around every audio corner….enjoy!

Joe Saul-Sehy

joesaulsehy.com/

7 Financial Hacks to Avoid

June 7, 2012 by Joe Saul-Sehy 29 Comments

I spend all day on the internet.

I was moaning with a friend yesterday at lunch about the COUNTLESS posts on your budget and being thrifty. Everything from the Latte Factor to How Stupid Is the Latte Factor? and I’ve Got David Bach’s Latte Factor Right Here.

Yawn.

I was thinking this morning that I’m searching for something new. Something meaningful. Something that helps me walk the straight and narrow financial path.

What would this post look like?

I think it’d be a little negative. It would be a post about all the quick roads to frugal you SHOULDN’T pursue. People are often motivated by fear, it’s said.

This post would help people avoid some of the big problems out there.

Folks from all parts would line up for this type of post, I’d think.

I couldn’t find it, so I created it.

Welcome to:

7 Financial Hacks to Avoid….the list.

1) Underwear is expensive. Why buy it? Nobody can see the stuff anyway, unless you want them to (and in that case it’s going to end up wadded up on the floor pretty soon). Get rid of underwear. You’ll feel more free and casual all day. A four pack of Haines tidy whitees costs $15.50. Imagine how many smokes that’ll buy.

2) McDonalds dumpster dive. McDonalds throws away food that’s still incredibly edible. Why not sit in your Ford Pinto and wait for the trash to go out? When I worked at McD’s back in the day, the food they threw out was all still wrapped up. You could get a McDouble, take it home and microwave it…and it’s almost good as new!

3) Disconnect your internet. Everyone complains about cable and how expensive it is. What about internet access? Uggg. That’s a bundle. Are you really making any money on that blog anyway? Let’s be realistic. You’d save time AND money by just pulling the plug right now. …money you could be spending on your cable bill and time you could have been doing something useful instead of reading this post. Double threat.

Very happy. Know why? No underwear.

4) Sell your bicycle and weight set. Who needs gym equipment and a bike when you’ve got only so much time in a day? If you weren’t worried so much about how you look, you’d finally be able to get in all that extra overtime your boss wants from you. Plus, imagine the sick days you’ll get off when you’re feeling lousy? Time Off + Daytime Television = Heaven.

5) Do you have kids? What have they done for you lately? Forget allowances: Let’s talk quotas. Bring $30/week to Papa Joe or I’m sendin’ you packin’. Give them clear warning and direction, though. You don’t want to seem heartless.

6) Shampoo? Soap? Dish soap is nearly the same and is far less expensive per fluid ounce. Use dish soap for all of your personal health needs. You’ll have a lemon-fresh scent and will never have to worry about dishwater hands with Palmolive. And, if you don’t care about how your hands look, just go unbranded. Ubersavings!

7) Finally, I know that food is expensive and my second tip above might be impractical, so here’s another: Why not find creative ways to invite yourself over to dinner at someone else’s house? Offer to bring a few hamburgers with you if you think you can pull off tip #2 in a combo deal. If not, offer to bring drinks and fill a pitcher with ice cold water. They’ll thank you with their health later, no matter what they say today.

See? I think that’s a marvelous list, don’t you? No lattes or practical “how to’s.”

This list in itself is a huge timesaver.

In fact, another hack would be: forget about writing lists. You don’t follow them anyway.

I feel compelled to follow absolutely nothing that’s written above and don’t feel bad if you don’t either. I don’t have time for that nonsense….or rather lack of nonsense.

What tips have I forgotten? Let’s add a few in the comments. Ready? Go!

Joe Saul-Sehy

joesaulsehy.com/

A Chart that Frightens Me: Investing 101

June 5, 2012 by Joe Saul-Sehy 20 Comments

In the past several weeks, I’ve ground my axe on charts that are either misleading or actually say nothing.

Today, let’s counterpoint: I’ll show you a chart that makes sense to me AND fills me with more dread than seeing Aunt Ernestine in a swim suit.

…a rather unflattering swim suit.

I found this chart at FRED, an acronym for Federal Reserve Economic Data. This website is chock-full of charts and graphs direct from the government and financial institutions. And, as a bonus, they’re usually easy to understand.

Bonus!

Here’s the chart I’d like to focus on today, class:

So, if you aren’t familiar with Treasury Inflation-Indexed Notes, don’t start nodding off on me! I’ll have to send Aunt Ernestine over to sit on your lap.

That woke you up.

Let’s explain what the $%!@ we’re looking at here.

As you can see on the header, this chart shows the yield-to-maturity on a 10-Year Treasury Inflation-Indexed Note.

What’s a “Treasury”?

Investments that are simply referred to as a Treasury in the U.S. are products of the U.S. Government. They’re sold at an auction. The amount of the note is fixed (you buy in $100 increments), but the interest rate is what they bid on. If nobody bids, the government will have to pay a high return to lure investors. IF lots of people bid, the government is able to sell the debt for a lower price. Initially, this debt was priced at 1-1/4%. That’s a nice win for the U.S. Government.

As an example, if you have great credit, you do this with credit cards. Instead of jumping on the first credit card offer, you examine the interest rate. If it’s higher than you want to pay, you keep searching. Essentially, you’re pitting “investors” (lenders) against each other for the pleasure of holding your debt.

What’s a Note?

A note is a ten year bond. Once the bond is issued (this one was issued in July of 2010), it’s paid off ten years later.

Do you have to wait ten years to sell your bond? No. You’re allowed to sell early, but you’ll do it on the open market.

The open market conditions produced this graph.

What Does the Graph Show?

This graph DOESN’T show you the price of the ten year bond. Instead, it cuts to the chase. If the bond is sold initially for $100 (called the Par Value), and an investor will give you $105 for it, he should already know that he’s only going to receive $100 when the maturity date comes. Therefore, it’s a simple computation: if you over or underpay, what is the true interest rate you’ll receive?

This chart shows the true rate if you purchased this 10 year note today.

In short: the price is so high you’re guaranteed to lose money.

Ouch.

Why is this Frightening?

If investors are comfortable loaning money to the government, knowing that they’ll lose money, this means that other places to invest money are even uglier.

In short, we can discern:

– There is much constenation about the financial markets now

– Lots of investors feel comfortable losing a little money with the U.S. government

From that I infer that investors think they’ll lose more elsewhere.

Is This An Opportunity?

Clearly, there is less opportunity in Treasury Inflation-Indexed Notes than there is with Aunt Ernestine. However, some investors may think that this means that the panic has gotten so high that there are obvious opportunities elsewhere.

Maybe.

Remember that the majority of traders have more money than you and I. Professional traders work from platforms that spend more money on research than we spend on our homes. If you’re looking for opportunity, it isn’t apparent in this particular graph. You’ll need to look further.

Where Do You Look Next?

This chart leads me to want to see past correlations between the 10 Year Treasury Inflation-Indexed Note market and other financial markets. By viewing these, I might be able to better discern if this is simply panic or something bigger.

The Worst of the Free Financial Advisor: Episode #11–Julie Clow, Author of The Work Revolution, Freedom and Excellence for All

June 4, 2012 by Joe Saul-Sehy 4 Comments

What a great show! We’re fired up about this interview…if you’re passionate about workplace improvement and efficiency, this is the interview for you.

Not familiar with podcasts and how they work? Here’s a link to the Apple page on podcasts: Apple – iTunes – Podcasts

Hoping to subscribe to our show so this goodness is waiting on iTunes every week? Try this link to subscribe: Worst of the Free Financial Advisor iTunes page.

<Open> Quick show agenda & OG not here.

<> Author Julie Clow interview

The book: The Work Revolution: Freedom & Excellence for All

<23:25> Fractional Sense w/ PK from DQYDJ.net. Topic: Risk Modeling

<27:44> Roundtable: Ford employees are being offered retirement packages soon…what should people retiring think about that they may have overlooked?

Around the Blogosphere:

Dr. Dean @ the Millionaire Nurse blog: Retirement Investing: We’ve Got It All Wrong!

Dominique @ Your Finances Simplified: A Guide to Broke Fancy: How To Fake It Until You Make It

Len @ Len Penzo dot Com: 100 Words On: Why I Hate Slow Drivers Who Cruise in the Left Lane

Carrie @ Careful Cents: May Debt Goal Update (Auto Loan): I’m Debt Free!

<57:38> Our Giveaway! One easy step to enter….

Joe Saul-Sehy

joesaulsehy.com/

Are You an Overnight Success Waiting to Happen? Our Cuppa Joe Discussion.

May 31, 2012 by Joe Saul-Sehy 15 Comments

Having found out today that the Zune is probably dead, I look at Microsoft and think “this was a good idea gone wrong.” From outside appearances, Microsoft never really identified what the brand “Zune” stood for. At one point it was a music player. Then it was a music service. Now, because Microsoft couldn’t make up it’s mind, it’s soon to be nothing. It seems to be a textbook case of jumbled product design.

The iPod never had that problem.

From the beginning, there was clear differentiation between the iPod and iTunes. One was a service, the other a little sexy looking hard drive that Apple marketed as a music player.

Cool Design Alone Doesn’t Win the Day

But people forget that the first iPod wasn’t a blockbuster; quite the contrary. Initially, in 2002 iPod sales were about 40,000 units a month. That may sound like a ton, but not when compared to the 56 million iPods sold in 2008. The product took some time to catch on. It took consistent backing of the manufacturer and a laser-like focus on the end product without distractions.

In the short time I’ve been blogging, a good number of well-designed and well-written sites have disappeared. I’ve watched blogs implode under the weight of the writer’s unrealistic expectations that if they wrote something (anything) the market would come running immediately.

This “quick success” isn’t limited to blogging. Restaurants open daily without any real planning and end up highlighted on the Gordon Ramsay show Kitchen Nightmares. Viewers like me ask “what were they thinking?” as you see people ill-suited for prime-time trying to run a restaurant.

There are other industries: tech gambles, films, online stores, retail and B2B operations. In each category you’ll find businesspeople who were hoping for quick riches.

In forums I’d see new owners complain that people weren’t coming to their site/restaurant/store. They’d rail against the injustice of lesser companies gaining the traction that they’d wished for. I wasn’t ever surprised when these businesses were gone in a hurry. Inspiration is great, but it doesn’t create an overnight success.

I think you start to understand business when you realize: you won’t be an overnight success. At that point, you’ll go into business with a clear understanding of what it’s going to take to succeed: tireless effort and a long-standing belief in your product.

The band Silversun Pickups was nominated in the Best New Artist category at the 2009 Grammy Awards. The band had been around since 2005….four years! Lead singer Brian Aubert, when asked about the three-year-late New Artist nomination answered: “It’s not lost on us how lucky we are.”

People want instant success, but the wise entrepreneur is ready for the long haul, and feels lucky when they finally find their audience. In most businesses, you don’t have to fall into the “get rich now” trap.

Instead, you can take the longer view:

1) Revisit your product. Do you have a jumbled message or a well-designed idea?

2) Realize that you have a cool product and treat it every day as awesome.

3) Interact with your audience in a way that cool companies would interact with their fans.

4) Be patient, but continue seeking out opportunities to invest in yourself and your chance of success.

Sure, sometimes you run out of patience or money. But if you’ve gone into business with the long view, rather than the “I’m gonna get rich quick” attitude, you’re far more likely to win because you’ve set up your business plan expecting it to be a marathon, not a sprint.

Who knows, four years into your new venture, like the Silversun Pickups or the iPod, you might be the next overnight success.

How do you remain patient about your business?

Joe Saul-Sehy

joesaulsehy.com/

Sometimes the Grass Isn’t Close to Green on the Other Side of the Fence….

May 29, 2012 by Joe Saul-Sehy 15 Comments

Ah, the stock market. The only spot where intelligent people are quite at home with the words “soared” and “plummet.” (Imagine if those were your choices in an elevator…).

And yet, is there much difference between the ups and downs of the stock market and those on a family vacation? In both cases, you’re in danger if you become too emotionally invested. You might get your heart broken when what you expected and what happened turn out to be two totally different things.

That was the case in this instance.

On one memorable trip, I felt like Clark Griswold loading two eight year olds and my wife into a car jam-packed full of camping equipment and making the six hour drive to Mammoth Cave, Kentucky. It sounded like fun to spend a few nights out under the stars, singing around the campfire, so I booked us four nights at the Jellystone Campground, in Cave City.

This place is custom made for kids. There was a pool, water slide, mini golf, and arcade. Heck, who cares about the kids, I was fired up.

I needed a break.

I was a financial advisor and it was July of 2002. I spent every day on the phone with clients reassuring them that the financial meltdown wasn’t swallowing all of their money. I’d revisit our defensive strategy. In fact, even on this trip, I’d been sneaking off for an hour each day to keep making phone calls.

I felt guilty being on vacation, but I kept reminding myself that this was “recharging the ol’ batteries” to keep fighting the good fight. The markets had started tanking 24 months earlier and hadn’t stopped.

Of course, the second we jumped in the car the Dow Jones took its worst turn of all. We didn’t know it at the time, but I was vacationing at the very bottom of the market.

So I’m just hanging up after strategizing with a client on the third day of our trip when the activities coordinator (who looked to be about 17) approached me.

Him: Sir, would you mind helping me with the hayride?

Me: Sure. (Are you kidding me? I wanted to hug the guy. I’d pay money to do anything besides talk about how the worst time to sell was when the market happened to be in free-fall).

Him: How’d you like to be Yogi Bear?

The Yogi Bear Show (Photo credit: Wikipedia)

Me: Come again? (I didn’t know if I should be offended. I knew I’d had a few beers in my day, but my waist was still fairly trim).

Him: Yogi Bear. I like having dads play the part of Yogi Bear on the hayride.

Me: You’ve got to be f$%#ing kidding me. Hell yeah. I’m in.

He tells me to be back at 2:30 to get into costume. I’m practically skipping as I cross the campground to tell my family. This is my big break. Maybe I’ll be able to turn this into a full time job as the hay ride Yogi Bear. It sure would beat having the same conversation over and over and over and….

Cheryl: Better day than yesterday?

Me: You’ll never believe how much better. Guess who’s Yogi Bear?

Cheryl: Is that some kind of code? Because I’m not Boo Boo.

Me: No! Guess who’s going to be Yogi Bear on the hayride.

Daughter: Oh no.

Son: No you’re not.

Me: Am too. High five me. (I’m pretty sure kids don’t do that, but I’ve never tried to be hip. These Jordache jeans are a little snug, but they go with my mullet.)

Cheryl: Don’t do anything stupid.

Me: What are you talking about?

Cheryl: Just do what the guy tells you. Don’t try to be funny.

Me: I wouldn’t try to do anything funny.

Cheryl: Like the time you tried to break dance at that wedding.

Son: Or when you tried to start the wave at the Tiger game.

Daughter: Or when you were trying to get the neighbor’s attention and she thought you were a peeping Tom looking in their window waving your hands.

Me: None of that was my fault, except the wave, and those were some lousy fans.

Cheryl: (sigh) Okay, good luck.

So….2:30 rolls around and I’m standing outside the campground office, ready to completely forget about the financial markets. In fact, I’m so stoked, I’d showed up ten minutes early.

Director: There you are, ready?

Me: Sure. What’s the belt for?

Him: Well, it’s about 85 degrees. Inside that costume it’s going to be a furnace.

Me: (totally sure this is overkill) Is it going to melt my pants off? Why the belt?

Him: Feel it.

I do. The huge pockets around the parameter are all ice. I can’t imagine why I’ll need that.

We head up a little hill where there are houses that are supposedly home to Yogi and Boo Boo. He unlocks the largest house and we step inside.

There it is.

My escape from the markets: hanging on the hook is a pristine Yogi Bear costume. Next to it on a bench is that big ‘ol crazy Yogi Bear head.

Me: This is the best thing that’s ever happened to me.

Him: (laughs. Thinks I’m joking.)

We put the belt around my waist. It’s freezing. Immediately I’m freezing.

Me: This is too cold.

Him: Put on the suit.

Me: Can we just take the belt off first? I don’t think I need it.

Him: How about this. If you’re complaining about ice once we get the suit fitted, we’ll take it back off.

I realize he’s placating me, but it’s good enough reassurance. We put on the suit. Now I have a pair of shorts, tee shirt, ice belt, and furry Yogi suit.

Him: How does it fit?

Me: I might get one of these for home.

We put on these huge hands. He shows me how to wave. Then he feeds me the great Yogi Bear hayride secret. I’m not to talk. At all. That sounds like heaven. After the last two years of client call after client call, I’m glad to have someone tell me to shut up.

Him: If you talk, you’ll try to sound like Yogi Bear. You won’t sound like him. I’ve had dad’s try. Don’t talk.

He shows me how to wave, and tells me that once we have the head on, I’ll need to turn my whole body if I want to look at things.

Don’t approach kids unless they approach me. Some kids cry. If they do, don’t try to console them; you’ll scare them more.

Cool. I think. I’m ready.

That’s when he puts that flippin’ head on me.

I’m not sure of the exact temperature, but I think it must have been somewhere in the range of 162 degrees.

Me: It’s hot in here.

Him: That’s why you have the ice belt.

Me: I still have on the ice belt?

He presses it into my skin. I feel a sharp stab of cold. But now it doesn’t radiate.

He’s talking to me and I can’t see him. Even when I turn my body like he told me I have a hard time tracking just where the heck his voice is coming from.

Him: Ready?

Me: No. How do you see out of this–

Him: Okay, let’s go. I’ve got your hand. Wave.

Ignoring my protests he opens the door and here comes the activities director and a sweating, bumbling Yogi Bear.

Twice I almost fall. Somehow, we make it to the wagon. They help me in. I’m sitting along a bench that runs the length of the thing. Kids jump on all around me. From time to time I see them. I’m waving like the queen on steroids. Every once in awhile I hear an adult say to a whining child, “maybe if you put your hand higher, Yogi will be able to see you.”

Hayride in Turner County, South Dakota (Photo credit: Wikipedia)

Thanks for the hint, parents.

Then I’d look down, almost dropping my Yogi head. Their pride and joy is standing right under me, hoping for a hand shake.

I deliver somewhere between a high three and high four. Usually I miss the kid’s hand altogether.

It’s now 199 degrees, but its okay because we’re singing songs. From time to time the wagon stops and more kids climb in. For the most part I hear this but don’t see them because I’m still trying to figure out how to see through that little hole.

We launch into “Old McDonald.”

Old McDonald had a —

All the sudden, I’m nearly yanked off the bench. Someone was pulling something in front of me. Then they let go.

“…farm, eee, iiii, eee, iii, oooo. And on his farm—“ I look around. I can’t see who did it. Hell, I can’t even find the little hole I’m supposed to look out of. When I straighten up there’s just some guy in his twenties. If he’s doing it, he must be a client I’d forgotten to call.

“he had a duck. eeee, iiii, eee, iii, ooo. With a qua—“ I’m just starting to figure out how to clap my hands and someone yanks me toward the floor again. I have to hang onto the side of the wagon to stay upright.

I can’t see anything out of the little f%$ing hole in the mouth. Sweat is dripping from every pore in my body.

Finally I find my culprit! Sitting right next to me…almost on top of me, is a little blonde kid. Maybe four. He’s staring right into the little hole I look out of. The guy in his twenties must be his dad.

The kid smiles, reaches up, grabs my tie, and forces me to the floor again.

I grab for the kid, but miss, and this time I go down. People stop singing. The director is helping up Yogi Bear. I’m trying to keep my head on and maintain regular breathing because it’s only 265 degrees. Something is baking. I’m pretty sure it’s my ass.

Director: Hey, don’t pull his tie, okay?

Dad: Who are you talking to?

Director: Your son is pulling Yogi’s tie.

Dad: Oh. Sorry.

I realize by his tone that Dad isn’t sorry at all. He’s barely paying attention. I’m horrified when the director lets it go and turns away.

This time I knew it was coming. Like slow motion the kid reaches up again, but I can’t stop it.

The second–and I mean the second–the activities director turns his head away I watch the kid reaches up, grab my tie, and yank the hardest he’s ever yanked anything in his whole life.

I have my feet dug in this time, and avoid the first Yogi Bear hayride accident on record.

I turn my body so the little eye hole can find the dad. He’s staring at me, with a monster grin on his face. Suddenly, I realize: he thinks this is hilarious!

Now they’ve gone and gotten Yogi Bear angry.

I’m going to grab that damned kid by the throat and choke him. I’m sure the heat wasn’t helping curb my rage. What about the ice belt, you ask? What $%#! ice belt? I had steaming hot water in a pool around my waist now. My nerves were shot.

Yogi Bear had one thought: Damn kid’s goin’ down.

I didn’t care anymore. That punk was about to learn a lesson.

Luckily for us all, the hay ride ended right then. Everyone got off. The director marched me back to Yogi’s house. He lifted the head off me and suddenly I could breath again. We took off the costume and I was a free man.

Thank goodness I hadn’t gone after the child, although I think it would have been a memorable YouTube video: Yogi Bear beating the $%!T out of some kid at the Jellystone Mammoth Cave Campground.

I marched back to the campsite.

Son: We saw you!

Daughter: You were funny.

Cheryl: What did you think? Fun?

Me: I’ll take calling clients about the market any day over being Yogi Bear.

Any day.

Joe Saul-Sehy

joesaulsehy.com/

The Worst of the Free Financial Advisor, Episode #10: Our Top 5 Ways To Ruin Your Investment Returns

May 28, 2012 by Joe Saul-Sehy 2 Comments

Never listened to a podcast before? Good news: they’re free and easy to use. Click here for Apple’s page on podcasts and how to listen.

Would you like to download the show to listen on your computer? Right click here to download the show.

Everyone else is telling you how to create better returns…so we’re happy to be the ONLY podcast around giving you specific steps GUARANTEED to completely derail your investment portfolio.

You are very welcome.

How Bout Some Show Notes?

<Open> The Huffington Post article: Facebook IPO Drinking Game

<> On The Blog: In Defense of Advisor Fees

<> Fractured Cents w/ PK from DQYDJ.net: Normal Distribution Curves

<> Roundtable

Carrie’s Favorite: Mint.com

(Honorable Mentions: Budgetable, ReadyForZero)

Dr. Dean’s Favorite: Morningstar.com

(Honorable Mention: WSJ.com)

Len’s Favorite: Bankrate’s Mortgage Calculator

Dom’s Favorite: Yodlee.com

(Honorable Mentions: Investopedia.com, ValueLine, ETF Database)

Around the Blogosphere:

Careful Cents: 5 Travel Hacks to Get the Most Out of Your Summer Trip

Millionaire Nurse Blog: Are You An Investing Scaredy Cat

Len Penzo: Why Private Schools Are Financial Rip Offs

Your Finances Simplified: We Have Officially Purchased Rental Property #3

<> Top 5 Ways to Ruin Your Investment Returns

Joe Saul-Sehy

joesaulsehy.com/

Beware Charts, Graphs and Snake Oil

May 24, 2012 by Joe Saul-Sehy 15 Comments

I did away with my Boner of the Week! series that called out stupidity in financial media and blogs because I didn’t want to be that guy. Well, at least not be that guy not every week.

But this site is called the Free Financial Advisor for a reason. My task is to show people the difference between the truth and lunacy; to dole out useful tips that you can apply, sprinkled with my own quirky sense of humor.

Buy the doughnut, the frosting comes free. Bargain!

What I also drag along is a HUGE sense of anger when I see absolute baloney (polite terminology) on the internets.

I fought it as an advisor, and I’ll fight it here for you.

So, this week I’m going to un-bury the Boner of the Week! segment, along with the prerequisite, er, uncomfortable picture. Because I’m too lazy to find a new one, you’re treated to my favorite from the old series.

You’re welcome.

Let’s rant:

A Tip For New Investors:

If someone shows off a chart with a couple squiggly lines and points at them BUT REFUSES TO TELL YOU WHAT THEY MEAN it isn’t “analysis.”

It’s smoke and mirrors.

That’s why I like the DQYDJ blog and ws fired up when PK agreed to join our little podcast. He presents a chart or concept and then explains it. I’m a little smarter for visiting DQYDJ. Check out How Do You Know You’re Ready For Active Investing? Sure, I get PK’s returns, but I also get books to read, a chart on his personal progress and the story of how he began. Good story, good tips, good times.

Onboard?

Don’t try to just show me a chart and tell me “I predicted the financial markets would decline, and see, I’m right.” No reference to how the chart works. No rationale behind the prediction. Just “I’m right. Deal with it.”

Even if the chart is flippin’ brilliant, do you treat financial sites like the circus? Do you come here to see my dogs and ponies? My smoke AND mirrors? Do you want me to flash you a quick glimpse of my 12 inch wealth of knowledge so you can swoon over it?

Hell, no!

Like you, I visit sites for tips and tricks THAT I CAN USE. I don’t want to be shown stuff that I don’t understand.

If you hand me a shovel and I don’t know how to dig, all you gave me was a stick with a funny metal end.

Our “Boner of the Week!” target post (which I no longer point to directly, because that’s not the point of the piece….the point is to help you make better, more informed decisions. If you visited this bloggers site this week, I’ll apologize on his behalf), told us this week that “Mr. Brilliant” called the exact day the market was going to decline. He then advised us to stay out of stocks because it’s a bad, bad time for the market which will correct to (AND THEN HE BESTOWED UPON US THE EXACT RANGE!!!!).

Someone alert Jim Cramer. There’s a new sheriff in town.

Why the hell isn’t this guy working for a huge Wall Street firm or being paid the big bucks by wealthy investors who eat these gurus up? I used to ask my clients this question when they’d bring in what I’d call “miracle fliers” from their mailbox. Some dude telling them that he has all the answers.

I was a good financial advisor. I knew one thing: I didn’t have all the answers. Ta-Da!!!

Oh, my friends, that alone wouldn’t raise my ire. Ready for the next one?

Then he tells us to subscribe so we can find out what stocks we should buy when the time is right.

Thank you, your lordship Mr. Merlin soothsayer.

I don’t want a magical list of stocks. IF I did, I wouldn’t be looking for them on your free internet site.

Here’s what I want: tell me the criteria you used and I want to be taught to use it.

What I’m Railing Against

Did the dude call the market?

Yup. It appears he did.

Could he know how market conditions work?

Yup, he maybe can.

Are you just whining, Joe?

No.

I want this dude to tell me why, not what! A site like this is dangerous because you become dependent on the author. What happens if Mr. Brilliant has a Philly cheesesteak sandwich that doesn’t agree with him tomorrow and his indigestion decides that you should go 100 percent into Zynga stock? Or he tells you that the end of the world is coming and you should sell everything? Would you just follow like a lemming off the cliff?

Don’t follow someone blindly.
Learn to do your homework.

I naturally mistrust when ANYONE tells me they can call the market (after 16 years as a financial pro I saw professional gurus get beaten down by the financial markets time and time again).

One of my favorite stock trading books is called Trading Rules: Strategies for Success’ target=_blank>Trading Rules, by William F. Eng. The basic tenant of the book is that you do yourself a huge favor when you quit pretending you know anything about the financial markets. Once you realize that it’s a freakin’ scary-ass place, you’ll start protecting yourself and making money.

One of Mr. Eng’s fundamental rules: Tips Don’t Make You Money (Rule 7).

William F. Eng is a wealthy trader. I understand his background. I know nothing about wonderboy Mr. “I called it” dude.

Set stop losses. Learn how fundamental analysis works. Explore technical analysis.

But don’t let someone tell you when it’s the time to buy and the time to sell JUST BECAUSE THEY TOLD YOU SO!

They won’t lose the money, you will. And then you’ll be cursing the blogger, who won’t hear you over the dance music he’s playing for the rest of the suckers who hang on every word he says.

Rant over.

Joe Saul-Sehy

joesaulsehy.com/

Meeting an Advisor? Understand Fees by Bringing This Checklist

May 23, 2012 by Joe Saul-Sehy 9 Comments

Yesterday I posted a riveting story about advisor fees.

How do you know all the fees an advisor may charge?

The good news: this isn’t my first fee-rodeo, so I’ve meticulously prepared and will present to you, hot out of the oven, a fee checklist. Now when you meet an advisor you can ask intelligent questions about what fees you may pay.

Isn’t this exciting? Of course it is. Let’s begin:

___ Advisory fee. This fee is an umbrella fee for services rendered.

What services are included?

Financial plan? Yes / No (how often is the plan updated?)
Budget review? Yes / No (will you advise on line items?)
Net worth review? Yes / No (do you make suggestions on assets for the fee?)

Often advisors say they will recommend new homes for assets, however, those new places are through them, garnering the advisor another fee. Will they make recommendations of funds/ETFs/other investments outside of their control?

Insurance review? Yes / No (In many states advisors can’t review insurances for a fee. However, they can make recommendations on appropriate amounts of insurance.)
1040 review? Yes / No (Again, advisors have to be careful here. Some aren’t allowed to give specific tax advice.)
Tax strategy? Yes / No (Will you recommend comprehensive tax plan?)
Asset allocation? Yes / No (Many advisors will calculate where your assets lie on an Ibbotson efficient frontier and recommend asset changes based on your goals.)
Estate review? Yes / No

___ Wrap fees on personally managed funds. Sometimes an advisor will charge fees based on the percentage of assets inside of an account. Often, these fees range from 0.5% to 2.0% Remember that funds inside these plans have fees also, so ask what the average fee is for funds inside the account and add it to the fee.

___ Wrap fees on outside managed funds. Often advisors will recommend outside advisors to manage all or a portion of your assets. Fees generally range from 0.5% to 3.0% of assets managed, per year.

Wrap accounts are easy to remember if you think of plastic wrap around your assets managed in the account. Instead of trading and holding fees, you’ll pay the “wrap” fee on the entire amount inside of the wrapper.

__ Trading costs. Are there commissions for trades? What would those be?

__ Commissions to buy funds. Does the advisor use mutual funds? Are there fees to buy, sell or hold the fund? What are those fees?

__ Insurance commissions. If the advisor completes an insurance analysis, are you expected to buy insurance through them or do you go outside? What types of insurance does the advisor make recommendations on?

When I was an advisor, I’d recommend an insurance amount needed. Then I’d prepare quotes through companies I represented and recommended my clients shop other firms, such as Zander insurance (Dave Ramsey’s company).

__ Annuities, Private REITs and Limited Partnerships. Does the advisor recommend these product types? Do they receive commissions when they recommend these products? Annuities may pay up to a 9 percent commission. Often REITs (real estate investment trusts) will pay nearly the same amount to the advisor.

__ Cash products. Do you recommend savings accounts, CDs and other similar cash accounts? Are these through you, banks or credit unions? How do they work?

__ Mortgages, auto loans and revolving credit. Do you recommend these products for a commission?

__ Other outside experts. Should I expect to pay other experts, such as attorneys (estate plan) or CPAs (tax review)? If so, it’s important to know that there may be even more fees after you write your first check.

Joe Saul-Sehy

joesaulsehy.com/

Worst of the Free Financial Advisor, Episode #9: Top 5 Ways to Save Money at the Grocery Store

May 21, 2012 by Joe Saul-Sehy 12 Comments

Wondering how to upload podcasts to your iPod, iTouch or iPhone? Here’s a link to the Apple page explaining the process. It’s easy and free.

Want to listen on your smartphone? Android users can watch this video. Blackberry users should try this approach. Both of these are easy and free.

Remember that new mixer we talked about a bazillion years ago? We finally figured out how to use these opposable thumbs and make the $%#! thing work. It’s amazing. You’ll notice the sound on our show is remarkably better. Now if we can do something about our voices…..

This particular episode is jam packed with money savin’ goodness: investments tips about Facebook, JP Morgan, AND your company stock. Then we pelt you with cheap entertainment ideas for the whole family, and finish it up with the top 5 ways to cut your bill at the grocery store checkout.

It almost makes me want to give a Cramer-esque “Boo-yah!”

Almost.

These Are the Show Notes You’re Looking For

<open> Teedra Moses article

Kickstarter website

<7:08> On the Blog: JP Morgan

<10:57> Fractional Sense: Company Stock

<17:10> The Roundtable

Thank you to Jana of DailyMoneyShot.net for joining us!

We’re giving tips on cheap entertainment, based on inspiration from this article at PTMoney.com: Quick Money Tips, Cheap Entertainment Ideas

Around the blogosphere:

Jana @ DailyMoneyShot.net: What’s the Going Rate for Teeth?

Dom @ YourFinances Simplified: (two videos on top of first page)

Len @ Len Penzo dot Com: What Were They Thinking? 10 Grocery Product Ideas That Flopped

Carrie @ CarefulCents: What I Learned From My Mother About Life and Finances

<44:12> Top 5 Tips to Save at the Grocery Store

Amazon Subscribe ‘n Save

We mentioned coupons @ our friend Jason’s site: WorkSaveLive, but he no longer has them! Here’s another site, Coupons.com.

Joe Saul-Sehy

joesaulsehy.com/