Investing for Less than Three Year Period

When I was in my 20s, I tried telling my mother how to invest her money. She did not want to hear it. After all, she knew everything and I knew nothing. It was the 1970s, a time of high inflation. Money market funds were giving 7 to 9 percent interest. Bank accounts were giving 5 percent. Inflation was running round 8 percent. She kept her money in a savings account. She never changed and she lost at least 3 percent due to inflation per year.

Today, we are in danger of deflation. Saving accounts are giving less than one percent. Money Market accounts are giving a little over one half percent. Inflation is at about 3.8 percent. Needless to say, you change with the times.

That is why we are going to talk about investing in corporate bonds that mature in about two to three years. The information that I am talking about here was taken on Sept. 30, 2011.

International Lease Financial M 5.625% of 09/20/2013 selling for $965
Bond is rated BBB- by S&P CUSIP is 45974VA81

The International Lease Finance Corporation (ILFC) is an aircraft lessor headquartered in Century City, Los Angeles, California.

It is the world's largest aircraft lessor by value, though ILFC's rival, General Electric's GECAS unit, has more aircraft. It leases Boeing and Airbus aircraft to major airlines worldwide, including AeroMexico, Air Canada, Asiana Airlines, Korean Air, Cathay Pacific, Cyprus Airways, Air France-KLM, Lufthansa, Alaska Airlines, American Airlines, Air India, Continental Airlines, Norwegian Air Shuttle, Mexicana, Pakistan International Airlines, Emirates Airline, Gulf Air and most recently, Delta Air Lines.

Royal Bank of Scotland Group P 5% of 11/12/2013 selling for $964.10
Bond is rated BBB by S&P CUSIP 780097AN1

The Royal Bank of Scotland Group (LSE: RBS) is a British banking and insurance holding company in which the UK Government (HM Treasury) holds an 84% controlling share (economic interest; actual voting rights will not rise above 75% in order for it to retain its listing on the London Stock Exchange). This stake is held and managed through UK Financial Investments Limited. The group is based in Edinburgh, Scotland, and is the world's largest company by assets. The group controls the Royal Bank of Scotland plc, founded in 1727 by a Royal Charter of King George I, the National Westminster Bank, which can trace its lineage back to 1650, and Ulster Bank in Ireland.

APRIA Healthcare Group Inc. 11.25% of 11/01/2014 selling for $975

Bond is rated BB+ by S&P CUSIP 037933AE8

Apria Healthcare Group Inc., together with its subsidiaries, provides home healthcare products and services in the United States. It offers home respiratory therapy, home infusion therapy, and home medical equipment services. The company’s home respiratory therapy products and services include oxygen systems, ventilators, respiratory assist devices, continuous positive airway pressure and bi-level devices, infant apnea monitors, nebulizers, and sleep apnea devices, which are used to treat chronic obstructive pulmonary diseases, respiratory conditions associated with nervous system disorders or injuries, congestive heart failures, and lung cancers.

I own bonds in International Lease Financial and Apria Healthcare Group Inc.

Invest to your advantage

I hear a lot of talk when I go to parties or some other social gathering. I can always count on someone coming up to me and asking about what hot stock I can suggest to them so that they can make a killing in the stock market. They want to buy the stock on Monday and by Wednesday they want to sell and buy some Bentley. Every single time I tell them that if I had that kind of information I would not be working for a living and would keep it to myself.

Most people have no clue when it comes to investing money. No, what I tell you, they do not teach in high school or colleges. I had to learn it from old retired steel workers in Pittsburgh, Pa. That is why money managers for the past 25 years have been robbing the average worker without their knowledge. They have been raiding their pension funds, bank funds, 401Ks, IRAs and the average worker has been saying thank you. Then they say, I will come back for the same treatment.

The same people are involved in every part of the business. Companies who have been giving their employees retirement accounts have been setting them up with the same investment firms. The traders in the market (who cause securities to rise and fall) work for the same investment firms. So the average person has lost a large part of there retirement funds over there working life time. The worker realizes it when it comes time to retire and live off the money. By that time it is too late for them.

Jim Cramer, the host of the Mad Money TV Show said something recently that I agreed with. I have been preaching this to you and anyone else that will listen for years. That is investing to your advantage, not the broker, the banker, your employer, or your friend’s advantage. Why buy stocks that give no dividends? By investing in income stocks you can reinvest the dividends and buy more of the same stock. Chances are, over the years, the value of your portfolio will go up even if the stock does not. Stocks and mutual funds are speculative because they do not mature. But with yields this high, I would take the risk.

This is also true for mutual funds that give high dividends. I have talked about Dreyfus High Yield Strategies Fund in my Blog before. I think it has come down to a price that I would start buying. As of Oct. 5, 2011, the price was $4.12 per share. It gives 54 cents per year in dividends. That is a yield of 12.62%. Using the rule of 72, dividing 12.62 into 72 and you have a little over 5.7 years for your investment to double. Using the rule of 115, dividing 12.62 into 115 and you have a little over 9 .11 years for the investment to triple.

Take this information and open a Share Builders Account or an account with the company that you are investing in and now you have a vehicle that charges you little if any commissions. An IRA allows you to defer taxes to the years where you are not working or working at a lower pay.

What can a person do with a self directed retirement account if they start at age 30 and stop at age 64? I think they can live a little better than their friends who thought that their investment firm is holding their hand and looking after their money for 34 years. This is called investing to your advantage.

Protecting You and Your Computer

I am sure you all know by now to use antivirus software such as “Mc Afee” to keep people from causing harm to your computer. This harm may come in the form of hijacking your computer by using a “Trojan Horse” Program. That program allows someone at another computer to see what you are typing like your bank passwords and ID. While you are down loading free music, you may also down load “Trojan Horse”, Spy Ware, Ad ware, and other programs that misdirect your links to other websites. Some viruses even go into your computer and change the setting so that your PC programs become unusable. All this may cost you hundreds of dollars to fix unless you are a certified Personal Computer software expert. So in this blog, we are not going to talk about such simple to avoid problems.

Instead we are going to talk about how you may help computer criminals defeat your antivirus software that will cause harm to you and your computer. I want to rob your bank account knowing that you get paid every other Wednesday. I know that because I sent you an email telling you that you are in the top ten finalists to win $100,000 if only you fill out a questionnaire with your name, address, phone number. Over the past 6 months I had you fill out other questionnaires. I send you a link with these questions on it. What you don’t know is that this link contains a Trojan Horse. Now I can get your bank account information, your personal information, and other important information about you. I can be you to any financial institution. From this, I can have your bank transfer your paycheck to my Nigerian Bank. By the time you find out about it, the money is gone. Your checks are bouncing all over the country.

Never open links, reply to contests, or other mail that you are not expecting from one of your stores or businesses that you deal with. Never give out personal information unless you know the people that you are giving it to and what it will be used for. Don’t allow your friends and family to give out information on you to people holding contest as well. Emails are used to hide downloads of “Trojan Horse”, Spy Ware, Ad ware programs into your computer and Blackberry (cell phones).

Never open mail that has no subject in the subject line unless you are expecting such an email. Nine out of ten times, it is not from who you think it is. It is from someone who hijacked your friends email ID and is sending you a virus.

Your 22 year old nephew is here from Nevada and wants to use your computer tonight while you go to bed. You see no problem with this since he is your sister’s child and you helped raise him since he was born. But you never know what is hidden in someone’s life. Your nephew goes on sex sights and without his knowledge “Trojan Horse”, Spy Ware, Ad ware programs are loaded into your computer. Without your knowledge or consent he contacts some 14 year old “Bomb Shell” on one of the social sites and starts talking about the things he wants to do to her. What he does not know is that he is talking to a “Child Predator” Police Officer. The Officer makes a date with your nephew the next day. He walks right into a police trap. You may say that it is not your problem. Yes it is, he used your computer and the police will come to your house and pick it up for evidence. They may go through your computer looking for evidence. The investigation may extend to your involvement into your nephew’s activities. The police don’t care who is charged and convicted for a crime. They are involved to gather evidence for the district attorney. Even if you are not charged as part of the crime, you will not have access to your computer. It may take six months or more before you see your computer again.

Here is the reason why I never let anyone use my computer, Blackberry (Cell Phone).

A Visit From the Bear Can Make You Sad!

One of my online brokers sent me some information about "Undoing a Roth IRA conversion." This information comes in handy for the poor "saps" who converted their Individual IRA Accounts to Roth Accounts. If they have their money in mostly stocks and mutual funds, they probably feel like Mr. Robin held them up on the way to town. Here is what my broker "Zions Direct" 1-800-524-8875 sent me.

Undoing a Roth IRA conversion may save money
September 7, 2011 // by Dave Carpenter // Leave a comment

The stock market’s summer nosedive was extra painful for those who recently converted their Individual Retirement Accounts to Roths.

Not only did their retirement savings shrink when the Standard & Poor’s 500 index fell 16 percent in three weeks. Suddenly, they faced the prospect of paying thousands of dollars more in taxes than otherwise necessary. That’s because the tax cost of changing an account is fixed at the time it’s formally converted by your brokerage or investment firm.

Roth IRAs provide tax-free growth and have surged in popularity because of both their long-term tax and savings advantages and the relaxing of rules in 2010 that barred those with incomes above $100,000 from converting.

But the market drop left many of those who joined the rush to convert to them regretting their decisions because they still must pay taxes on the higher amounts that sat in their accounts last year. Investors flooded financial advisers with calls and emails about getting out of their Roths in early August, before stocks turned higher.

They still have more than a month to undo them. Unlike with a bad stock purchase, a do-over is possible with Roth conversions until deep into the following tax year.

This year, those who want to ditch the Roths they established in 2010 because of adverse tax consequences or any other reason have until Oct. 17 to undo or “recharacterize” them. Those who do so will avoid paying the tax bill for the conversion or, if they already paid, get their money refunded.

“It’s a way to save a lot of money during a down market for those who have seen their account values depreciate significantly,” says Ryan Himmel, a New York CPA who heads BIDaWIZ Inc., an online marketplace for tax and financial advice. “You’re leaving money on the table if you’re not considering this.”

Reversing a Roth also can push large tax obligations into the future, when you may have more cash to absorb them. That was the case for the Segals of suburban Cleveland. They converted a chunk of their retirement savings to a Roth in March on the advice of their financial planner. Then they reversed course weeks later when they realized just how hefty the tax bill would be and that it would push them into a higher tax bracket.

Barb, a retired medical educator, and Allen, a physician, both 60, said they needed the cash instead for current expenses such as paying down the mortgage. “We know there are benefits to paying taxes up front rather than later,” Barb Segal says. “But at a time when we are really trying to save and invest as much as possible for our retirement, the immediate tax consequences were too great for us.”

With this year’s deadline just weeks away, here are some basics about Roths and how to undo them:

Q: Why are Roths considered beneficial over the long run?

A: After you pay taxes on the conversion from a traditional IRA, your retirement dollars in a Roth grow and can be taken out tax-free.

Anyone who expects to be in a higher tax bracket at retirement also would benefit by paying the taxes now. And with tax rates widely expected to rise in the future, many retirees may end up in higher brackets than they are currently.

Roths offer greater flexibility in retirement, too. Unlike with traditional IRAs, you are not required to withdraw a required minimum amount every year once you turn 70½. You can let the money keep accumulating tax-free.

Q: What exactly is a Roth recharacterization?

A: It’s the process of undoing all or part of the conversion from a traditional IRA to a Roth IRA.

Q: What’s an example of when you would want to do it?

A: Let’s say you converted a $100,000 IRA to a Roth last year and the value has dropped to $80,000. You will still be paying taxes on the $100,000. You don’t get your money back for any money-losing investments, but you effectively save thousands of dollars in taxes.

Q: How do you know if it’s the right move?

A: If your holdings have already lost substantial value, the decision to recharacterize is a no-brainer, says Ed Slott, a Rockville Centre, N.Y., accountant who specializes in retirement issues. “Why pay tax on value that no longer exists?” he says.

Otherwise, focus on the net savings you’d achieve. The more the Roth’s value declines, the greater the tax benefit.

Factor in the cost of getting professional help, such as paying an accountant to amend your tax return as needed, says Richard Jackson, principal at advisory firm Schlindwein Associates in Dallas. “You would like to not have to recharacterize,” he says.

Q: How often do people undo their conversions?

A: Fidelity Investments, the biggest provider of IRAs, says it typically reverses less than 15 percent of its Roth conversions. But there’s still the potential for many people to do so by the Oct. 17 deadline. Fidelity alone completed about 220,000 Roth conversions last year, more than a fourfold increase over 2009.

Q: What are the down sides?

A: Anyone who converted an IRA to a Roth in 2010 was given the one-time perk of being able to put off paying taxes for a year and pay half each in 2011 and 2012. Losing that tax-deferral deal is probably the biggest negative to recharacterizing, says Tim Steffen, director of financial planning for Milwaukee-based advisory firm Robert W. Baird & Co. By spreading out the tax obligation over time, it made absorbing a big expense more manageable.

Q: So how do you go about making the change?

A: Contact your Roth IRA custodian and ask to recharacterize your account back to a traditional IRA. If you have already paid the conversion taxes, file an amended return to get your money back.

Q: Can you convert back to a Roth later if you recharacterize?

A: Yes. You can reconvert after 30 days.

Copyright 2011 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.

Do you know that you are being watched?

My daughter hires and fires people for her company and for other companies that pay for her services. Recently, she came to me with a story about a person that she wanted to hire for a client giving the applicant $150 per hour to program cell phones. She did a back grown check on the individual. She found out that the person had a DUI that made him ineligible for the job. She had to resend the offer of employment meaning that she could not be paid a bonus for finding a good qualified applicant.

Every day technologies are being used to monitor the people of the world with unprecedented scrutiny -- from driving habits to workplace surveillance. Shoppers and diners are observed and analyzed; Internet searches are monitored and used as evidence in court. It is big business that collects most of the data about us.

But increasingly, it's the government that's using it. According to the Washington Post, " The top-secret world the government created in response to the terrorist attacks of Sept. 11, 2001, has become so large, so unwieldy and so secretive that no one knows how much money it costs, how many people it employs, how many programs exist within it or exactly how many agencies do the same work." The Post's investigation is based on government documents and contracts, job descriptions, property records, corporate and social networking, Web sites, additional records, and hundreds of interviews with intelligence, military and corporate officials and former officials.

The secret agencies and agency contractors have files on average US citizens gotten from public and government records. They have records on "Right of Center "members and associates of the "Tea Party" as well as members of the "Left of Center" groups. They take your ID from "eye scans" without your knowledge. They gather other information on US Citizens without violating the US Constitution.

"Big Brother Big Business," aired on CNBC and takes a look at the companies behind the powerful business of personal information and the people whose lives are affected by it, including: a woman who lost her job due to mistaken identity; a man whose cell phone records were stolen by his former employer; a woman whose personal information was stolen from a company she had never heard of; a man who discovered his rental car company was tracking his every move.

The documentary below also looks at how the FBI, the Border Patrol, police departments and schools are using biometric technologies to establish identity as well as an inside peeks at an AOL division that works solely to satisfy the requests of law enforcement for information about AOL's members. This is becoming an Orwellian Nightmare. http:nomoretyranny.org

http://video.google.com/videoplay?docid=6061213358499552766

CNBC "Big Brother, Big Business" Recorded Nov 1, 2006

I saw this on CNBC. This was done in 2006. Technology has grown considerably and can do much more now than it could in 2006.

CNBC said, “I think it's important that people look at the technology and start to sense the fact that information is being collected. I don't think that a good news report leads to immediate conclusions. I'll let you be the judge of that. But! I will say that this is news in 2007, and everyone knows that sensations sell. So, should we be worried? What price are you paying for being well connected digitally in the post-information age? Who do you trust?”

http://projects.washingtonpost.com/top-secret-america/articles/a-hidden-world-growing-beyond-control/

A hidden world, growing beyond control