Monthly Archives: July 2012

$100 Invested in Yelp

$100 Invested in Yelp
(Yelp)
 

Investment Idea: $100 invested in Yelp

Total Investment: $100

Total Time Cost: 00:10:00

Extra Costs: $9.08

Total Time Spent on Investment: 10 minutes to set the trade trigger on TD Ameritrade.

Research and Preparation:
In order to get set for this investment I logged into my TD Ameritrade account and searched for stock ticker YELP. It came up and was trading at a price of $24. That seemed to be way too high, and buying four shares for a total of $100 at $25 a share didn’t seem ideal. Instead, I set a stock trigger to buy five shares of Yelp if the price hit $20 a share.

Yelp share buy trigger
(Yelp share buy trigger is set)
 

Low and behold, only a couple of days after setting the trigger a load of bears showed up and shorted the stock.

Yelp five day stock chart
(Yelp share price chart)

As you can see the price is now hovering below the $20 amount I paid for it. Yelp also has an earning call on August 1st, so hopefully they will have some good news and the tide will turn back in my favor.
Reason for Investment:

Excluding the recent bearish trend on this stock, I personally believe Yelp is a great service and is still well positioned in the reviews/restaurant local search market place. This market, which I consider to include such sites as MenuPages and OpenTable, is ripe for acquisition and mergers. After the Instagram deal, a billion dollar acquisition no longer seems like that much of an impossibility. Last year Google purchased Zagat, and ironically, the person who led that acquisition was none other than Marissa Mayer,* who has since left Google and now heads up Yahoo. As the battle for ad dollars continues to grow I feel another attempt at acquiring Yelp is on the way, either from Google, Facebook, or Microsoft. However I wouldn’t rule out a surprise buy out by Apple, who is flush with cash, and looking for ways to better compete with Google, and help soup up it’s Siri voice search app.

At the time of writing this, Yelp’s market capitalization was hovering at around $1.2 billion dollars, allowing for one of the aforementioned big four to come in and scoop it for most likely a $2 billion dollar price tag.

Returns:

When setting the buy trigger on this investment I intentionally set the price at a low amount of $20. I believe that Yelp has a very real chance of being acquired in the next year or so, and at a price range of $35+ a share. To find the current value of this investment, take the current price of a share of Yelp and multiply it by five. To find an up to the minute price click here!

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$100 Invested in a High Yield 12-Month CD

Investment Idea: $100 invested in a high yield 12-Month certificate of deposit from Ally Bank.

Total Investment: $100

Total Time Cost: 00:15:00

Extra Costs: $0

Total Time Spent on Investment: Ten minutes of research finding the best certificate of deposit price. Ten minutes creating an Ally bank account. Five days for the account to become credited and the certificate of deposit to be funded.

Research and Preparation:
You might be a red neck if you think investing in CD’s means buying five limited edition Garth Brooks Christmas Special CD sets.

However, a CD in the financial sense actually stands for “certificate of deposit” and investing in a CD actually means buying a certificate of deposit from a financial institution with a guarantee that they will pay you a set amount of interest and your initial amount back to you after a certain period of time. Also, CD’s issued by federally insured banks are insured up to $250,000, making them one of the safest, but lowest earning investments in the market.

You might be a red neck if you think buying a Jumbo CD means buying a record. A jumbo CD is actually the term given to a CD which has a very high size: normally a buy price of $100,000 or more. The larger the amount the CD is, the higher likelihood a bank will offer you a better rate on the CD. In my case, I have the opposite of a Jumbo CD. I have what we would call a “mini-CD” (Not an actual finance term) since my investment is only for $100.

In order to find the best price for a certificate of deposit their are some great tools but perhaps the best would be BankRate.com. BankRate offers lots of current up to the minute rates being offered across the country and lets you search them too. They have rates for mortgages, home equity, auto loans, credit cards, and lastly and most importantly for us common CD rates.

So I went ahead and clicked CD Rates.

CD Rates section of BankRate
(CD rates section of BankRate.com)
BankRate then displayed the most common CD rates from around the US in a nice table, and allows you to sort by Institution, APY (Annual Percentage Yield), Rate, Min Deposit, and Comments. I sorted the table by minimum deposit, and only one bank offered a CD which had no minimum deposit.

CD Rates Ally Bank
(Ally Bank had the only no minimum deposit CD’s)
As you can see, not only was Ally Bank the only bank that would allow me to purchase a CD for just a $100, it was also the bank offering one of, if not the highest, APY’s. APY stands for Annual Percentage Yield, and is the amount of return you should expect after a year. I should expect my $100 investment to return $1.02 for the year. It would achieve this amount by earning a rate of 1.01% that is compounded daily yielding a total return of 1.02%. When buying CD’s and making other investments it is always important to check the compounding rate. The difference on the return between an investment that compounds daily, quarterly, or yearly can be huge.

Knowing that Ally bank was the only bank I could even open a $100 CD at and the fact that it’s rate was the highest made it a no-brainer for me to go ahead an open an online banking account with it. (Click here to read about how to open an online Ally Bank account)

Ally CD Opened
(Ally Bank $100 CD)
The process of opening the Ally account was relatively easy. Unfortunately, it took a couple of days for my deposit from my regular checking account to clear, but on July 25th, the money had finally arrived and the CD went live and has been earning me half pennies daily.

Ally CD Opened
(The CD finally opened and earning interest!)
Reason for Investment:
There are a whole lot of alternative investments out there but there are also some classic investments that every portfolio should include. One of the most common and safest investments out there are CD’s. CD’s are issued by banks and insured by the FDIC for up to $250,000. They offer low returns and normally force the buyer into a locked-in time frame. CD’s are a good place to put money you don’t need for six months or more if you don’t want to put that money in too risky of an investment.

The main reason for this investment was to diversify and add a stable and common investment to my portfolio. CD’s are a very common investment and never reap that big of a return, but at the same time they are a safe place to put your money and earn a couple of pennies on the dollar.

Returns:
With my Ally one year CD, I am looking to earn $1.02 for the year. You can check this investments current value here!

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$100 Invested in Oil

Investment Idea: $100 Invested in Oil

Total Investment: $100

Total Time Cost: 00:15:00

Extra Costs: $9.08

Total Time Spent on Investment: 10 minutes of research. 5 minutes spent online signing up.

Research and Preparation:
With talk of ever booming oil prices caused by global warming, and new found global demand, I wanted to get a piece of the action. Unfortunately, I knew that you couldn’t just buy the real thing and store it yourself. There is no easy way to buy oil and store it and then hope to resell it while making a profit on such a small operation. It all reminds me of the great “It’s Always Sunny in Philadelphia” episode titled, “The Gang Solves the Gas Crisis,” in which the gang decides to buy gas and hoard it before the price raises. However, they run into a whole bundle of issues, from trying to store it, transport it, and even trying to sell it. Below is a clip from the episode.

(The gang learns a valuable lesson about buying oil)
Knowing that buying oil directly wasn’t exactly the best option, I looked out for a way to replicate and mimic the price of oil and hopefully get in on it before the price went up even more.After doing some digging, I came across the USO. No, not the USO that Charlie Sheen just gave $1,000,000, but the United States Oil Fund. The USO, ticker symbol USO, “is a domestic exchange-traded security designed to track the movements of West Texas Intermediate (“WTI”) light, sweet crude oil. USO issues units that may be purchased and sold on the NYSE.”

That sounds like a whole lot of gibberish, but basically it simmers down to mean that the USO’s price tracks almost spot on with the current price of sweet crude. To illustrate this, below is a chart of the year to date performance of Oil and USO.

Oil year to date performance
(Oil looks to be tanking)
As you can see, the red line for Oil and the blue line for USO turn practically purple with all of their overlapping.

Anther quick takeaway is that it looks like oil is doing horribly. Perhaps this is a good sign, and that the market is at its bottom, a great time to buy in to it!

After reading more about USO, I went ahead and checked it’s stock price. It had been around $33.40 a share the day I checked. This was perfect. If it could just drop to $33.33 I could buy three shares for a total as close to a $100 investment as possible.

I needed a place to buy and sell stocks cheaply, so I went to Google and found TDAmertitrade. It seemed to have good reviews, so I went and signed up for an account. If you guys want one too, email me ahead of time so I can get some referral money! Unfortunately TDAmeritrade has a minimum deposit of $500, so I placed $550 into the account since I assume that each stock trade would cost around $10 and I would be making five or so total stock investments.

Unfortunately, by the time my account was fully set and funded, a couple of days had passed and the stock price of USO was now hovering at $34.50. I got worried. Had I missed the bottom? Was this stock on the up and up again?

Since I had missed my initial window of buying the stock at my ideal $33.33 price tag, I needed to just wait for it to hopefully drop again. TDAmeritrade has an awesome tool called Trade Trigger, where you can set a trade to automatically occur when a certain condition is met. In my case, I set the trigger to fire when the ask price of a share of USO was $33.33. When this condition was met it would then buy 3 shares of USO at a total price of $99.99. And I would even be sent an email when it had happened.

TDAmeritrade Trade Triggers
(USO Trade Trigger is set)
And then I waited.

This morning when I checked my inbox a new email arrived, subject, “Trade Trigger order activated.” Now that was exciting.

USO shares bought
(USO shares bought)
I logged into my TDAmeritrade account and sure enough a debit of $109.08 ($9.08 fee per a trade) had came from my cash supply, and I was now the proud owner of three shares of United States Oil Fund.

Reason for Investment:
The price of oil and of gas has seemed to be steadily on the rise. Even as people try to turn more green or use hybrid vehicles, there is still a booming market for gas guzzlers in India and China, as people turn in their bikes and reach for the keys. I personally don’t see this trend changing anytime soon and feel holding on to some oil will pay out nicely in the long run, even as oil seems to be down for now due to the slow economy.

Returns:
This investment’s return is based on the stock price of USO multiplied by three, for the three shares of it I own. To find an up to date price click here!

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What is a Living Will

Imagine a man who was in a serious accident with injuries so severe that he was being kept alive by a respirator and a feeding tube. His family has been at his bedside for weeks with no response from him and prospects for his recovery are grave at best. His family and doctors are helpless to do anything but wait because he can not speak for himself and let them know that he would rather they pull the plug and let him go peacefully than to exist like this. This situation could have been prevented if this man had a living will.

living will
Always be careful when signing important documents!

A living will is a legal document that lets a person inform their family and doctors of his/her wishes regarding life-sustaining procedures in the event that they are incapacitated or rendered permanently unconscious. People don’t really expect this to happen to them, but the fact is that it happens all the time. Most people don’t want their family to be burdened with the choice about “pulling the plug”, and in some states, if there is no living will stating a person’s wishes, the doctors are not permitted to discontinue life-support. For this reason, it is important for everyone to draw up a living will.

Because laws surrounding living wills vary from state to state, it is advisable to seek out the help of an attorney who specializes in estate planning. A lawyer can answer all questions and make appropriate recommendations as to what documents should be set up and whether a Medical Power of Attorney should be named. (A Medical Power of Attorney is a person who will make medical decisions on someone’s behalf if they are incapacitated, but their medical condition is non-life threatening.)

The living will contains a list of directives for doctors and family to follow relating to resuscitation, life support, breathing tubes and feeding tubes. The person writing a living will has the right to decide how they want their medical care to be handled in all of these situations and others not mentioned in the scope of this article. The decisions made in the living will are not automatically acted upon in any life threatening situation. A heart attack, for example, is life threatening, but the prospects for recovery are good after a heart attack, so medical personnel will resuscitate and do anything possible to revive the person. The living will usually comes into play for a person with either a terminal illness or someone who has been declared permanently unconscious with no prospects of recovery.

After a person takes the steps to set up a living will, the most important thing to do is make their doctors and family aware of the document. It can be a difficult discussion to have, especially with family members, but the living will only works if the right people know it exists. After the document has been completed, copies of it should be provided to the family doctor and immediate family members so that they can carry out its directives.

 

Financial Downfalls of a College Student

Every college freshman is confronted with new finance problems and issues. Out of their parent’s house, not having to report where they are going or explain what they are doing all the time. It is like finally understanding what freedom is supposed to feel like. Cloud nine feels pretty good for a while. You are floating along, going to parties, going out to eat, spending all the money you saved from the summer before or all the money Mom and Dad sent you off with when suddenly, the money and the cloud are gone and you are left sinking into a major money problem, with a bank account sinking as well.
Financial Downfalls of the College Student

Don’t be ashamed. It happens to almost all of us incoming college students. Here are a few helpful tips to keep you in line during your first year and keep you on that cloud and out of debt.

1. Find a job.

This may seem obvious to those who worked during high school, but for those who did not need to, this may seem like a last resort. You may begin looking at all the negatives of what getting a job can mean; less study time, less social time, and more responsibility on top of your school work. Now, push those thoughts out of your mind and look through the positive ones. You will make money and new friends with your co-workers, gain good real world experience, and create new opportunities for yourself. Look for places where you have the possibility to move up, or that have benefits for college students. I currently work for a grocery chain in the Midwest, Hy-Vee. Hy-Vee offers a 401 K plan for everyone ages 19 and over. This is the kind of benefit I am talking about.

2. Find the right bank.

Look at the banking options you have around you. Check out the savings account and checking account options. Which one has the highest interest rate? Do any of them offer start up or joining benefits? Pick the one that seems like the best fit for you and go start a bank account! I highly recommend starting out with a checking account. Once you’ve accumulated around $500, start a savings account. Usually savings accounts have to be started with a $100 deposit. Once you do this, start a monthly automatic transfer of a small sum from your checking into your savings. This way, you will be automatically saving money and not even needing to think about it. A small amount, such as $10, $15, or $20 will not be missed during the month.

3. Create a budget.

This may seem like the solution to all your problems. “Oh I’ll just start a budget and stick with it. No problem.” Well, it is actually a lot harder than it seems. First, take a look at the things in your life that are costing you money, like driving, eating out, groceries, going out with friends, other car expenses, rent, utilities, etc. Then take a look at how many hours you work during a week. This may seem overwhelming, but once you know where all your money is going, where you can cut back, and where you can afford to give more, you will feel much more confident in your financial situation. Make a list of all things you cannot live without, like driving, groceries, rent, utilities, etc. Now, plan out how much you can put towards these items each week. Remember; do not plan out on spending all your paycheck on these things every week. You will want to have a little “random” fund set aside in case of emergencies or something comes up that you had not thought about. If you are planning on creating the savings account with the automatic transfer of money, do not forget to budget that in either.

Once you figure out where all your money will be going, you will feel so much more secure in your financial situation.

4. Take advantage of your options.

If you are attending school in a big town, like I am in Iowa City, take advantage of the buses. Many times the “Cambus,” or the university’s bus system will be free. If you can use their buses, you will save your gas money for the week.

Look for coupons online and at the grocery store you use. I am not recommending that you become an extreme couponer or anything. Just think about what you are buying and where you can afford to save money.

Find the free shows downtown or go to the park and play Frisbee golf with friends! Activities that are free usually tend to be a lot more fun for you and your pocketbook. Jump into your new financial situation with confidence and knowledge, and have a great time doing it! Check back often for more great easy to understand financial advice, that every college student is going to want to know about.