http://www.eFIPO.com

It's been a fun time on saving advice, but it's time for me to exit. I gotta spend more time on my main site. Please visit it for complete posts, and debates. Thanks again for the whole community for helping me out for the past few months.


Sincerely, Jeremie

As I have told you many times in the past few months, I knew that the stocks that I owned were going down. A lot of my portfolio relies on the consumer action for it to see stock prices soar. I have retail store holdings (like Best Buy & Circuit City) that usually only see profits in the non-business markets. Today a story in Wall Street Journal directly pointed out what I was saying in the past (I can’t link to the article I am referring to because you need a subscription. Sorry!)

“Forecasters are more divided than usual over what kind of holiday shopping season retailers will see this year, with predicted gains for overall sales ranging from a 2.5% hiccup to a gangbusters 7.5% advance.” I’m more on the optimistic side of the argument. A lot of those retail giants receive over 50% of their yearly revenue in less than two months of selling.

“Depending on who is counting and how they do the tallying, shoppers are expected to spend anywhere from about $250 billion to $786.6 billion.” That’s a lot of money to be made during just a few months. Last year a huge change happened in the retail market. Increase of sales happened without products moving off the shelf.

Who’s to blame for that phenomenon? Gift cards! Gift Cards stole a huge amount of revenue from products. This really doesn’t change the profits of large companies; it just changes their selling strategy. “Thirty-eight percent of the value of gift cards purchased in the 2005 holiday shopping period were redeemed in January 2006.”

What does this mean to you? If you have extra month laying around after your holiday budget is done, buy some stock so you can actually MAKE money while shopping.

I received an email today with a great question. Here it is “Hey Jeremie I’ve been reading your blog for about 2 months now and I have a question. I just ran into a pretty large amount of money. Well to me it’s big money. My grandmother gave me $2,500 and I am trying to decide what to use it for. I don’t have any debt, I’ve already maxed out my IRA for this year, and I have six months savings already built up. What should I do?”

First, I would like to congratulate you on your successful savings habits. It seems you are on the right on track to a very early retirement. I would love to be in your position right now! There are a few recommendations that I would do based on the information you sent me.

Do you own a home?
Yes- See if you need to purchase anything around the house that might need to be replaced. Small home improvements are always a great investment too.
No- Open a separate savings account for your home. Try to save around 20% of the down payment. I know it seems high but that’s just a target. Use a high interest online savings account.

Are you currently married?
Yes- Consider taking a small vacation with your wife. It’s always nice just taking a quick getaway before the holiday season.
No- Save for a ring so you don’t have to go in a huge amount of debt when you decide to pop the question. It’s always good to have some sort of down payment on the ring.

Do you have kids?
Yes- Start saving for their education. As you know even a little can go a long way with compound interest. “Compound interest is the most powerful force in the universe.” - Albert Einstein
No- Put more money into your online savings account and save it for the holidays or an extra rainy day fund.

You can also invest some into something that will create passive income. These are just a few suggestions I would consider doing.

Mutual Fund Performance (All grouped together)

* Friday, October 27, 2006 – Full Value $10,628.86

* Friday, November 3, 2006 – Full Value $10,485.46

* Decrease of $143.4 which is a ~1.4% decrease.

Individual Stock Performance (All grouped together)

* Friday, November 3, 2006 – Full Value $2,233.81

* Friday, October 27, 2006 – Full Value $2,281.27

* Decrease of $47.46 which is a ~2.1% decrease.

I expect 2 more weeks of a down market till my portfolio starts hitting homeruns. I finally calculated how much money I needed to achieve a 20% return on my mutual fund portfolio and 22% on my stock portfolio. It took me a while because I added money into both portfolios which makes it harder to calculate a needed return.

Mutual fund balance January 1st, 2006 $9548.45
Needed money to return 20% – $11,458.14
So I need another $972.68

Stock Performance balance January 1st, 2006 $2042.78
Needed money to return 22% – 2492.19
So I need another $258.38

(Congratulations…now you’re
down to only one boss!
Happy Retirement!)

Are you worried about retirement? Probably not… I mean you’re young and you don’t have to worry about it for such a long time. I don’t think so. The “Are you worried about retirement” question is so vague. I better question would like “When do you want to retire, and how much money do you want when you retire at that specific age?” Personally, I want the ability to retire around the age of 40 and then dedicate my life to public service. What are your retirement goals?

Everyone has their own ideas about retirement. Do you want to live lavishly or comfortably? The real question is - how do you plan to fund your retirement? There are so many options out there such as: 401(k), IRA’s, real estate, investing in business, owning your own business, ect. I plan to use pretty much all of the above.

According to the U.S. News & World Report, there are 5 keys to resting easy concerning retirement. Beside the key points are some articles that may interest you concerning that precise topic

1. Plan for the financial transition. Couldn’t find any, which means I will be writing on this very soon. If you find an article on this subject please leave it in the comments!
2. Pay down debt before you retire. Jeremie (me!) from eFIPO.com article on Why save when you’re Broke.
3. Evaluate your assets. 2million article on Asset Allocation
4. Health insurance is a must. Jeremy from Generation X Finance article on Why do I Need Insurance? - Part 2
5. Take care of your health. JLP from AllFinancialMatters article on Health Care.

Go to http://www.efipo.com/20061103/retirement-rules/ for all the links to the articles

According to a new study conducted by the American Institute of Certified Public Accountants, Generation Y (eFIPO generation, 17-35) are not saving money and are engulfed in debt. Why is this happening? Times have changed. We live in complex world that promotes the need for immediate gratification. Whether it’s the media (TV & radio) or celebrities, we just can’t help but want more.

Americans aged 25-34 had a median net worth of $3,746 in 2004, which is a significant decrease from $6,788 in 1985. Debt accumulation has also increased from $3,118 to $4,733. The net worth figure is also skewed because it doesn’t encompass inflation. The value of $6,788 in today’s dollars would be about ~13,000 (using a 3.7% inflation rate). If I used the savings rate it would be even higher. What does that mean for you? Start saving, spend below your means, and invest in your future. You can’t use the ignorance card anymore. Don’t come up with more reasons why not to save for retirement. Learn from your mistakes and start being proactive.

I know this data seems very frightening, but the eFIPO Generation have a few aces up our sleeves. First, we are the most educated generation in American history. The baby boomers have to retire at some point, and who do you think will fill those spots? Illegal immigrants? Of course not! Second, time is working with us. We are young and we can correct the screw ups that we’ve made over the years. Start to pay down your debt, and use the awesome powers of compound interest and market returns in your favor. Learn your investment strategy and begin building your nest egg.

We don’t have to be the debt generation. We are Generation Y and we have the ability ask “Y not?” Y not be rich? Y not retire young? Y not get involved in politics? We have the ability to break the cycle. It’s up to you if you want to be part of the experience or sit on the sidelines.