What is Passive Investing?

For some, the idea of investing conjures up images of crazed traders on the floor of an exchange.

Others think of someone in a home, sitting in front of a computer screen, desperately trying to time the exact best time to buy — and then to sell.

These images, and the idea that you have to be on top of all the market movements and news, discourage many from investing.

Not all investing is a short-term attempt to profit, though.

Indeed, many investors are passive investors, doing very little to actively manage their portfolios.  Think investing in a tax-advantaged retirement account like a 401(k) or an IRA.

A passive investment doesn’t have to be all about your retirement account, though.  Anyone can be a passive investor and come out just fine in the end.

Definition of Passive Investing

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Think of Marriage as a Business Arrangement?

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Many people enter marriage blindly, underestimating how minor annoyances they experience while dating can grow exponentially during marriage. 

While couples may argue about a variety of issues ranging from in-laws to child rearing to household chores, research shows money fights can be the most toxic to a marriage.

Jeffrey Dew at Utah State University analyzed data collected from 2,800 couples and determined that those who fought about money weekly were “30% more likely to get divorced than couples who reported disagreeing about finances a few times a month.”  (The New York Times)

Many of us believe in the romantic ideal that love is enough to grow and sustain a loving marriage, but that is certainly not the case. 

While physical attraction is important, what is more important is your spouse’s ideals and convictions, and how closely they are in line with your own.  If you are a saver and you willingly enter marriage with a spender, be prepared for routine conflict, and perhaps divorce.

Jan Dahlin Geiger, a financial planner in Atlanta states, “‘Overspending is no different than being an alcoholic or drug addict’ in its effect on a relationship.  ‘What one person is doing could have a huge negative impact on the couple’s finances’” (USA Today).  Likewise, spenders may hide their purchases from you and incur debt you do not know about.

Of course, overspending is not the only financial problem couples might face. 
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Five Ways to Use Credit Cards Without Getting Buried in Debt

Everyone appreciates the importance of using credit cards responsibly; the issue comes down to tactics.

How do you use your credit cards to your advantage without also over using them to the point where they become a problem?

Let’s face it, credit cards are extremely user friendly!

Everything about them tempts you to use them even more.  From generous (and often rising) credit limits, to zero-interest introductory rates, to cash rebates and rewards, to the completely self-directed nature of the credit arrangement pull us into what is probably the most cozy relationship with any kind of debt we’ll ever have.

But credit cards are loans—as in debts that are required to be paid back.  If we ever lose sight of that we’re at risk of becoming credit card junkies or bankruptcy candidates.

How do we stay on the safe side of credit cards?

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Good High Yield Dividend Stocks Are Better Alternatives to Bonds Today

The markets continue to be volatile.

With the European countries still struggling to figure their way out of the debt mess, and even the well regarded bank like JP Morgan taking large losses on their hedging activities, it is understandable that some investors may decide move their assets to the relative safety of the bonds.

However, this safety is illusory.

The Inverse Relationship Between Bonds and Interest Rates

This is one of the fundamental principle of bond investing.  It is well understood but still bears repeating.

The value of a bond goes up when the interest rates are low and it goes down when the interest rates are high.
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Which Airlines Have Seats Open for Your Rewards?

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Membership has its privileges but cashing in on those privileges is another story.

If you’re a traveler but you don’t fly enough to get in to the extra special diamond, platinum, or other private group of the most elite airlines, you know that amassing frequent flyer miles or points is easy but using them to get a better seat or a free flight might be exceedingly difficult.

The problem is simple: airlines save money by offering fewer flights which means less seats available.

Even worse, when an airline merges with another airline, the amount of people in the frequent flyer problem doubles but often, the amount of flights taking off and landing doesn’t.  More people but less seats doesn’t make you happy.

Finally, if that isn’t enough frustration, in order to make money, airlines sell points and miles to credit card and other companies to offer to their loyal customers.  Some of those people sitting in the first class seats that should rightfully be yours may hardly ever fly.  Go ahead and get a little frustrated!

Ideaworks knows how you feel and that may be why they conduct the Switchfly Reward Seat Availability rankings report (click here to see the report pdf.) Continue Reading

Reflections on a Frugal Japanese Life

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It is no secret that Americans are not good at saving.  

In fact, before the economic downturn, Americans were only saving 1% of their income according to The Atlantic.

Compare that to the Japanese, who save 25% of their income, down from a high of 30 to 35% according to Maki, the Japanese woman behind the blog Just Hungry.

My husband was born in Japan and lived there the first 25 years of his life, so I asked him about his experience growing up.  He was at first hesitant to share because he is nearly 40, so he doesn’t feel his family is representative of the way things may now be in Japan.  Still, this is his family’s experience, which I find to be in stark contrast to many American households, even 30 years ago.

His Parents’ Backgrounds

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Tradeking and Zecco to Merge – More Capabilities, Same Great Pricing

Like so many other industries, there are small players and big players.

Little fish in a very large pond may be another applicable cliché to describe this story.  The pond is the brokerage business and that pond is big.

Companies like Fidelity, the world’s largest retirement account holder has 13.5 million accounts, E*Trade, one of the most well known of the brokers for retail investors has 3.9 million accounts and TD Ameritrade has 5.7 million.

In the past, there were plenty of smaller discount brokers but most were bought by the larger firms.

Schwab acquired OptionsXpress for $1 billion and TD Ameritrade acquired Thinkorswim for an undisclosed amount.

As the big brokers keep getting bigger, there was little room to compete if you were still holding on as one of the smaller firms in the highly competitive field of discount brokerage.

[Related: Best Online Brokers for Inexpensive Trades]

This was true for two small firms, Zecco and Tradeking.
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