Bobby’s theory of Relativity

Time can be converted to Dime and Dime can be converted to Time. Read on to how what should you do (Time-> $ OR $ -> Time) and how should you go about doing it?

Albert Einstein proposed theory of relativity in the year 1905, whereby he established that matter can be converted to energy and energy can be converted to matter.

Today, I am proposing Bobby’s theory of relativity – it states “Time can be converted to money AND money can be converted to time”.

Time can be converted to money

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Shark Tank Audition

Read on to find out how my Shark Tank audition went and how I was sitting there documenting my thoughts so that I can share them with you.

This was the most beautiful face at the audition, so beautiful that I had to remove my face:

Winner of the ‘Most Beautiful Face at Shark Tank Audition, Miami, 3/3/2016’ (Awarded by One More Dime)

I had my Shark Tank audition on 3/3/2016 but I will still write the post as if this was today.

Here is how the day went:

I planned to leave at 6.30am – I was in my car at 6.35am. Continue reading

IRA accounts (Ultra-rich vs Rich vs Poor)

Ever wondered how the Ultra-rich use IRA accounts? And how people with moderate means can also use the IRA accounts? Read on…

In recent past, my Roth IRA account’s worth reached $100,000 so I am personally very excited. I can be considered rich by many standards. Today, we will talk about Roth IRA accounts and how the ultra-rich and rich use it. We will then continue to talk about the middle class and the poor – and explore what can they do to be able to save a little more.

(You can also skip directly to rich or middle class/ poor section if the ultra-rich jugglery does not interest you).

Ultra-rich

Ultra-rich use several different techniques to make the most of Roth IRA possibilities. The most widely used and easiest to understand is “Buying pre-IPO stock that records a 2,000% gain as soon as IPO’.

IPO stands for Initial Public Offering. Any company usually starts because a few like minded people come together and start to create a new product or service. They put some of their money and start the company.

If the idea starts to do well, they will find investors to invest some serious money. Once the company becomes successful, then they go to the ‘stock market’ and sell part of their (owners + investors) ownership to common public through an IPO.

The company has a lot of flexibility in deciding how much to ‘charge’ for the initial distribution of shares.

The name of Max R. Levchin (Yelp) comes up often in these discussions, let us examine what he did:

He acquired Yelp stock mostly for free. At one point, he held about 29 million shares of Yelp.

Yelp went public in 2012 at stock price of $15. This means Max’s 29 Million shares would have been worth $435 Million.
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Compare 30 year vs 15 year mortgage

More than 5 million homes get sold in the country each year. Assuming 80% of them are financed through a mortgage – 4 million households face the question ’30 year vs 15 year mortgage’ every year (and in my opinion 90% – 3.6 Million – do not understand all the differences):

How to compare 30 year vs 15 year mortgage?

 First off – there is no straight forward answer to the decision between 30 year mortgage vs 15 year mortgage, here is a screenshot of an Excel spreadsheet that I developed to make my decision:

30 year vs 15 year mortgage

30 year vs 15 year mortgage


What are the factors that go into that decision?

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Making money by moving money – 1

Make money by moving money

Make money by moving money

Today we will see how to make $592 in 22 minutes.

I received a letter today by mail that told me about a promotion offer being run by a bank: Earn a $500 bonus by depositing $50,000 for 90 days.

Essentially – you open a savings account with this bank, transfer $50,000 to the new account, leave the money there for 90 days, and the bank gives you $500.

Although I will explain the $50,000 example today, the bank has offers for deposits starting $5,000. 

What is the ROI (Return on Investment)?

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Buying vs leasing a car

Leasing is for rich people and buying is for people who want to stay rich. Let us examine the differences between buying vs leasing so that you can decide for yourself if buying is better for you or leasing is.

In my opinion, the primary (and perhaps) only advantage leasing offers over buying is the convenience of having a new car every 2-3 years. Still go through the complete post and decide for yourself.

Definitions – Buying vs Leasing

Let us start by defining buying vs leasing:

Everyone knows what buying a car means – it means you own the car, it is yours, you can use it for as long as you like, and sell it whenever you like.

On the other hand, leasing is renting. You do not own the car. The dealer owns the car, he rents it to you for a fixed period of time (usually anywhere from 2 to 4 years). You pay rent every month. At the end of the lease term, you return the car to the dealer.

Arguments people make

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IRA versus Roth IRA

Deciding factors: if the contribution is deductible, tax bracket in retirement versus tax bracket today, income levels today, current age, and availability of  retirement plan at work.

If the question is whether you should invest in an IRA account (including traditional and Roth), then the answer is YES (capital bold yes)*. If the question is whether you should contribute to a traditional IRA or a Roth IRA, then the answer is ‘it depends’.

It primarily depends on several factors. Two of these factors are the most important: whether the contributions are taxable in the current taxable year, and whether you expect your tax rate to be higher or lower (as compared to the current rate) in retirement.

The basic idea of an IRA account (traditional and Roth) is 'Money is taxed by the IRS only once' - either you get taxed now OR you get taxed when you withdraw the money in retirement.

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What is a credit score and why is it important?

What is a credit score, how is it calculated, and why it is (or is not) important?

What is a credit score?

Let us take a personal example in order to understand what is a credit score. We do not know each other. You have extra money that you are willing to lend in return of interest expectations. Apart from asking me details like my salary, my other debt obligations, my employment history; you will want to know have I taken loans from others before, and if yes then have I paid them back on the agreed terms and conditions (payment history).

In addition, you would want to know if I borrowed as much money as they were willing to give me, or my ‘needs’ were less than what I could have borrowed (utilization).

In addition, you would like to know how long have I been borrowing from others (age of credit history), you might want to know in total how many times have I borrowed and how many of the loans are still active (total accounts), you might want to know how many loans did I take recently.

And finally, you would like to know how many loans did I ask for (credit inquiries) and if I have any public records that might be of relevance (civil litigation where I was asked to pay damages, or previous loans that went into collections).

This is exactly the way anyone lending money to anyone will think, and the banks are no different. Banks are professional money lenders and a credit report lists all of the facts that we listed above (saying you might want to know).

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Personal Capital – review (my experience)

Today I will share my review of being a Personal Capital user for 3 years – the good, the bad, and the conclusion.

Overview

Personal Capital website allows you to create an account on their website and map all your investment and cash accounts to your personal capital account. You can map your IRA, Roth IRA, regular trading account, your SEP IRA, your joint trading account, and even your checking account to your Personal Capital account.

Personal Capital Benefits

  1. Asset Allocation (Holistic picture)

In today’s day and age, it is natural to have several investment accounts. In addition, you might be managing your finances at the household level and suddenly you have your spouses accounts to monitor too. As an investor, it is critical for you to know how your portfolio looks at the aggregate level.

Personal Capital - Target Asset Allocation

Personal Capital – Target Asset Allocation

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