What a way to welcome the year: the market is down, a recession appears to be imminent (if not here already) and worst of all, I still can’t find myself a Nintendo Wii.

As we enter the New Year, things may look a bit bleak, but a few resolutions I plan on keeping will help ensure my year is a success.

What about you? What have you resolved yourself to do? If you’re still looking for a few ideas, here’s a couple of scattered things to help get you on your way:

Reduce Those Taxes. Investing in managed mutual funds? Chances are you’re paying more tax than you should.

While I’m all for paying my share of tax, I prefer not paying more than my share, and that’s why I like to minimize the tax I pay by investing in index funds. Are you investing in managed mutual funds? If you are, there’s a decent chance your fund managers are actively trading stocks and as a result, they could be causing you all sorts of unnecessary tax.

Do you have an idea whether or not your funds are causing you excess taxes? Take a moment to do something really boring but effective: take out last year’s tax return, look on the first page, line item 8a and 9a under “Taxable Interest” and “Taxable Dividends.” If there are dollar amounts on these line items, and you aren’t using this money for income, then you are paying more tax than you should.

If this is the case, don’t take your portfolio to Jiffy Lube for a tune up, rather, take it to a knowledgeable investment or tax advisor. They should be able to give you a few ideas on how to save you some taxes such as investing in index funds or other options not mentioned here.

Rebalance Your Investments. Statistics don’t lie. When it comes to mutual funds, they tell us that last year’s winners are often next year’s losers. Did you make some nice gains last year in things such as international and emerging market stock funds? Congratulations. That’s great news. But just like a good roll at the dice table, it could be time to take some money off the table and put it into your pocket or somewhere else.

Save a Couple of Bucks. Invest a hundred dollars a month into an S&P 500 index fund and ten years later what do you get? At a hypothetical return of 8% per year, here’s what you get: very little taxes to pay along the way, diversification into the 500 largest companies in the country across several different industries, low fees and at the end of the day, around $17,000 dollars towards your retirement. … How good is that?

Review Your Risk. The markets are pretty bumpy these days (to say the least), and the experts out there are fighting each other as to whether we’ll spend the year running with the bulls or getting eaten alive by hungry bears. Are you invested heavily in stocks? Maybe it’s time to take a breather. After all, for a portion(s)of your money, a 5% rate of return in something such as a boring CD could be much more appealing at the end of the year than losing some money in the stock market.

Make That Contribution. Grandma sport you a few extra C-notes for Christmas? Consider using that money for a nice gift: tuck some of that money into an IRA by April 15^th, get a nice tax deduction and watch it (hopefully) grow tax deferred. By the time retirement rolls around, chances are pretty decent that you’ll be able to get yourself not one nice Christmas gift but more than a few.

 

Pay Off That Debt. Before making that IRA contribution or investing a few dollars, this one should be at the top of the list… Want to lock-in an attractive rate of return?

Many people can do so by paying down their credit card debt. Some cards I’ve seen charge an astronomical interest rate and by paying it down, congratulations – you just “banked” yourself this high rate of “return.”

Explore. I just recently evaluated a software program that could potentially revolutionize the way people pay off their mortgages. Although I haven’t completed my total due diligence yet, it appears this system could help you pay off your mortgage in about half the time. And get this…. paying off the mortgage in less time does not appear to require any additional out-of-pocket payments. … Fascinating? … Absolutely. … Accurate? …. It appears that way. … Care to know how to do this? … Give me some more time to complete my due diligence.

Write Something. Have a great idea? Why not share it with me and many others?… My new book came out in November and I can honestly say, it’s changed my life. Although I’ve written quite a few things before, this was my first major release and it’s done wonders for me on many different levels. Regardless of the profession you’re in — whether you are a plumber, painter, full time mom, or even out of work — writing about something you’re familiar with helps you stand out amongst the crowd.

If there’s any advice I’d give anyone about creating a much welcomed milestone in their life, it would be to write a book, or even simpler, a blog, a newspaper article, … anything at all. Chances are, there’s an audience out there for your thoughts and with a little time and dedication, there’s little doubt your work will find its audience.

Read. Care to tune up your investments? Learn a few things? There’s no better place to start than by reading a good book. Here’s couple of my personal favorites that come to mind:

• You Can Never Be Too Rich (how can I resist recommending my own book?)
• The Millionaire Next Door (fantastic read)
• The Intelligent Investor (the all-time classic book on value investing)
• You’ve Lost It, Now What? How to Beat the Bear Market and Still Retire on Time (practical advice from the Wall Street Journal columnist you shouldn’t miss)
• The Little Book That Beat The Market (a great read for a technical investor)
• The Automatic Millionaire (very simple, but very effective)
• Exchange-Traded Funds For Dummies (never heard about these ETFs? Start reading about them now!)
• Common Sense on Mutual Funds: New Imperatives for the Intelligent Investor (Classic book on understanding mutual funds)
• Blood on the Street (Where did your money go in the tech crash of 2001? Here’s a great inside view on Wall Street you won’t want to miss)
• You Buy, You Die, It Pays (Life Insurance? Check out this book for some truly creative ideas)
• The Science of Getting Rich (Ever hear of Napolean Hill’s classic “Think and Grow Rich?” If you haven’t, then you probably heard of people such as Anthony Robbins and a long list of other personal-power gurus that can all trace their roots back to Wallace Wattle’s classic book that serves as a foundation to all)

Send Cards. I don’t know about you, but it’s pretty rare when I get a card from someone these days. While my email in-box is constantly stuffed, last year, a buddy of mine did something from way back in the stone age: he sent me a “thank you” card. In our age of technology, that thing really stood out; so much so, that the other day I purchased a box of thank you notes and vowed to use at least one every month.

In Conclusion. Did I miss any good ideas? … I’m certain I did. … Drop me a line. … I’d love to hear some good ones. After all, good market or bad market - there’s nothing like a good resolution kept to ensure your year is a success.

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If you’re like me, then during this time of year you’re likely thinking about taking some time off, eating lots of food, downing some eggnog, giving and unwrapping a bunch of cool gifts.

But before kicking back to celebrate the holidays, you may want to take a moment to consider the following end-of-the-year money matters you won’t want to miss:

If you’re like me, then not only do you pass out on the couch by nine every night, but you also don’t enjoy paying the mortgage. If that’s the case, consider ending the year with making an extra payment.

Making an extra payment will, over time, cut the amount of interest you’re paying and reduce the number of years before your house is free and clear.

If that’s not a good reason to plant a nice one on your boyfriend underneath the mistletoe, then check this out: an extra payment will also help you maximize itemized deductions for this year.

As an example of how making an extra payment an help you in the long run, suppose you bought a house for $150,000 and took out a $120,000 mortgage for 30 years at an interest rate of 9 percent — at the end of those 30 years, you would have paid over $227,500 in interest alone—in addition to your original $120,000 mortgage. Your total expense will be more than twice the original price of your house.

If making an extra payment is something you can’t do, then adding a few extra dollars each month towards your mortgage can really go a long way. For example, if you could afford an extra $100 every month, in the example above, you’ll save over $82,000 in interest—and pay off your mortgage nine years and two months earlier.

Can’t afford $100 a month? How about an additional $50? Paying an extra $50 each month will cut your payment by five years and seven months and save you $52,000. An extra $25 will shave off three years and three months, saving you $30,000. Even as little as an extra $10 a month will cut your mortgage payment by one year and save you $13,500.

Got the point? … I hope so, but just know this: the above are examples only.
Everyone’s situation will be different and if you want to better understand what making extra payments or monthly contributions will do to your mortgage, then be sure to consult a qualified advisor to help you out.

FSAs are savings accounts for health care purposes. If you know what these FSAs are and you’re currently investing in one, be sure to spend any excess balances before the end of the calendar year or they will be forfeited. One way to use up the excess: stock up on over-the-counter medicines for next year. How good is that?

Maximize itemized deductions by making donations in the form of cash, property, or appreciated stock. The latter could also help you avoid some capital gains taxes as well. Support your local charity and save some taxes? When it comes to creating some good Karma in the universe, life doesn’t get any better than that.

Are you retired? I once asked someone that and they weren’t sure. If you’re aware that you did retire, then not only is your retirement off to a promising start, but you most likely know about these things the IRS calls “Required Minimum Distributions” (RMDs).

For those that don’t know what these RMDs are, it’s something you’ll one day need to address: if you’re currently investing money into an individual retirement account (IRA), then not only does Uncle Sam give you a nice tax deduction on these contributions, but he also allows you to “defer” paying taxes on the account until later on in life… And according to the IRS, this “later on in life” thing happens when you turn 70 ½.

Once you reach this age, Uncle Sam wants you to start paying some taxes on the IRA, and he does this by requiring you to take annual withdrawals from the IRA in the form of an RMD. As for the amount of RMD you’re required to take, I would recommend speaking to the firm currently holding your account.

If you have multiple IRAs with several firms, for simplicity, make sure you take an RMD out of each one.

If you’re self-employed and need to buy deductible business-related items next year, you may want to consider buying them now in order to maximize your deductions for this year.

You can currently gift up to a total of $12,000 per year per person to as many people as you want. This $12,000 may be given to one person, or distributed to any number of individuals.

Gifting accomplishes two things:
it makes people happy and for those with significant net worth, it could lower the taxes heirs might owe when inheriting the estate.

Given current market volatility, you may not want to call your broker these days to find out how your account is doing but you may want to make contact to discuss end of the year tax strategies such as offsetting capital gains and losses.

Understanding gains and losses for the year is an important topic that can really pay off come April next year when you file your return. In discussing your gains and losses with your broker, be sure to take note of any capital gains you’ve realized this year from the sale of stocks or mutual funds. If you own mutual funds, find out if the fund will be distributing capital gains. When you (or your broker) add up the possible gains, check to see if there are any losses you can “carry forward” from prior years to help offset the gains. If there aren’t any losses to carry forward, you might want to consider selling investments that aren’t doing too well.

Taxes should never be the sole reason you buy or sell investments, but it may be possible to improve your tax and investment situations at the same time. Think of end of the year as being a decent time to “clean out the closet.”

If you haven’t already contributed this year’s maximum of $15,500 ($20,500 for those 50 and older) to your 401(k), consider increasing your contribution when receiving the year’s final paycheck. You have until December 31st to make the final contribution for the year, and if you can afford it, tucking away as much money as you possibly can into a retirement plan is obviously a good thing.

A 529 plan offers high contribution limits and significant tax benefits.
Money in the account can grow tax-deferred for years, and withdrawals are tax-free (as long as the money is used for any number of expenses relating to higher education with qualified institutions).

But some people are using these 529 plans for estate planning as well, since the money invested in a 529 plan account is considered “a gift.” These days, each person is allowed to contribute a lump sum of up to $55,000 — which is considered five years’ worth of gifting. Not bad, right?

You can make contributions to your IRA through April 15th, but why not consider getting it done now? For 2007, the IRA contribution limit is $4,000, or $4,500 if you are age 50 before the end of the year.

Don’t have an IRA? Technically speaking, you can set one up and fund it by April 15th of next year (to give yourself the tax deduction for 2007), but as far as I’m concerned, setting up an account now and funding it always gives you a better chance to avoid procrastination.

So, whether you’re hoping for a Wii, iTouch or that new Rolls Royce, hopefully addressing the tips above will help you enjoy your new toys even more knowing some of this stuff is out of the way.

Should you be too busy to read my further posts that will close out 2007, I want to most sincerely wish you and your family a very happy and safe holiday.

Order my brand new book today and save 5% from Amazon: You Can Never Be Too Rich: Essential Investing Advice You Cannot Afford to Overlook

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Where do you go for investment advice?

A financial advisor? CPA? Jim Cramer? Suze Orman? Maybe the retired guy down at the pool?

What about Yoda? Ever consider him?

As surprising it may sound, when it comes to getting good advice on investing, for a moment, forget The Wall Street Journal and everything else out there. That two-foot, nine-hundred year old creature surprisingly offers some decent advice on investing. In fact, as crazy as it sounds, the entire Star Wars series itself offers some fantastic suggestions to get us on the right path towards success. Only problem is, few people have taken the time to do something as ridiculous as I have: ponder how the classic tale can teach us a few things about making money.

Mind you, this wasn’t exactly done on purpose. A couple of nights ago, in the deep, dark hours of a California night, I found myself out on the couch flicking through channels for something to lull me to sleep. After watching the Met highlights on ESPN (total disappointment), a re-run of Mad Money, then surfing past Happy Days and Charles In Charge, I landed on Star Wars only to soon realize the classic movie and all those that followed really can teach us a few important things about prudent investing.

Here’s a few examples:

Investing: I recently took a moment to do something most normal people would never do: search through a stack of magazines to analyze the financial ads. Between Fortune, Money Magazine, Smart Money, BusinessWeek and a handful of others, the results were undeniably clear: in my brief study, when it came to ads for financial products, by a long-shot, it was the costly, managed mutual funds that advertised far more than anyone else.

What relevance does this have? … Let’s continue …

Star Wars: Imagine being Luke. You just crashed in a dark, musty swamp where a two-foot tall creature named Yoda revealed himself to be the Jedi master. If that wasn’t odd enough, a little while later the thing tells you to start lifting rocks with your mind. Having little choice but to go with it, you heroically manage to satisfy master, but when he tells you to lift an x-wing fighter with your head, that’s a different story:

LUKE:
Master, moving stones around is one thing. This is totally
different.

YODA:
No! No different! Only different in your mind. You must unlearn what you have learned.

Lesson Learned: I totally agree with Yoda. After all, who wouldn’t? The creature not only managed to live nine-hundred years, but he beat the pants off an Evil Emperor four times his size.

When it comes to learning a few things about successful investing, the first place many folks should start is not by learning complicated investment formulas that ultimately few wind up remembering, but with a willingness to do what Luke was basically forced to do: unlearn some of the things you perhaps already know.

What baggage are you reading this article with? Is it scores of ads from costly mutual funds trying to get your hard earned dollars into their pockets? You know, the ads showing happy people who all seem to be putting Bill Gates to shame? Based on the vast number of ads out there from the costly fund companies, chances are your sub-conscience is carrying a few of those fancy advertisements in your head and you may not even know it.

So, to begin with, start by listening to Yoda. Being a successful investor often means willing to unlearn some of what you know. While your mind may not wind up lifting an x-wing fighter from a dark, musty swamp, you just might be able to open a window to a few new interesting concepts about successful investing.

Here’s the first example that comes to mind…

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Investing: Some of the more interesting investment concepts can either be traditional in nature or somewhat unique. Although they’ve been around for ten years or so, a low-cost investment product such as Exchange Traded Funds are relatively new and are just starting to explode with popularity. On the more unique side of the spectrum, who would ever think something as bland, boring and unappealing as Life Insurance would provide some retirees with better returns than their stocks have ever produced? In today’s marketplace, investors selling their life insurance policies are experiencing some of the greatest profits I have ever seen. Who’s doing these things? It’s not sophisticated actuaries nor is it Noble Laureates that have figured out how to beat the system; it’s main street retirees that opened their minds to one of today’s hottest concepts, that of something called “Life Settlements.”

Star Wars: In real time it took a few months but in movie-time it took just under two hours for Luke to truly open his mind to new concepts. By fully opening his mind and entrusting The Force, he turned a targeting computer off and wound up landing one right into the Death Star’s exhaust port. … End result? Death to the Star and birth to inter-galactic celebrations across the universe that changed our movie-going lives forever.

Lesson Learned: Whether it’s the willingness to turn off a computer tracking system or explore innovative concepts such as Life Settlements, it’s those with open, educated minds that often find the success they seek.

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Investing: Who would you rather be? A sock puppet on national TV promising those that own its stock boatloads of money or a cup of coffee that costs 3 bucks? While at first being a puppet seemed like the way to go, it was just a matter of time before Starbucks double-Frapps put the Pets.com mascot to shame. As most people that experienced the .com bust can attest to, investing into hype often leads to nothing but regret.

Star Wars: Who would you rather be? A seven foot master with a deep voice, impressive ship and a mind that melts men or a skinny blue eyed farmhouse kid chugging around the galaxy in a worn out jalopy? While at first glance sporting a cool black helmet and long cape could seem like the way to go, Star Wars proved to us that in the end, staying away from the hype can wind up saving you from the dark side of things.

Lesson Learned: Save the sock puppets for your kid’s next birthday. Flashy ads, slick brochures and fast-talking salesmen isn’t what counts, it’s what’s behind the window-dressing that does. Next time you’re confronted with a hyped-up investment that seems a bit “too good to be true,” keep in mind Han Solo’s classic line, “I got a bad feeling about this.” Think smart, double-check the hype and remember: this is your hard-earned money we’re talking about.

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Investing: Some of the most successful investors I’ve ever met started out with nothing. Thinking back to these people, those with the most often started out with the least. Somehow, some way, fearless persistence, dedication and that occasionally annoying thing called “time” steadily built them their success. While diversifying your investments, reducing fees, minimizing taxes and budgeting yourself to save a few dollars every month may sound painful, dreadfully boring and slow paced, remember: when it comes to trying to get rich quick, the longer you play the game, the less chance you typically win. On the flip side, when investing smart, the longer you play the game, the greater the odds you’ll come up a success.

Star Wars: Have a good idea for a movie? George Lucas did. To follow in his footsteps, first lock yourself in a room with a legal pad and for the next year or so, do nothing but write an outline to a science fiction story. Then, over the next year or so, expand the outline into a screenplay, and once that’s done, spend the next year re-writing it. With the script finally complete, spend another year raising money to produce it. With financing in place, spend another year filming it, the year after that editing it and once that’s all finally done, take a deep breath, sit back and make a billion dollars.

Lesson Learned: Don’t think success could happen to you? That could be your first problem. Whether it’s building wealth or creating the second most successful movie ever made (behind Gone With The Wind when inflation is factored in), remember: the journey to riches rarely happens overnight. Take, for example, Henry the Electrician, a friend of mine who once made $4 dollars an hour fixing fuse boxes. Tired, worn out and wanting a better life, he one day had the guts to scrape together a few dollars, purchase an apartment on the dark side of town and rent it out. Half a lifetime later, with hundreds of apartments to his name, his personal Star Wars is now a reality, and with a little time and dedication, I’d bet anything one day yours will one day be as well.

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Investing: There’s nano-tech, bio-tech and gen-tech. Derivatives, floaters, collars, straddles and a long list of many other complex investments. While some of these might be all well and good, it’s probably best you listened to Warren Buffet who once wisely told us mere mortals to stay away from things we can’t understand.

Star Wars: There’s tall creatures, short creatures and monsters buried beneath the trash. Blubber-filled giants, underground slugs, women with thin heads and a long list of other bizarre things. While some of these might be all well and good, it’s probably best you listened to Yoda who once wisely told Anakin to stay away from things he can’t understand.

Lesson Learned: Who knew Warren Buffet and Yoda would be so alike? Until this moment, I for one never did. Whether your journey is about destroying an evil empire or building wealth, staying away from things you can’t understand is often a first rule of success.

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Investing: Want to outperform most mutual fund money managers? I do. That’s why when it comes to investing my own money, I often stick with index investing and put my money into things such as the S&P 500. Somewhat sad but irrefutably true, over time, you’ll most likely make more money investing into the simple and mindless S&P than most mutual funds. And if returns aren’t enough to inspire you, what about fees and taxes? Fees in most indicies are typically around two tenths of a percent and investing in indicies rarely causes capital gain taxes until you decide to pay them, not someone else. How good is that?

Star Wars: Legendary effects, wild robots, fantastic chases and places that few people could ever imagine made my popcorn dance, but when stripping away all that cool stuff, what do you really have? A simple and familiar storyline that follows Joseph Campell’s classic thesis that proved all timeless stories can be boiled down to the same, simple storyline that’s been re-hashed a thousand times through heroes wearing many different faces.

Lesson Learned: Forget phone books of investments many investment accounts contain. Who has the time to keep track of those things anyway? Whether it’s creating a movie few will ever forget or making money, remember: it rarely has to be complicated for it to be effective.

I had fun pondering how Star Wars can teach us a few things about our money, and in fact, there were a handful of other “lessons” I wound up editing out. But who knows? Given the examples above, next time you see Star Wars, perhaps you too will realize some of the valuable lessons the classic tale teaches us not only about money, but about life itself.

May The Force be with you.

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Health insurance protects against medical emergencies, homeowner insurance protects against flood or fire, car insurance protects against drivers like me and what kind of insurance protects your money? Have you ever given that any thought?

It sometimes surprises us how little thought some people give to this important subject, but during these turbulent market days, I’m sure many are giving it a bit more thought than usual. After all, you work real hard for your money. Wouldn’t it make sense to protect your investments?

I suppose the next logical question would be, “Sounds good. How can I do that?”

There are a number of ways you can protect your money and I’m not talking about keeping it in a fireproof safe or watching it on a daily basis. Certainly, those could be effective ways of protecting your money, but most of us have more interesting things to do such as work, eat, go to the movies or in my case, challenge my kids to Nintendo on a weekend evening. If those activities or anything else is more interesting to you than watching your money on a daily basis, then here are a few quick thoughts on how you can protect your investments:

1. Reduce risk: I find that many people, especially those in retirement, often have too much money in the stock markets. One of the best ways to protect your money is to diversify stock investments into safer places such as bonds, CDs and a number of other possibilities not mentioned here.

 

2. When investing in individual stocks, a fantastic way to “insure” against possible loss is to buy something called “put options.”

When they hear the word “options,” many investors run for the hills thinking there is great risk involved. Some types of options have unlimited risk while others are very conservative, and buying a “put option” is one of those. When you buy a put option, all you are doing is giving yourself the chance that someone will be obligated to purchase your stock at a price above what it’s trading at sometime in the future.

Imagine this: you have a lot of money in a particular stock. You’ve had some real nice gains and the price per share is currently at $100. Over the next few months, for whatever reason, the stock tanks and you now find it trading at $50 per share. Sad day? Ordinarily it would be, but because you bought a “put option,” someone out there is obligated to buy that stock from you “as if” it were still trading at $100 per share.

Needless to say, there is a cost to buying the put option and as a result, there’s a chance you might have paid the “insurance” for nothing. But when it comes to “insuring” individual stocks against loss, buying a put option is often a fantastic consideration, especially for those who want to protect large gains concentrated in one stock.

 

3. Another way to protect an individual stock against loss is to establish something called a “stop loss.” To keep it simple, think of a “stop loss” as a safety net underneath your stock. Using the example above, if a stock is currently trading at $100 per share, you can “place” a safety net (stop loss) at $90. If the price of the stock drops and hits the safety net at $90, the position would be sold at that price, but bear in mind: there is no guarantee the stock would be sold at $90. For various technical reasons beyond the scope of this blog, the stock might “fall through” the safety net and not get sold. Chances of this happening are unlikely, but it could happen, thereby making the “put option” a more reliable choice.

 

4. Exchange Traded Funds: If you like the idea of investing in index funds, you may want to consider investing in index Exchange Traded Funds as opposed to an index mutual fund. In general, ETFs are indexes that trade like a stock. The primary difference between an index ETF and an index mutual fund is that ETFs trade within the day (as opposed to at the end of day when mutual funds are actually sold). In addition, given that ETFs “act” like a stock, you can also place stop losses on them and in many cases buy put options on them as well — both benefits that you cannot do when investing in index mutual funds.

So, if you are investing in index mutual funds and want more control of your investment, you may want to consider investing in index ETFs instead. However, bear one thing in mind: the “negative” of an index ETF is that if you are investing into the same position on a frequent basis, you would most likely be better off sticking with index mutual funds. This is because when you invest in an index ETF, you will incur trading costs every time you make additional investments. When you invest in an index mutual fund, typically it won’t cost you anything each time you add more money to the account.

 

5. Variable Annuities: An investment into a variable annuity provides tax deferment and direct investments into various stock market indexes or sub-accounts (mutual funds). Most variable annuities also have Death Benefits as well as Living Benefits. These offer a wide variety of guarantees to the investor at a cost. Benefits could include: return of the original investment to the heirs when the investor dies. This protects the heirs in the event that the account goes down in value. Other benefits could be the highest account value paid at death and also various guarantees for income in case the account goes down in value. Many companies offering variable annuities have death and living benefits that will differ widely, so be sure to closely investigate each option and its cost before making an investment.

 

6. “Growth CDs”: The actual terminology for this type of investment is Structured Products, but many refer to them as “Growth CDs.” This type of CD is offered by banks and sold through brokerages. They are actual Certificates of Deposits fully insured by the FDIC, but there’s one major difference between these CDs and those offered at the local bank: the interest these CDs could earn is determined by the performance of various stock market indexes. If a particular index(es) goes up in value, then you could earn more than the typical bank CD. If the index(es) go down in value and you hold the CD to maturity, you’ll get your principal back, plus in some cases a minimum amount of interest. If you are looking to invest in the market while protecting your principal, “Growth CDs” could be something to consider as part of your diversified portfolio.

 

7. If the concept of a “Growth CD” sounds familiar, it might be because it’s similar to that of an Index Annuity. Similar to a Growth CD, an Index Annuity offers stock market participation without risk to your principal. Also, just like some Growth CDs, market participation is typically “capped” or limited up to a certain amount. Furthermore, earnings, if any, are “locked in” on an annual basis. Also, and different from the CD, all potential earnings are tax deferred. There are far too many details about Index Annuities to outline in this blog but suffice it to say, make sure you understand a handful of important provisions before investing including, but not limited to: the length of time you are required to hold the account, the quality of the insurance company offering the annuity, the way the potential earnings are calculated, surrender fees and other important points not listed here.

Bad market got you down? Hopefully some of the above ideas will be helpful in protecting what which we all work real hard for. Stay tuned for my next post when I’ll add a few more ideas on how to protect your investments should this highly volitile market continue.

Saving is not always easy. There are bills to pay, clothes to buy, movies to see and a long list of many other things that can easily get in the way. With this in mind, I wanted to point out a few ideas on how to save $100 per month.

Let’s suppose you invest $100 every month, and let’s also assume you invest it into a stock index fund that earns an average return of 8% per year. Before revealing the results, note the emphasis on “index fund.” This is important to highlight because when investing in an index such as the S&P 500, not only do you get instant diversification, but you’d also keep the fees you pay and the taxes you owe to a bare minimum as well.

Let’s also suppose the amount you save increases by 3% per year to keep in line with a hopeful increase in wages. So, invest $100 per month in an index fund such as the S&P 500 and at an 8% average rate of return, the following would result:

Looks good to me. Here’s a few creative ways to help you get there:

1. Invest your refund: Are you one of the unlucky people to get a tax-refund this year? Remember, your tax refund is merely an overpayment of estimated taxes or withholdings that earned Uncle Sam interest, not you. If you were one of the unlucky people to receive a refund, evaluate your estimated taxes or withholdings and don’t give it to Uncle Sam as a tax-free loan. Instead, invest it. Doing so could very well get you that $100 monthly savings you’ve been looking for.

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2. Brown bag it: Working? Let’s suppose you eat lunch out every day and the average meal costs $12. That’s $240 per month in food costs. To save money, would you eliminate dining out every day? Not unless you wanted to miss out on the latest business news or how Jane’s date went with Jeff. So, let’s assume you cut down on the dining and ate out once a week. Doing so would bring the total monthly food costs to right around $50. You still have to feed yourself, right? So let’s assume you spent about $100 for some groceries. Do the math, and there you have it – you’re left with a $100 dollar monthly savings.

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3. Rideshare to Work: Let’s suppose you travel 15 miles each way to work, your SUV holds 20 gallons and gets 15 miles per gallon. Two more variables needed: Let’s suppose gas costs $2.75 per gallon and there’s 22 working days in the month. How much would you save if you carpooled with two friends? Sounds like one of those SAT brain twisters, right? And you thought you were out of high school — Do the math and that’ll save you roughly $80 per month and get you a nice ride in that carpool lane as well. How great is that?

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4. Energy Checkup: Are there ways you can save a few dollars on your monthly energy costs? For me there was. A couple of small touch-ups around the house and I am now helping keep Al Gore happy. With a few mouse-clicks on the “Home Energy Checkup” at www.ase.org, I quickly learned a few interesting ways to save a couple of dollars every month on my energy bill and maybe you will too.

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5. Skip the Root Beer: It’s a rare day when I don’t have a craving for an ice-cold Root Beer. Suppose I didn’t listen to my own advice above and ate out five times a week. If a Root Beer costs $1.50, I just spent $30 per month. For savings and nutritional reasons, I should have been drinking water. While the $30 savings won’t get me my $100, it’ll definitely help get me there and make my Mother happy along the way as well.

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6. Clip Coupons: If you’re just like me, that means you eat a few boxes of Cinnamon Toast Crunch every month along with a few dozen South Beach Protein Bars and bags of Turkey Jerky. Interested in saving a few dollars on these monthly purchases? Websites such as www.coupons.com claim you can print a few of their coupons and save over $100 every week. Who says Double Stuff Oreos are bad for you? When I’m busy saving money when eating them, I would completely disagree.

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7. In-Home Beauty Regime: Thanks to a thinning hairline and my Flowbee, it’s been at least a decade since I paid someone to cut my hair. Suppose each cut costs an average of $50 and I need to cut my hair once every two months. By doing it myself, I’ve basically saved $25 per month. Care to come by for a Flowbee? Would you do it yourself? Doubtful on the former, possible on the latter. There are also a few possible things you can do to reduce your monthly beauty costs such as a do-it-yourself manicure or mudpack.

Better nutrition? Energy efficiency? Getting yourself rich instead of Uncle Sam? As far as I’m concerned, over a ten-year period of time, I can think of 21,796 reasons to save $100 per month and hopefully you can too.