Simple Steps to Save for Future Use

I wish I had a dollar for every person who tells me that they do not have the money to save for the future. They claim that it takes all that they have to maintain their life style. Then I follow them home and laugh. We are just going to talk about the obvious things that can help most people save for the future.

Supporting Wal-Mart and the Retailers

What I see at their residence is a bunch a junk lying around. Most of the clothing and appliances are rarely used. Many people have clothing bought months ago that still has the tags on them. Most of the stuff is bought because they wanted to make a fashion statement for that day. Some of the stuff was bought because they wanted it at the moment but really did not need it.
They have 5 TVs with only 4 people living in the house. They have 3 cars with only two drivers. The children have more toys than what they can play with. Every time a new toy is on TV, they rush to the store to buy it for them. That is not love that is stupidity, showing the children the same kind of spending patterns that the parents have.

Plan your purchases by first determining how the item will benefit you. Second decide where it falls into your families priorities. If it is still something that you need then use your computer and see if it is selling at the best price. For example, why pay over $100 per month for a cell phone plan at Verizon’s when a $45 per month plan at Wal-Mart will do?

Dumb Savers and Dumber Coin Droppers

I bet you have a large jar of coins on your living room table or on your bedroom dresser? Every time you have spear change, you put the change in the jar. So far so good. Now the jar is full. What do you do next? Many people just start another jar and do nothing with the full jar of coins. The longer you hold on to that jar of coins, the less the money in that jar is worth because of inflation. The best thing to do is cash it in and use it to fund your IRA account.

The dumbest people that I ever had contact with are people who walk along the street, find pennies in their pocket and just drop them on the sidewalk. Why do they do that? Because in their view, a penny is not worth anything. People like that I follow around because I pick up their pennies and put them in the jar on the dresser. It helps fund my IRA. I am getting free money. One hundred pennies makes a dollar. One hundred of these free dollars makes a hundred dollars. If I can make 10% off the hundred dollars, I will have $110.00. Free money!

Some of These People Smoke

Smoking is the most preventable cause of death in our society. In fact, nearly one in five deaths in the United States results from the use of tobacco. There are many reasons to quit smoking. The financial cost is just one. It might just be the reason you decide to quit.

The price of smoking must go up in the future. If you must smoke, roll your own. You can do that for $18.00 for a 2.5 pound bag of tobacco.

I tried to get my parents to stop smoking but they said that you have to die of something. I said “How about dying of old age?” This money can help finance your IRA. Some of you can fully invest in your IRA ($5,000 for age 49 or younger; over $6,000 after age 50) by using your smoking money. If you put $5,000 per year into your IRA and get no interest or appreciation, from age 30 to age 65, you will have $175,000 in your IRA Account. By using your smoking money for your IRA, you will live longer and have the money to keep you alive.

Knowing How to Use Risk Management

Risk management is the identification, assessment, and prioritization of risks followed by coordinated and economical application of resources to minimize, monitor, and control the probability and/or impact of unfortunate events or to maximize the realization of opportunities. Risks can come from uncertainty in financial markets, project failures, legal liabilities, credit risk, accidents, natural causes and disasters as well as deliberate attack from an adversary, or events of uncertain or unpredictable root-cause.

The strategies to manage risk typically include transferring the risk to another party, avoiding the risk, reducing the negative effect or probability of the risk, or even accepting some or all of the potential or actual consequences of a particular risk.

You can tell that the banks, pension funds, insurance companies, and governments did not put in place good Risk Management Procedures when they bought Derivatives in the financial markets. An analysis of the investments would have told them that they were buying mortgages of people who had little or no income. It was just a matter of time where the “house of cards” was going to cave in on them. When it did, it took people’s houses, pension fund money, jobs, businesses, and savings with it.

Our little Risk Analysis is not as complicated as all that. Look at the Investment Choices above.

I have to figure out what to buy based on my risk criteria. Since I am starting to get the feeling that businesses are still coming apart at the seams and my retirement date is only a few years away, I want to be as safe as I can be. In other words, I do not want a failure of this investment to greatly” impact” my return.

I start by looking at the S&P Rating of these bonds. Marina District Finance is into gambling businesses in Atlantic City. They are my only BB- bond on the list. Just by definition, they are the least safe. Given that Atlantic City casinos are losing market share to Pennsylvania and other North East casinos, they could be in serious trouble in 2 to 3 years. That maybe why they have an interest rate of over 10%.

Telecom Italiacap, an Italian firm in Italy has the least amount of interest and its country is not doing well in the EU. The other investments have to do with banking and have the same S&P Rating. Dresdner Bank AG has the highest interest rate. Looking at the bank’s business and the economy in Germany where the bank is located, they seem to be secure.

So I am going to buy Dresdner Bank AG .

I Saw the Crisis Coming!

2009 Map of Poverty in the United States

After my oldest daughter finished her BS Degree Studies, married and got established, she noticed that the world around her was falling apart. She asked me how did this happen and why is she doing so well when everyone else is doing so poorly. I told her that I planned for the hard times while everyone else lived in denial.

In the 1960s, my older brother William J. Williams III went to Juniata College in Central Pennsylvania. One weekend when he came home, I read one of his books that showed how the United States was wasting its money from 1950 to 1965. The wealth of the nation was leaving this country. This wasting of money could not be sustained. This fact along with the fact that oil production in the United States peaked in 1970, was my first clue that many affluent Americans and their families will be counted among America’s poor in the future.

I had a radio program on WAMO in Pittsburgh Pa. in the 1970s and early 1980s. I also had a cable TV show on Cable TV in Monroeville, Pa. In these programs I talked about the coming economic disaster and how to invest to smooth over the waters as we pass through them. Some people actually paid attention while others called me names like “money lover”, "Mr. Money", or "miser".

A family living out of their car in America. The husband cannot find work.

Thirty years later, many of the people who made fun of me found that their children are homeless, very poor, and have no source of income. The people that made fun of me have little retirement money.

Below is the introductions to a three part series on why we are in one of the largest and most in depth depressions in the Post World War II period. The program also give evidence that the world is moving toward economic collapse. It does not matter if you live in the richest country or the poorest country, the hammer of economic collapse will be upon you.

Women living in the streets with no home or food in America.

http://www.youtube.com/watch?v=su_DZWxC3lU

Addicted to Money: Part 1.

This report is the program for anyone who wants to know how the financial crisis came about, what it means for us now, and what we can do to create a sustainable economy. This three‐part series is a survival guide for the New Economy, presented with wit, charm, and incisive appeal by David McWilliams, a young economist who talks just as candidly to the most influential and powerful players in the global economy as he does to ordinary people.

http://www.youtube.com/watch?v=FYEX-PEYtQ0

Addicted to Money: Part 2.

David McWilliams reveals how Australia and many other nations have become one‐trick economies, vulnerable to the inevitable sudden shocks that are a by‐product of a fragile, globalized economy. In Australia's case, they have become totally dependent on Chinese resource demand, putting their future in the hands of a ("Communist") party‐state dictatorship with a very big check book says McWilliams. China in turn has marched itself up an economic cul‐de‐sac, becoming overwhelmingly dependent on demand for its exports and in the process accumulating masses of potentially volatile US dollars.

http://www.youtube.com/watch?v=zLW-xJZwnsg

Addicted to Money: Part 3.

In the final episode of Addicted to Money, David McWilliams argues that the convulsions of the financial crisis are small compared to the imminent threats ahead. We are facing severe shortages of the key resources that fuel the global economy. What makes our civilization possible: oil, water, and food. Ultimately, these are all energy issues, and until the energy dilemma is seriously addressed here, there can be little optimism for sustainable long term growth. We have reached "The Great Disruption", the moment where our old economic model can no longer be sustained.

When I was born, Earth only had 6 billion people. Today Earth has over 8 Billion people. Food production around the world must keep pace with the world population growth. Any disruption in food production could cause a serious spike in food prices. These disruptions can take the form of weather related disasters such as floods, hurricanes, and droughts. If you have noticed, we had such problems in 2011. In my local area restaurants, food prices have gone up an average of 36.53% in 2012. Keep in mind with all this water around the planet, only 10% of it is drinkable. If society does not manage this water, the people and animals on this planet could be in serious trouble.

This all means that you and your family better start thinking "outside the box" and planning for the future to sustain you and your family. That means that you can no longer afford to buy and do things to please the masses. If you do, you or your family may end up like the people above.

My Ainsworth Lumber Co. LTD Investment

SteadiTred Stair Tread Panels

In my IRA, I own shares of Ainsworth Lumber Co. LTD (ANSBF) and I also own a Corporate Bond issue in that company. Over 5 years ago, this company had to reorganize and I ended up with a new bond with stock in the company. On the OTC Market, the stock on March 13, 2012 sold for $1.57 US. The 52 week high was $1.64 US that occurred on 3/01/2012 and its 52 week low occurred on 12/29/2011 at 90 cents US. The stock just started trading in December 2011 on the Over-the-Counter (OTC) market. It also trades on the Toronto Canadian Exchange and the Frankfurt Germany Exchange.

If I am a gambling man (and I am not), I would place $164 in this stock and buy 100 shares of it.

Ainsworth Lumber Co. Ltd. manufactures and markets engineered wood products in North America and Asia. Its engineered wood products include oriented strand board, oriented strand lumber, and specialty overlaid panels. The company offers flooring products, rim boards, and Web stock for I-joists for floors; stair tread panels, stringers, and risers for stairs; headers, sheathing, and radiant barriers for walls and roofs; concrete forming for sidewalks, curbs, slabs, and non-structural concrete; and structural insulated panels. It serves dealers, builders, original equipment manufacturers, homeowners, specifiers, wholesale distributors, building materials professionals, and other integrated forest products companies. The company was founded in 1950 and is headquartered in Vancouver, Canada.

Problems with Alien Companies

First let’s learn the word of the Investment Business. I am from Pennsylvania. I pay my taxes to Pennsylvania. So any company that is created in Pennsylvania is a domestic company. Any company that is created outside Pennsylvania but is created inside the United State is a foreign company. Any company that is created outside the United States is an alien company. So this company, a Canadian Business is an alien to any US Citizen. This terminology goes back before the Civil War when states acted as separate nations when it came to business. This is the major factor in setting off the Civil War (labor practices between states). Special investment rules apply in this case.

I had an odd lot of shares (1 thru 99 shares) in this company and I wanted to get an even lot of shares (100, 200, 300, and etc. shares). I tried to buy the amount of shares that I needed to bring me up to an even lot. The brokerage firm did not allow me to buy the shares. The SEC had a block on these share not allowing any US Citizen to buy them. So I contacted the Securities and Exchange Commission (SEC), Philadelphia District Office to find out why since Canada is a friend and trading partner of the United States.

Securities and Exchange Commission

Arthur Gabinet, District Administrator
Philadelphia District Office
Mellon Independence Center
701 Market Street,
Suite 2000
Philadelphia, Pennsylvania 19106-1538
(215) 597-3100

E-mail Address: philadelphia@sec.gov

I never found out from the SEC why or what the problem was. But on March 2, 2012 at noon, I got a call from my broker telling me that the odd lot shares was already in my account and that they took part of an interest payment from my bonds to pay for it. This was an odd phone call since I do my own online brokerage without the help of a broker. Here is why when something is not right, you got to follow up on it because all it takes is someone not doing their job and it could affect your investment transactions.

The new bond given to me is AINSWORTH LUMBER SER 144A 11.00000% 07/29/2015. It is a Moody’s CAA1 and a Standard and Poor’s B- rated bond. It sells for $790 US. Your assignment is to find out if the company pays its interest in Canadian or US currency.

Company Contact Info.

Bentall 4 1055 Dunsmuir Street

Suite 3194
PO Box 49307
Vancouver, BC V7X 1L3
Canada

Phone: 604-661-3200

Fax: 604-661-3201

http://www.ainsworth.ca/

R R Donnelley & Sons Co 7.625% June 15, 2020

On January 25, 2012, this bond rated Ba1 by Moody’s and BB+ by Standard & Poor’s matures in 8 years and 5 months. The bond recently sold for $907.50 and matures at $1,000 for a “yield to maturity” of 9.613% per year. If the bond was bought today, the bond holder would make about $734.27 with a $907.50 investment in 8 years and 5 months.

RR Donnelley (NASDAQ: RRD) is a Fortune 500 company based in Chicago, Illinois that provides print and related services. The company originally known as R.R. Donnelley & Sons Company was founded in 1864 by Richard Robert Donnelley. His son, Reuben H. Donnelley, founded the otherwise unrelated company R. H. Donnelley.

RR Donnelley's cartographic production facility was for many years one of the largest in the United States. In the late 1980s, the division was spun off as its own company, Geosystems, which in turn became MapQuest. It is now a subsidiary of AOL.

This company is part of the Commercial Print Industry and is part of the Standard & Poor’s 500. The company is publicly traded on NASDAQ using the symbol “RRD". Products include Books, catalogs, financial documents, magazines, direct mail, labels, retail inserts, and electronic SEC filings. It's revenue ran around $10 billion in the year 2010.
http://www.rrdonnelley.com/

I do not have a position in this company.

My Third Year Reporting on Bonds

This is Darnell's 12 Economic Sectors that he invested in from 2008 to 2012.

We are going to learn a little about portfolio analysis. But first, if you are the type of person who feels that someone is being self-serving when teaching something. If you feel that you don’t need to learn new ideas then leave this blog and go watch Jerry Springer. If you want to learn how to obtain money for retirement or you want your children to learn how to save for their retirement or advance education then keep reading.

The Bernard Madoff fund consistently recorded an 11% gain every year for 15 years. Berny was a Scam Artist and he took approximately $50 billion from people and institutions. The professionals knew that something was wrong because investments cannot grow consistently that long.

For the past 3 years, my IRA has grown on average 109.331%, 36.444% per year, 3.037% per month, .759% per week or .152% per business day.

No, I am not running a scam on myself. There is a way to make over 10% per year consistently, without being scammed out of your investment. You can’t be scammed because you as the investor. You take control of your investments and your money. You use a "Self Directed" IRA at an online brokerage firm that is insured under SPIC. This is what we will study here with my “Self Directed IRA.”

Portfolio Make Up
This is my Portfolio Make Up. I always stay fully invested. That is why less than 1% of my portfolio is in cash. I buy very little stock because I invest for income, not growth, or speculation. The stock is in Ford Motor Company, a bond mutual fund, and a Canadian Forestry Company.

Ford Motor Company will have its next earnings report on Friday Jan. 27, 2012. They have renewed giving quarterly dividends of 5 cents per quarter or 20 cents annually. For this quarter, the stock goes ex-Dividend on Jan. 27, 2012. Stockholders must be of record by Tuesday Jan. 31, 2012 to receive the dividend. The payment date for this dividend quarter is Thursday March 1, 2012. This dividend is nothing compared to what my bonds give.

In fact, my portfolio gives me a 9.43% cash return in interest even if my investments do not appreciate. That interest is reinvested into more bonds that give more interest. This is why over 97% of my investments are in corporate bonds with a Standard and Poor’s rating of BBB+ or below. That is the secret to making over 1% per month, every year.

ABC Portfolio Analysis
In my portfolio, I managed to diversify my investment with 19 bond issues. I am invested in 12 different sectors of the world economy. The top three sectors are Oil, Health Care, and Banking. Oil makes up 61.54% of my holdings.

This is where you should say, if something happens to the price of oil, Darnell is going to take a big price hit on his bonds. What if one of his oil companies goes out of business? What then?

Portfolio Oil Analysis

You got that right! This is where my portfolio is venerable. My 61.54% in Oil is broken down into two oil companies. The largest is the Venezuela Republic. That is in a country in South America run by Hugo Chávez. Chávez is said to be mismanaging the country's oil fields to the point where we can have a collapse of the Venezuelan industry in the near future.

But what I am doing is riding the world oil bubble. I am betting that this bubble will last until Dec. 2014. That is when my last Venezuela Republic Bond Issue matures.

You ask, what is my logic behind this bubble and why do I think it is going to end after the year 2014? The answer is very simple if you know world politics and the politics of oil. The world is in a depression. We have fewer cars on the road because fewer people around the world are working. This brings down the demand for oil. So the price of oil, (the 01-19-2012 Price; $100.27 for WTI Crude and $110.54 for Brent Crude Oil) that is still going up cannot continue to go up.

The Strait of Hormuz

If that is the case then why is oil going up? It is because of the problems in the Middle East. Israel does not want Iran to develop a nuclear missile capability. Iran claims that they have a nuclear program to create electricity for the nation, not weapons. Israel is a client state of the United States. So the United States is threatening Iran with economic warfare. Iran says that if the United States carries out that threat then Iran will shut down the Strait of Hormuz where 16% of the world's oil passed through. The US says that if Iran tries that, they will send the US Navy to keep it open.

So we have a real chance for a shooting war to start between the United States and Iran. But if that happens, it will not stop there. Iran is a client state of Russia and China. This is the same China that is the third largest holder of US Debt. These four countries can start World War III, a "loose, loose" situation. This is what is keeping up the price of oil and this problem will not go away in a few years.

Taking Advantage of the Banks

Bank of America Corporation 5.75% of Aug. 15, 2016 was trading around $988.29, yielding 5.59% when I bought them. It has a S&P bond rating of BBB+ and a Moody Rating of Baa2. The company is not on the bond watch list as of January 18, 2012. The bond pays Semiannually, on Feb. 15 and Aug. 15. It pays $1,000 at maturity. Per bond, the investor would get about $287.50 and $11.71 in bond appreciation or $299.21 per bond.

Bank of America is one of the world's largest financial institutions, serving individual consumers, small- and middle-market businesses and large corporations with a full range of banking, investing, asset management and other financial and risk management products and services. The company provides unmatched convenience in the United States, serving approximately 58 million consumer and small business relationships with approximately 5,700 retail banking offices and approximately 17,750 ATMs and award-winning online banking with 30 million active users.

Bank of America is among the world's leading wealth management companies and is a global leader in corporate and investment banking and trading across a broad range of asset classes, serving corporations, governments, institutions and individuals around the world. Bank of America offers industry-leading support to approximately 4 million small business owners through a suite of innovative, easy-to-use online products and services. The company serves clients through operations in more than 40 countries.
Bank of America Corporation stock (NYSE: BAC) is a component of the Dow Jones Industrial Average and is listed on the New York Stock Exchange.

For more Bank of America news, visit the Bank of America newsroom.