The personal finance and debt reduction carnivals are both live. Frugal Underground is hosting the one on debt reduction and My Money Blog is hosting the one on personal finance.
As I mentioned before, when it comes to investments, saving money is usually the diamond in the rough that nobody recognizes. In fact, saving money is plain and simply the best investment you can make. It is, however, often difficult to convince others of this.
I did a search for “The best investment you can make” and got a return of over 78,000 matches. When I added “saving money” to the search, it dwindled down to 418 matches, and of those returned on the first page, none advocated that “saving money” was the best investment you can make.
While saving money may not be in vogue when it comes to an “investment strategy,” it comes with a number of qualities that most investments would love to have. Here are some of the reasons that saving money is the best investment you can make:
Low Risk: Saving money money is an extremely low risk investment to make. While it is possible to lose money while trying to save it, these instances are few and far between.
High (sometimes instant) Returns: If you gain 20% a year on a stock investment, it would be considered a banner year. You can get the same 20% return (and often more) instantly without any risk and with minimal effort several times a week when you use “saving money” as an investment strategy.
No Capital Gains or other taxes: The money that you save completely tax free — it isn’t subject to any taxes on the Federal, state or local level.
No Brokerage or other Fees: There are no broker or other fees that eat away at your return since you achieve the savings yourself. That means when you have a 20% return, the entire 20% goes to you.
Easy To Implement: A money saving strategy is easy to implement and doesn’t require extensive study. Basically, anyone can do it — even a child.
Where else can you find an investment with all those positives at such a low risk?
If you have a large amount of money sitting in an ING or Emigrant Bank Account which you won’t need for 14 to 15 months, you should seriously consider investing some of that money in Government I-Bonds. The Bureau of Labor Statistics released The Consumer Price Index (CPI) for September yesterday which rose 1.2%. This was the largest one-month increase in since 1980 with most of the blame being placed on a spike in oil prices as the result of Hurricanes Katrina and Rita.
The CPI rates are used to calculate what rate the the US Government I-Bonds will pay come November 1, 2005. The rates rose 2.85% semi-annually or at a 5.69% annual rate. This new rate (5.69% + fixed rate component) will replace the current I-Bond rate of 4.8%.
Currently the I-Bonds pay a fixed rate of 1.2% + the inflation rate. The fixed rate portion could also change, but should fall somewhere between 1.0% and 1.8%. This would mean that the I-Bond would pay a minimum of an incredible 6.69% and as much as 7.49% over a six month period beginning in November depending on what is decided for the final fixed rate portion.
I-Bonds can be purchased for as little as $25 with a maximum purchase of $60,000 in a one year period ($30,000 in TreasuryDirect and $30,000 in paper bonds). While the interest earning period is 30 years, you can redeem them after 1 year (with a 3 month interest penalty) or after 5 years with no penalty.
For those who have money sitting in online bank accounts earning between 3% and 4%, moving any money that you won’t need for 15 months would make sense. You can buy I-Bonds in either late October or late November (you’ll get full interest for the entire month no matter when you purchase them during the month, so you might as well leave them in the online bank until the end of the month).
If you buy this month, you’ll get 4.8% for 6 months and 6.69% for 6 months then leave the money in for another 3 months so you don’t lose the high 6.69+% rate on the 3 month penalty. If you buy in November, you’ll get 6 months at 6.69+% and whatever the new rate is renewed at 6 months from now. While both have some unknowns, either looks like a much better return than leaving it in your current online bank account.
You can find out more information about the I-Bond at the Treasury Department Website
Both the Carnival of Personal Finance (#17) and the Carnival of Debt Reduction (#4) are live.
If you aren’t familiar with carnivals, they bring together posts from various authors on a specified subject. This gives you a good opportunity to sample a variety of posts from authors you may not have known about on that particular subject.
My contributions this week were The Avian Flu Virus – Getting Financially Prepared in the Carnival of Personal Finance and The New “Keep The Change” Program from Bank of America in the Carnival of Debt Reduction.
Lots of good reading to check out.
For those who follow best selling authors and their financial teachings, Yahoo! Finance has put together a quality line-up of these authors who will be writing future columns.
The ranks now include David Bach (The Automatic Millionaire), Ken Dychtwald, Ph.D. (Reinventing Retirement), Robert Kiyosaki (Why the Rich Get Richer), Suze Orman (Money Matters), Daniel Pink (The Trend Desk), Laura Rowley (Money & Happiness), Jeremy Siegel, Ph.D. (The Future for Investors), Ben Stein (Common Sense) and Charles Wheelan, Ph.D. (The Naked Economist)
The group should put out some interesting articles to help in all the areas of personal finance.
There are more and more quality personal finance blogs out there. Here is a list of other personal finance blogs on the Internet. If you have a personal finance blog and want to be added to this list, please email me so that I can add you.
The Alpha Guy: One guy’s life about graduating college, financial advice, and other ramblings.
Bank Deals: Online banking has created great opportunities to get higher savings rates and better deals. Information and articles on issues related to online and personal banking.
Canadian Financial Stuff: My essays and points of view and opinions on things to do for Home Finances.
Capital Ideas: A 23 year old cubicle dweller dreams of financial independence, and some fun along the way.
Chief Family Officer: Find tips on food, finances and fulfillment.
Chrees’ World: Notes on the goals, experiences, and results of a 44 year-old recovering accountant. Personal finance is the focus, but expect lots of diversions.
Clutter 2 Cash: Charting my progress and sharing experiences as I try to go from clutter queen to cash-tastic and enjoy an early retirement.
Consumerism Commentary: Striving for personal financial security.
Everybody Loves Your Money : Don’t give it to them!!
Financial Baby Steps: The personal financial blog of a baby and the baby steps she’s taking to be financially secure for the rest of her life.
Financial Freedom 4 All: Helping people reduce debt and make wise investments for their future.
Five Cent Nickel: “There are plenty of good five-cent cigars in the country. The trouble is they cost a quarter. What this country needs is a good five-cent nickel.” – Franklin P. Adams
Frugal For Life: Helping people live below their means (LBYM) one day at a time. Experience life, by living a simple, frugal life!
Growing Money: Smart money management and investments. Discussions of efficient ways of saving money and great ideas and strategies for investments.
It’s Your Money: Money Musings: Thoughts on my personal finances, goals, experiences, motivations, and accomplishments (or lack thereof).
Mighty Bargain Hunter: Finance, saving, spending, and bargains
Million Dollar Goal: Tracking our quest for a million dollar net worth.
Mr. Thrifty: Your guide to thrifty living. Articles and tips on how to save money on phone service, mortgages and getting the most out of your Bed Bath and Beyond coupon.
My Open Wallet: An anonymous New Yorker tells the world how much money she makes and what she spends it on. And how much of it she saves.
No Credit Needed: No credit needed blog.
Retire Young and Wealthy: My personal description of how I plan to retire young and wealthy through property investing in Australia and New Zealand and through internet marketing.
Scott On Money: There is so much advice that is given by so called experts on financial matters that is, well, garbage. I’ll share my experiences and thoughts here to hopefully give your financial goals a boost.
Seattle Simplicity: A 30-something Seattle girl’s quest to maximize net worth through frugal living and simplicity
Simplify My Life: Simply a journal of my personal finance transactions.
Single Guy And His Money: I’m a 28 yr old single male trying to manage my finances and hopefully retire young enough to enjoy it.
Sitting Pretty: Straight Financial Advice from a Well-Heeled Lesbian
Stop Buying Crap: Yet Another Personal Finance Blog
weissblog: These are my random thoughts and ideas. The only central theme here is my life, so there will be posts and articles about religion, law enforcement, finance and all sorts of interesting things (well, interesting to me anyways) Why? Well, it’s my blog.
All Things Financial: A personal finance blog dedicated discussing such topics as budgeting, asset allocation, 401K, IRA, cash flow, insurance, and other areas in personal finance.
Blueprint For Financial Prosperity: …your helpful guide to financial security and independence.
Budgeting Babe: A Web site dedicated to all the young, working women who want to spend like Carrie in a Jimmy Choo store but have a budget closer to Roseanne – this is my catharsis after leaving the store empty-handed.
Fat Kitty: Making the move from poverty to prosperity
Financial Maturity & other money blabs: For those who like improving their money situation and the idea of Financial Maturity
Financial Reference: Personal finance blog
Happy Capitalist: Life is a series of choices
I Just Want To Be Rich: Chronicles of a mid 20s Bostonian trying to hit the big time.
Kate Spills The Beans: A personal finance blog.
Let’s Make Cents: Personal finance, wealth building, debt relief, goal setting, money management, investing, and anything else I find interesting….
Momma & The Boys On A Budget: Penny pincher work at home momma to 3 boys enjoying watching bargains and giving ideas on how to stretch those dollars.
My Money Blog: My Path to Financial Freedom. Goals: $100,000 non-retirement by mid-2007, $1,000,000 net worth by age 45.
New Age Personal Finance: Personal Finance for the New Age.
Savvy Saver: Personal prosperity depends not on how much money you make, but on how much money you keep. This personal finance blog is dedicated to making smart money decisions, living below your means, and increasing personal wealth.
Sharp Money: Making, Investing, Saving, Spending
Sound Money Tips: One quick personal finance tip every day. Credit cards, banking, investing, insurance, mortgages, frugal living & online shopping. From Seeking Alpha.