Gift cards are really a bad idea for a gift.

Gift cards are heavily promoted by issuers and available at many retail outlets. They even entice you with offers like $50 card for $40. The worst of these cards are those valid only at one retailer such as Starbucks, Macys, Target...

Fact is it is a really bad deal for the person receiving the gift. The issuers win big.

40% of gift card recipients do not use the total value of the card.
More than $41 billion in gift cards went unused between 2005 and 2011.

There are many better ways to give a gift which actually benefits the recipient.

1. Think ahead and just send a check. This is the simplest way and these days checks can be deposited using a smart phone. Very low tech and works. These days the checks are cashed as if they are electronic transfer using ABA routing number and account number and transfer is quick.

2. Your credit union may offer Visa or MC gift card for no fee and charge the recipient a 1% fee.

3. If you are tech oriented, You can send money using services like venmo , google wallet , Square Cash , PayPal and others if you look. There may be a fee of about 3% but still way better than gift cards.

See an article here.

4. If you know for a fact that the recipient uses Amazon, it is instant to send Amazon gift card and it is no fee.

Happy gifting...

Your 1yr promo is over on cable TV and price went up? Here is what you can try.

Let us say you have cable TV and internet bundle with 2 DVRs and after 1yr, price went up by $30 a month.

Here are some choices.

1. Play the game and ask for promo of Cable TV, internet and phone even if you don't use the phone line. Cell phone is fine these days.

2. Look at what you are paying for the DVR rental. Perhaps  $15 a month eeach for the DVR In 1yr, you are paying $360. Buy a used Tivo with lifetime service for $230 * 2 = $460. After 1yr, if you cancel cable and get ATT Uverse or DirecTV or Dish, you can sell your Tivos for at lease $175 * 2 = $350 and you came out ahead. If you continue with cable you save even more.

3. Look at what channels you actually watch, dump cable TV and get a Roku box or some device and watch Dish network over internet. There is netflix and bunch of others too.

4. Do you know that in most cities, all you need is a simple antenna to watch network TV in high definition and record on Tivo too?

Fight back and enjoy literally...


 

Should selling stock depend on dividend or tax implication?

Like most of you reading this article I too faced the same issue when it comes to selling stock.

Selling is always a tough decision as it is. If you have loss, you are tempted to wait for recovery. If you have profit, you are afraid that you are selling too soon.

Think of a high dividend paying stock which offers 7% dividend like an oil company for example BP. It hit a high of 43.60 in April 2015, a low of 29.38 5 months later in Sep 2015. You lost all the dividend and more. Dividend should be the reason to buy stock ONLY if you look at the past history and the future stability and believe that stock price will be flat and you are better of than cash in the bank. Even then it is a riskly move. Just examine not a stock by high yield bond JNK for example. Price may vary 10%. Dividend is 6%. Do you have a good reason to buy?

Let us talk of tax implication. Assume you had stock in Apple you bought early this year for close to 110. You saw it hit 130 and almost keep going back to 130 and thought that you will be hit with tax if you sell and held on. Now you are probably worse off selling at 116.

So, how do you decide when to sell? If you are a long term investor and believe that over time stocks are better and not sure what to do, you would buy an index such as S & P 500 and hold for 10 years or so and accept the historical annual return of 7.6% and dividend of about 2%. 7.6% per yr is same as about 0.55% per month compounded. 2% per yr is same as about 0.5% per quarter. When your Apple stock went up to 133 in Feb barely 2 months after you bought it, you had a profit potential of 20% in 2 months. If you did not take it and pay taxes you lost really badly.

Remember the old saying.

Bulls win, Bears win. The greedy pigs get slaughtered.

Don't let dividend or taxes control your selling decision. If a stock far out performed S & P 500 in a short amount of time, you owe it to yourself to remember why you bought that stock and think if you think the stock will still out perform S & P 500 at the current price.

Just food for thought...

Is it wise to collect Social Security at 62 or wait till 66 or even 70? It depends...

You probably read many articles like this one

At your full retirement age
which may be between 66 and 70 depending for people born between 1940 and later let us say you collect $1000 per month.

Here's how it works if your full retirement age is 67.

• If you start your retirement benefits at age 62, your monthly benefit amount is reduced by about 30 percent. The reduction for starting benefits at age
  
  • 63 is about 25 percent;
  • 64 is about 20 percent;
  • 65 is about 13.3 percent; and
  • 66 is about 6.7 percent
  So, most financial planners and social security administration encourage you to wait till 67 or even 70 to collect the $1000.
  I think It may be wise to use your 401k money first and delay collecting social security if you are financially able to do so. So, is it a clear cut decision to delay? It depends on how you invest the money. Let us say you collected $700 a month at 62 an invested in stock market with a historical return of 7.67% for S & P 500 Index. Let us say you get only 4% on the average. When you are 70, you would have $73k after tax. Now you can invest $73k at the age of 70 and get 4%, you get about $240 a month. On top of it you get $700 from social security total slightly under $1000 Vs $1320 a month from social security if you waited till 70 to collect. So, why not wait? Return in stock market is not guaranteed but social security is (at least that is what they say). However if you waited till 70 to collect and you suddenly had health issues and you die at 81, it is a wash. If you live well past 81 then you may come out ahead by waiting. However, do you want to take risk and hope that there will be no more changes in social security? Jury is out on that. Of course, you could have invested in a high flying stock and made a ton of money or gone to Las Vegas and lost it all...
  
  
  However, if you have poor health and financially tight, absolutely not a good idea to wait.
  
  If you are young and in good health and not contributing maximum to 401k and eating out and lot, travel a lot, indulging your kids a lot, buying fancy cars, buying new gadgets and clothes a lot, renting for ever and not getting on the real estate band wagon (if you live in an area where real estate is going up) and living in the moment, you may really regret it when you cross 40 and get laid off... At 50 it gets worse and social security expects you to have a job till 70?
  
  If you were a foreign national who became a US resident or citizen and you are thinking of retiring outside US, be aware that you get no medicare outside US and medical costs and inflation is much higher than you remember. It may not be practical. Besides, you may have kids who are US citizens and of course they live in the US. As you get older, you cannot expect kids to take time away from work and fly at great expense to take care of your health and finances in a foreign country. Your siblings in the foreign country are getting older too. Do you think their kids will take care of you as well as their parents?
  
  I hope I gave you food for thought.