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|* repair credit|
|Intro||home - top
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Here is a simple plan for an average american:
1. Get out of debt - www.debtfree.com , repair credit, and accumulate 6 months cash reserve
2. Invest maximum allowed into retirement plans:
- From your employer ( 401(K) ) - www.401k.com/401k/pfp/rp/fringe.htm
- Individually (IRA, Roth IRA ) - www.strongfunds.com/strong/Retirement98/ind/products/roth.htm
- From your small business (Simple IRA, SEP IRA, Keogh, etc.)
3a. Buy a house
3b. Open account with one of the on-line brokerage firms and invest in index funds
3c. Other investments - other funds, stocks, bonds, real estate, annuities, etc.
|* The Millionaire Next Door : The Surprising
Secrets of America's Wealthy by Thomas J. Stanley, William D. Danko
* Rich Dad, Poor Dad : What the Rich Teach Their Kids About Money That the Poor & Middle Class Do Not! by Robert T. Kiyosaki, Sharon L. Lechter (also - www.richdad.com/ - )
* The Gorilla Game : Picking Winners in High Technology by Geoffrey A. Moore, Paul Johnson, Tom Kippola
* Investing - read here: www.moneyandmore.net
* http://users.erols.com/scambos/ - the article describes that one can legally live in USA without paying taxes.
|Links||home - top
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* www.edreyfus.com/qsys/web/headers/menu - many links
* http://www.guidenet.com/market.shtml -
* marketperform.com- good site, Offers the First Investment Tool to Measure Performance of Financial Institutions' Recommendations. See which firms' recommendations yield the highest returns and get notified when they release their next calls.
* www.fool.com - The Motley Fool
* quote.yahoo.com - good to start and plan portfolio
* cbs.marketwatch.com- original news and comments
- links to data and analytical tools
* www.bigcharts.com - charts
- useful, but costs $9.95/mo
* www.marketplayer.com - poweful screening
* www.quicken.com - stock search - simple and free
* www.freeedgar.com - offers all SEC filings, can be downloaded
* www.bigcapgrowth.com - large cap stocks to buy
yahoo >> Business and Economy (Finance) > Mutual funds > Reference and Guides
News and services:
* Netscape Personal Finance
* Dreyfus Brokerage Services
* Financial Times
* The Economist
* Barron's Online
* News Alert
* The Wall Street Journal
* Stock Smart
* DLJdirect - Home
* E*TRADE - Home
* Nasd Regulation
* Investor's Business Daily - Financial Web Site
* Fox Market Wire
* Table Of Contents
- http://www.josh.com - Island
* www.ecinvestor.com/ - Piper Jaffray Inc
* www.gomez.com - Review of Online Brokers
|Mortgage||home - top
of the page -
p - principal, the initial amount of the loan ($400,000)
y - years (30)
n - number of months (12 * y = 360)
i - the annual interest rate ( 7%)
j - monthly interest in decimal form = 0.01 * i / 12 ( 0.005833333)
t - total cumulative interest = (1+j)^n ( ~8.1165)
m - monthly payment = p*j*t / (t-1)
For our example: m = $2,661.21 (=$400,000 * 0.005833333 * 8.116497475 / 7.116497475)
a - total amount of mortgage = m*n ~ $960,000
Let's calculate the balance during the payment time.
We start with the principal amount. Then we have 2 forces: monthly payments reduce the amount by "m" every month. And between the payments the amount grows - multiply by (1+j).
To make calculations we will start from the very last payment (#360) and go back in time. We will use a coefficient f = 1/(1+j), which is ~1 (~0.996 in our example).
|Payment #||r- remaining balance after payment||b - balance before payment||principle paid
b - bnext
|359||mf||r+m = mf+m||mf||m(1-f)|
|358||(mf+m)f = mf^2 + mf||r+m = mf^2 + mf +m||mf^2||m(1-f^2)|
|1||mf^359 + mf^358 +...+mf^2 + mf||r+m = mf^359 + mf^358 +...+mf^2 + mf + m||mf^359||m(1-f^359)|
so original principal p=mf^359 + mf^358 +...+mf^2 + mf + m.
This is a simple geometric progression. Let's calculate it:
pf = (mf^359 + mf^358 +...+mf^2 + mf + m) f = mf^360 + mf^359 +...+mf^3 + mf^2 + mf
pf - p = (most of stuff cancel each other) = mf^360 - m
m = p (1-f) / (1-f^360)
1-f = 1-1/(1+j) = j/1+j ~ j
f^360 = 1/t
thus: m = pjt/(t-1) - which is the formula we used above.
As you making payments - your remaining principle balance decreases by "m", but then it grows because of interest.
So the actual amount of payment which went towards principle is (b - bnext) - see the table.
See more in the book: The Vest Pocket Real Estate
Advisor by Martin Miles (Prentice Hall)
|Mortgage + Investment||home - top
of the page -
Pay off your mortgage first - then start investing. Never take a 30 year mortgage. Take 15-years and the one, where you can accelerate payments (thus actually paying it in 5 years). Use we-weekly payments plan to further decrease the amount of interest you are paying.
Instead of putting all your cash into paying off your house, you take a low interest mortgage - and put most of your cash into investments. This approach has the following advantages:
- investment can add to your networth at a higher rate than mortgage substract
- all mortgage interest is tax-deductable.
- plus you have more flexibility with your cash
Math models show that 2nd approach is better. In reality it depends how you manage your money.
One thing for sure - you should NOT pay PMI (Private Mortgage Insurance).
If your downpayment is too low (usually less than 20%) - you will be asked
to pay PMI, which is very high extra payment. So you better make a 20-25%
downpayment. If you don't have money - get a short-term loan for this amount.
It will be at higher interest than mortgage - still it is much better than