just act like you know what you are doing
Kevin Nguyen is insightful and entertaining in The Financial Crisis, as Explained to My Fourteen-Year-Old Sister but I can’t understand why the middle word of his blog subtitle is italicized.
Filed under: moneyA few words about Dolley Madison in honor of the release of her Presidential Spouse coin by the US Mint.
Wow, this is … scary? interesting? the way it’s just gonna be for now? I don’t know what to say, except, I can only find two other days in my lifetime that Gold has closed over $800 per troy ounce. Friday, January 18, 1980 ($835) and the next trading day, Monday, January 21 ($860).
Here’s something that caught my attention: One of the Stevens (Dubner) who wrote Freakonomics is now publishing a new book based on research done with capuchin monkeys.
I very much enjoyed Freakonomics and I enjoy working with little monkeys (at the zoo, not in my day job — just to be clear) so this promises to be fascinating. The catch is that the Steven (Levitt) who was the brilliant, nerdy brain behind the operation doesn’t appear to be involved in this new book, it is just the writer/transcriber half of the pair. Still, the article (linked above) describes the research in the book as a study in economics among the monkeys where useless washers were currency that could be exchanged for treats … and more.
Filed under: money, Real LifeThis weekend Americans are celebrating an annual ritual of frustration and procrastination leading up to April 15th, tax day. This year the calendar affords us a couple of extra days to get a postmark on our payments. So what are we doing with that extra time and energy? We are creating the real American dream, we are having a contest with a big wad of cash on offer. And what kind of contest could be more American than a rap about taxes? The contest is hosted by none other than Vanilla Ice (so quit asking where is he now) and sponsored by the nearly ubiquitous tax preparation software Intuit’s Turbo Tax (which I highly recommend). And since we’re Americans and we love to laugh and we don’t care about anybody but the winners, here’s the first-place video that made rapping whitedude Seth Greenberg $25,000.00 richer:
Filed under: Funny, money, The InternetLadies, take note Adia Diamonds Raising the Standard for Laboratory-Grown Diamonds.
It also doesn’t require slave labor … at least not in the traditional sense.
Maybe I should buy stock in this company. Maybe they’ll figure out how to spin straw into gold, too…
Filed under: money, Real LifeLet’s say you have a savings account and while you’ve always known that you need to save that money for a rainy day, you look at it just sitting there and you’re not sure if you should do something else with it. Remeber that it is a savings account and not an investment account and you have little to no tolerance for risk. So, along comes an offer for a CD which pays a higher intrest rate, but ties up your money for a set length of time (or you’re hit with a penalty). “What,” you wonder to yourself, “should I do?”
That brings us to the Compound Interest Calculator. Here we can observe the differences between these options. Let’s pick an easy, round number to start with ($10,000.oo) and see what happens to it annually. We could pick a longer or shorter term, but 12-months is a good place to start.
If you put $10,000.oo in a savings account and the intrest rate is 4.40%* compounded monthly, at the end of one year you wind up with $10,448.98.
If you instead lock that same money up in a 12-month CD that earns at 5.20%* compounded annually at the end of one year you have $10,520.oo.
The difference, $71.02 is what you could call liquidity cost or the price you pay for having your money readily available. Incidentally, $71.02 is about 0.o71% of $10,000.oo which is almost exactly the difference between 4.4 and 5.2. The fact that one is compounded monthly accounts for the slight difference.
But that’s just what happens after one year. Now, let’s consider the effects of the increased intrest versus an early withdrawl penalty later on.
If you avoid rainy days for a period of two years the $10,918.12 you have in the savings account is growing and available to you at any time without penalty. For the CD, after the second year’s intrest is paid out you would have $11,067.04. The early withdrawal penalty (for a CD with a term that is 12 months or less) is three (3) months of interest regardless of when, prior to maturity, you make a withdrawal. And because it is paid out annually, you don’t get any intrest for that year, either.
During the second year that penalty would be $143.87 but when you add the $575.49 you miss out on by not getting your intrest paid out at the end of the 12-month term, your total loss is $719.36. Considering this, in a worst-case scenario where you have to pull your money out just before the term is up, you wind up around $485.16 less than you would have been had you just kept the money in the lower intrest savings account. You risk just under 1% of your stash plus the intrest for the whole year by betting that you won’t need access to the money before the CD matures. If you win, the higher intrest rate of the CD is excellent and after a few years of compounding annually your money is substantially more than if left in the savings account. For an interesting view of this difference, use a compounding calculator.
All of this is pretty basic, I know. It is simplified for my simple mind. And the take away isn’t earth shattering, but it is this: If you are going to need to access the money don’t put it in a CD. This just explains why. I’m fascinated by it because I really suck at math but I love the wonderful things that can be done with it.
Bonus: A shortcut to determining the quality of an investemnt is the Rule 72
* These numbers happen to be ING Direct’s rates today.
Filed under: money, Real LifeI’ve set up a Virtual Stock Market game and you are invited to participate. You start with $250,000 of funny money to invest in the markets to try and make some cash. It is a pretty realistic simulation as you can short-sell, make margin accounts, and you even have to pay comissions ($29.95) for each trade. You can make limit orders and you can buy any stock on the exchange worth a nickel or more, so bring your theory and let’s see how well it works out. You have from now until Halloween to grow your green.
Use the information and directions below to join the game:
Game ID: halfnhalf
Game Password: halfandhalf
1. Open this link and read the competition summary:
http://vse.marketwatch.com/Game/StartViewGame.aspx?id=halfnhalf
2. Click on the ‘Join Game’ link.
3. If you are an existing Virtual Stock Exchange member, enter your Email address and Password in the login panel and get set to trade. If you are a new user, follow the link to register - it’s easy!
4. Follow the instructions and start trading!
Join now, and see if you can win the HalfAndHalfMillionDollars competition! The more participants the higher the level of competition. Can you master the market?
Filed under: money, The InternetI have failed to respect Buy Nothing Day. I am a bit disappointed, but I needed groceries. More specifically, I needed a turkey. That’s right, I paid for turkey today. In fact, it was the first time in my entire life that I have purchased an entire turkey. For four dollars. Wow. In fact, so much stuff was on sale at the grocery store tonight that I nearly came out ahead! Had I not given in to the impulse to make a lasagne, for which the ingredients were not on sale and had I left the regular-priced canned beverages behind, they might have given it all to me for free.
And here’s a quote that fortune(1) served up to me today. I wish I could take credit for it:
If I’d known computer science was going to be like this,
I’d never have given up being a rock ‘n’ roll star.
– G. Hirst
G. Hirst, it seems, is a leader at the place where semantics and artificial intelligence overlap. He has written such articles as “Semantic interpretation and ambiguity” and “Computational stylistics for natural language translation” and, my personal favorite, “Computational simulations of mediated face-to-face multimodal communication.” I bet if he had kept up the rock’n'roll dream we’d be listening to some fine lyrics about now.
Filed under: money, Politics, Real Life
