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November, 2016

FOUR WAYS TO WIN AT MONEY MANAGEMENT
by LARRY

Sooner or later, most all of us can use a little extra money and can foresee times when we might need still more of it. Bonds are paying very little, though, in fact adjusted for inflation are likely to erode our buying power. Are there still in this economic environment smart means to get and stay ahead in the financial game? Each of us can decide for him- or herself, but these are a few worthwhile ones that occur to me:


1. We can pay off credit card debts right away. If this is not possible, at least we may find legitimate methods to consolidate and reduce or eliminate them with loans at lower interest rates. Debt counseling may help. The average credit card user in 2016 has debts on credit cards totaling around $4700 and pays an official interest rate on them of plus or minus 15%. However, with the typical monthly payment of about $190, the effective rate is compounded to a much higher level. That $4700 debt thus can often take 10 years or more to completely resolve after total payments of more than $22,000.


2. We might buy used instead of new vehicles. The value of the average new car in the U.S. depreciates 25% after the first 12 months compared with the initial sticker price. Even after 12-24 months a secondhand auto usually has years of life in it and still looks good. Car savings can be enhanced further by buying directly from an individual rather than a dealership or buying certified vehicles from a discount vendor such as CarMax and Hertz Car Sales. When one adds the savings of getting moderately pre-owned, still in fine shape transportation plus using a certified vehicle discount retailer, the total savings can be 35% or more off the cost of a new car. For example, a 2016 Kia Optima LX went for about $22,000 last year. The Kelley Blue Book value for a certified 2015 Kia Optima LX with 37,000 miles is about $14,700. Yet here in Austin a good condition certified Hertz Car Sales 2015 Kia Optima LX goes for around $12,900, a 41% savings off the cost of the 2016 car.


3. We can set funds aside for a rainy day. On average, since World War II a bear stock market (defined as when stock market averages drop at least 20% or more from their highs and stay down for at least 60 days) occurs about every 3-4 years, though without any particular regularity. We are currently in a bull stock market (defined as a 20% or greater advance from a major stock index low). In this case, it has persisted for quite awhile, by some calculations since March of 2009, over 7 years. It may yet continue for a few more, but odds are another bear market will occur before the end of President-elect Trump's term. It is suggested that we can keep our powder dry by maintaining a substantial portion of our liquid funds in certificates of deposit, money market accounts, or other cash-equivalent reserves, ready to be fired into low-priced stock shares once the next bear market is underway. We might dollar-cost-average investments into safe but (by then) beaten down stocks or stock mutual funds, maybe ones like those in the table.

Places to Put Our Dollars in a Bear Market
CompanyTicker
Symbol		Recent
Price		Dividend
Yield
Expediters International of WashingtonEXPD$51.501.55%
Infosys Ltd. (ADR)INFY$13.892.70%
McKesson CorporationMCK$140.050.80%
Novo Nordisk A/S (ADR)NVO$32.422.80%
Vanguard 500 Index Fund Investor SharesVFINX$202.111.92%

If one had invested in Vanguard 500 Index Fund Investor Shares at the end of February, 2009, for example, and kept those shares of VFINX till November 17, 2016 (the last date for which records are available at time of writing), he or she would have seen a rise in the holdings of over 200%, a 7-plus year average annual increase of more than 15%.



4. Finally, for those of us who want to benefit from what is left of the currently upward moving market, a nice use of some of our liquid assets is to buy shares in strong, successful companies with good growth prospects that had been lagging the market yet are starting to appreciate in price again. Here are three that look inviting to me at this time:

Places for Possible Current Investment
CompanyTicker
Symbol		Recent
Price		Dividend
Yield
Franklin Resources, Inc.BEN$38.891.85%
Kohl's CorporationKSS$54.573.67%
Schlumberger Ltd.SLB$80.002.50%

There are, of course, many more successful money management tips. People are advised to research the topic carefully and/or seek the guidance of a reputable financial consultant before investing in any mutual fund or stock security.



DISCLAIMER

Larry is not a professional. Don't take him seriously!

Actually, the investment article provided here is for general information only and should not be considered as professional advice, a solicitation to buy or sell any security, or the Word of God. Investors are encouraged to do their own research while considering their personal goals and circumstances, or consult their own professional financial advisors, before making investment decisions. Neither Larry nor LARVALBUG will be liable for any losses sustained by any visitor to this site.

(Disclosure statement: Larry and Val have holdings in some of the suggested assets but do not "make a market" in any of them and do not derive any direct benefit from recommending them, except perhaps for a bit of smug self-satisfaction.)



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