A good set of winter tires will go a long way in getting you home safely

A few years back a question like that wouldn’t have even crossed my mind! But moving to the east coast, I’ve learn’t a few tricks on driving in snow without getting myself killed!

Prior to moving to the east coast, I had never driven in snow. I was blissfully unaware of what it takes to drive in snow. I still remember that day. A cold wintery morning, no snow, but icy conditions and I had to attend an interview. I turned on my gps, put on some music and hit the gas!

The GPS told me to take a steep, cobble-stoned road that was covered with ice. And I did. The car went up a bit and then got all floaty and started slipping! Lights I’ve never seen in my car started flashing (stability assist)!

My first instinct was to hit the breaks and park the car. Luckily I didn’t, I was halfway there, and even though the car was slipping, it was moving forward. But I did make it!

So what went wrong? I wasn’t speeding, the tires were new, the car had traction control and stability assist and yet it was a struggle and potentially dangerous to go up that road. How do you climb up a steep road covered with ice?

Winter tires. That’s what was missing. My tires were actually pretty new, but they were sporty, summer tires meant for California roads. Winter tires make a huge difference. A lot of science goes behind the materials used and the treads for better traction and grip on icy roads. This one thing will make a huge difference on how your car performs in slippery conditions. Get your tires changed before the start of winter and change all four tires. (I know this post is a little late for that!)

Climbing up a steep, slippery road

If you are climbing up a steep slippery road and your car starts slipping but keeps moving forward, don’t hit the breaks! Once the car stops, you will start slipping backwards with pretty much no control. For me, I kept going till the road started leveling again. Of course, avoid steep roads if possible, but if you do have to take them, keep this in mind.

Climbing down a steep, slippery road

Going downhill is always harder than climbing uphill when roads are slippery. Breaking may or may not work depending upon how good your tires are how slippery the road is. If you break too hard, your car has the potential to skid, if you break too slow, it may or may not stop. Once again, a good set of winter tires helps a lot.

Negotiating a turn when roads are wet

When you make a turn, your car is pulled towards the edge of the turn by what’s called the centrifugal force. Slushy and wet roads magnify this effect. Slow down! That’s the best advice I can give (and it works)!

Saving money on tires

Now tires are not cheap and prices vary greatly between retailers for the exact same set of tires. Here’s how you can get a good deal on a tire:

• Never buy tires from a dealership. The quote I got for a set was somewhere in 4 figures. Got the same set of tires for 30% less including labor at a local auto shop
• If you have a Costco membership, that is a good place to get tires
• You can order tires online and get it shipped either to you or to a auto shop near you. You cut the middleman and the savings are significant and worth your effort. Amazon has a limited selection, Tirerack and Discount tires are other well known tire dealers
• Once you purchase the tires, go to the manufacturer’s website and look for rebate forms. A number of tire manufacturers provide significant cash backs in the form of mail-in-rebates
• Haggle! When getting your tires installed, haggle on the price. These costs are not set in stone!
• PRO-TIP: When you are getting your tires changed, ask the mechanic to check your brakes as well. Usually, there is no additional charge for this

If you own a 4WD/AWD, you may think you are covered. But remember, a four wheel drive provides control and stability but your tires provide traction. Go with a good set of tires because no 4WD can defy laws of physics!

Share your winter driving stories, tips and tricks!

This one thing will make a huge impact on how your car handles in snow and ice is a post from Money Cone ^DISCLAIMER

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What time is it? It’s time for another roundup! Some great reads from my usual list and I’ve added some great posts from new, promising bloggers to this roundup.

But before we get to it, here are some news snips that’ll make you go hmmm!

• Apple is sitting on so much cash that if it decided to distribute it all as dividends, each shareholder will get $112 per share! Apple sadly, doesn’t pay dividends
• SOPA, the draconian copyright law failed as lawmakers bailed leaving the architect of SOPA, Lamar Smith fuming. A small victory for the masses
• If infidelity is your thing, you should try running for president! Just ask Bill Clinton, Herman Cain or Newt Gingrich!
• The good news at Research-In-Motion, the makers of Blackberry phones, is that the CEOs have stepped down. (Yes, RIM needed two CEOs to keep it running). The bad news is the new CEO had this to say after assessing the threats RIM was facing from Apple, Nokia and Microsoft: “I don’t think that there is drastic change needed”
• This lender will lend you $1,500 for just 234.25% APR. You don’t have to compare payday loans to see if that is a good deal!

Now for some good reads!

TheFreeFinancialAdvisor with 5 Jaw-Dropping Financial Advisor Interview Questions. Informative read!

Crystal@BudgetingInTheFunStuff, who makes a living blogging, with an excellent piece – Don’t sell yourself short!

Ashley@MoneyTalks with: Your Money is Like an Unruly Child. Find out why!

A back-to-the-basics post at WorldOfFinance aptly titled, What is personal finance?

We all have good and bad roommate stories! But is the savings worth the hassle? Check out Jeffrey’s post!

Green Panda@Greenpandatreehouse with Are Investment Risks Not Worth Taking?. Sane advice.

Unless you are a celebrity, you don’t talk about this, but always good to know! MomVesting with Prenups!

Daniel@SweatingTheBigStuff asks: Should Tax Evaders Be Given A Safe Haven? What do you think?

101Centavos with a fun post : Redneck Dividends

Barb@BarbaraFriedbergPersonalFinance with Enjoy Life and Make Money-part 1. They can go hand-in-hand!

Joe@RetireBy40 with a post on how well they have finances under control compared to averages.

Novel Investor has the solution to The U.S. Debt Problem!

LaTisha with an excellent piece: How to Write a Job Getting Resume

A very nice post from Shilpan@StreetSmartFinance: 3 Must Money Lessons for Smart Investors

CashFlowMantra gives an update on his efforts to eliminate PMI…

Bret@HopeToProper with an intriguing post Where Would You Invest a Million Dollars?

Mich@BeatingTheIndex gives an update on his portfolio for 2011. Before ye judge, look at Mich’s 2010 returns!

FinancialGod with a thought-provoking post: The Role of Money in the Financial Crisis

Ken@ArborInvestmentPlannerBlog presents Six Top Global Investment Trends for Your Portfolio in 2012

SixFigureInvestor with some practical tips on where to stash your cash today.

Carnival Mentions
Posts from my blog were featured in the following carnivals. Thanks!

Canadian Finance Carnival #67

Carnival of Financial Planning – Edition #216 – December 23, 2011

Canadian Finance Carnival #68

Carnival Of Financial Camaraderie # 13 – Christmas Edition

The Best of Money Carnival #135 – It’s a New Year of Money Edition!

Totally Money Blog Carnival #49

Yakezie Carnival : Better late than never edition

Thanks for reading!

Blog Roundup is a post from Money Cone ^DISCLAIMER

Vanguard offers funds that have some of the lowest expense ratios in the industry. Offering funds at-cost was a novel idea that made Vanguard the world’s largest mutual fund company, with about $1.6 trillion in assets.

It took a while for competition to take notice, but now there are fund companies that offer funds that are priced lower than their Vanguard peers.

Here’s a list of the ten, commonly used ETFs that have an expense ratio lower than that of Vanguard’s. (ETF commissions have not been considered in the preparation of this list.)

Large Cap – Value (VTV vs. SCHV)
Schwab’s U S Large Cap Value ETF (SCHV), tracks the Dow Jones’ U.S. Large-Cap Value Total Stock Market Index and has an expense ratio of 0.13 which is less than that of its Vanguard peer, VTV, which has an expense ratio of 0.15. Schwab started offering this ETF towards the end of 2009. Vanguard’s assets are over 19 times that of Schwab’s!

Large Cap – Blend (VV vs. FLG)
In the large cap blend category, we have Morningstar’s aggressively priced FLG with an expense ratio of just 0.05% as opposed to Vanguard’s VV, with an expense ratio of 0.13%. FLG is entirely composed of US and Europe sectors whereas VV has a small exposure to Canada. Both have zero exposure to Asia.

Large Cap – Growth (VUG vs. SCHG)
Schwab once again undercuts Vanguard’s Growth ETF, VUG, with its own SCHG with an expense ratio of 0.13% versus Vanguard’s 0.15% ER.
Technology, Industrials and Health Care form the top 3 sectors for SCHG; VUG’s top three sectors are Technology, Industrials and Consumer Discretionary.

Mid Cap – Blend (VO vs. FMM)
Morningstar introduced its Focus Morningstar Mid Cap Blend ETF, FMM, at the end of March last year. It has $4.6M assets under management and an expense ratio of 0.12. Vanguard’s VO has $3.2B (that’s a B!) assets under management and and expense ratio of 0.15.

Small Cap – Blend (VB vs. FOS, SCHA)
In this category, we have both Schwab and Morningstar offering ETFs priced lower than that of Vanguard’s VB (0.17% ER). Schwab with SCHA has an expense ratio of 0.13% and Morningstar’s FOS has an ER of 0.12%.

Total Bond Market (BND vs. SCHZ)
Both Vanguard’s BND and Schwab’s SCHZ both track the same index – Barclays Capital U.S. Aggregate Bond Index. The difference is in their sizes. Vanguard has $13.8B assets under management and Schwab has $174.6M. BND’s ER is 0.11%. Schwab’s SCHZ is cheaper by 0.01% at 0.09%!

Short-Term Government Bond (VGSH vs. TUZ)
PIMCO’s TUZ vs. Vanguard’s VGSH. Both hold short term government bonds maturing in 1 to 3 years. VGSH tracks the Barclays Capital U.S. 1-3 Year Government Bond Index whereas TUZ tracks BofA Merrill Lynch 1-3 Year US Treasury Index. The comparison between these two funds are well matched as PIMCO is one of the world’s largest fund companies and home to the largest bond fund, PIMCO Total Return Fund.

TUZ has $143.0 M assets under management and VGSH has $170.6 M. TUZ is priced lower with and ER of 0.09% versus Vanguard’s VGSH at 0.14%.

Intermediate-Term Government Bond (VGIT vs. SCHR)
Intermediate bonds have a duration of 3 to 10 years. Vanguard’s VGIT tracks the Barclays Capital U.S. 3-10 Year Government Index and has an expense ratio of 0.14%. Scwhab’s SCHR which tracks the same index is cheaper at 0.12% ER. But this is one ETF from Schwab that’s managed to overtake Vanguard’s VGIT in terms of total assets, even though SCHR is newer than VGIT. Schwab has $122.39M and Vanguard has just $81.68M.

Short-Term Corporate Bond (VCSH vs. SCPB)
Vanguard’s VCSH tracks Barclays Capital U.S. 1-3 Year Corporate Bond Index while State Street’s SCPB tracks Barclays Capital U.S. 1-5 Year Corporate Index. Slightly different, but close enough. Both hold investment grade corporate bonds. State Street’s is slightly cheaper with an ER of 0.12% and Vanguard’s VCSH has an expense ratio of 0.15%. Though both are relatively new ETFs with an inception date that’s just about a month apart, VCSH has a market cap of $2B whereas SCPB tops off at $393M.

Sector: Financials (VFH vs. FFL)
And finally, Focus Morningstar’s Financial Services ETF FFL, manages to beat its Vanguard counterpart VFH with an expense ratio of 0.19% against 0.23% for VFH. Vanguard’s VFH is more diversified with a composition of 513 stocks against just 199 stocks making up FFL.

One more investment company will be joining the ETF market with its own ETFs – Fidelity. Recently, Fidelity filed with the SEC to go beyond the lone ETF it offers now – Fidelity Nasdaq Composite Index (ONEQ). Though Fidelity has been offering select iShares ETFs commission-free, these ETFs are not as aggressively priced as Vanguard’s.

With competition heating up, investors now have more low cost choices than ever before.

“In the long run it’s something everybody will be doing because it reduces costs”

-John Bogle, on indexing

Disclosure
No positions in the funds mentioned above.

10 ETFs Cheaper Than Their Vanguard Peers is a post from Money Cone ^DISCLAIMER

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Suze Orman recently launched a prepaid debit card called the Approved Card. Now, I’m not a big fan of prepaid cards in general and prefer debit cards instead, but this coming from Suze Orman, deserved another look.

I like Suze Orman. She does what a very few can do – break down complex financial topics so that the average man on the street can understand. Suze’s advice is quite sensible and her show is definitely worth watching.

This card, like most prepaid cards, is geared towards students and people with little or no credit. With a prepaid card, you can’t get into debt. You can only spend what you prepay. Since this is endorsed by MasterCard, you can use this card where credit cards are accepted and since this is a prepaid card, no credit is issued, but you get fraud protection from MasterCard on your purchases.

To understand the nuances of signing for purchases as opposed to using a PIN, read my post: Should you sign for a debit card purchase or use your PIN?

This card does have some features not found in a normal prepaid card like free identity theft protection and free access to your credit score.

But is this card worth signing up for? Let’s find out!

9 Purported benefits of using the Approved card

1. Stay Debt Free
With the Approved Card (or any prepaid card) you can’t get into debt. If you don’t opt-in for overdraft protection with a debit card, you can’t get into debt either.

Both require funds to be available in your account before you can spend it. But since Ally Debit card is backed by a checking account, and since Ally pays interest on its checking account, you earn interest on your balance. With the Approved card you earn 0% interest.

2. Safer Than Cash
From the website: “If your Approved Card is lost or stolen, your money can be replaced under the MasterCard Zero Liability policy (conditions and exceptions apply—see The Approved Cardholder Agreement).”

If you are familiar with fraud liabilities, you’ll realize that there is nothing new here. Electronic Fund Transfers are governed by Federal Reserve’s Regulation E.

• If you report a lost or stolen card within two days, you are liable upto $50.
• If you report it after 2 days, you could be liable upto $500 and
• if it has been 60 days since your card was lost or stolen, you could lose your deposit.

I actually went through the cardholder agreement for the Approved card and it pretty much aligned with the above. But then how can they say ‘MasterCard Zero Liability policy’ if you can lose upto $50?

Here’s a little blurb from the fine print:

“This reduced liability does not apply if a PIN is used as the method of verification for a disputed transaction”.

If you use your PIN, you do not get the benefit of zero liability.

No, Suze Orman is not trying to be sneaky here! This is standard for any Debit or Prepaid card endorsed by either VISA or MasterCard. Please read my post on why this isn’t a surprise: If You Bank Online, You Need To Do This, Pronto!

When you sign for a purchase, your purchase is protected by your card provider, in this case MasterCard which on top of Federal Reserve’s Regulation E, also offers zero liability. When you use a pin, your purchase is protected by your bank which usually follows Federal Reserve’s Regulation E and hence no zero liability.

3. Free TransUnion Credit Scores, Reports & Monitoring
With the Approved card, you can check your credit score once you pay the monthly account maintenance fee of $3. With Ally’s debit card, there is no account maintenance fees, but Ally doesn’t provide credit scores either.

Now here’s the catch. TransUnion scores are not FICO scores. FICO score is the score that matters the most when you apply for a loan, not TransUnion Credit score.

Now, if you must, you can get this score for free! Here’s how:
Sign up for CreditKarma.

Credit Karma provides TransUnion credit score for fee. No credit card is required to sign up.

To find out how to get all three credit scores for free, read my post: How to get your credit scores from all three bureaus for free

4. Free Identity Theft Protection
With the Approved card you get free ID theft protection from TrustID. CreditKarma now offers free ID Theft protection from TransUnion if you opt-in. No fees for this service either.

My Review of Credit Karma

5. Set Up An Emergency Fund
The Approved card has this unique feature where you can set aside money which will not be a part of your prepaid balance. Sort of like a savings account without earning you any interest! With Ally, you can create additional accounts for your emergency funds, all earning interest.

6. FDIC Insured
Your prepaid balance is federally insured upto $250,000. You automatically get this protection with any bank account, not just Ally’s.

7. The Credit Project
When you make use of a debit card, your purchase and payment history is not reported to credit bureaus. Which means, your exemplary payment history is not reflected in your credit reports or your credit scores.

So, does Suze’s Approved card report your transactions and history to credit agencies? Report yes, will it have an impact on your credit scores or reports? No!

When you opt-in, you are basically agreeing to send all your purchase and payment history to TransUnion! Companies will pay big money to get their hands on data like this. With the Approved card you are agreeing to give this data for free. How is this helping the card holder?

8. Low Monthly Fee
For the privilege of using your money, you’ll have to keep paying a fee of $3 every month. With Ally’s debit card, there is no fee, no minimum balance requirements either.

9. Teach Your Teens Financial Responsibility
You can order three add-on cards with your Approved card for a one-time fee of $3 per card! I can do this for free with Ally by creating joint accounts. I get the same benefits without the extra cost.

Other Fees With Suze Orman’s Approved Card

Card Purchase Fee: $3
Monthly Fee: $3
ATM Withdrawal Fee: $2
ATM Balance Inquiry Fee: $1
OTC Withdrawal: $2
Paper Statement Fee: $2 per statement
Bill Payment Fee, Paper Check: $1 per check
Customer Service: One per month free, $2 thereafter per call

The Same Services With Ally Bank

Card Purchase Fee: Free
Monthly Fee: $0
ATM Withdrawal Fee: $0
ATM Balance Inquiry Fee: $0
OTC Withdrawal: $0
Paper Statement Fee: $0 per statement
Bill Payment Fee, Paper Check: $0 per check
Customer Service: Free

Let’s calculate the true cost of Suze’s Approved card. Let’s say you make 2 ATM withdrawals and 2 bill payments a month using this card. That will be $9 in fees alone every month which works out to $108 a year!

One other feature touted in the site is free money transfer between Approved card holders. With Ally’s PopMoney service you can transfer money to anyone with an email id or a phone! Absolutely no fees.

My Thoughts
For the people this card is targeted for, I think the Approved card is a very bad deal. As I’ve shown you in this post, all the benefits that this card provides can be had for free if you know how.

If this card were from the Kardashians, I understand. But coming from Suze Orman, I expected this to be revolutionary.

I was quite disappointed.

Suze Orman Photo by David Shankbone

Suze Orman’s Approved Prepaid Card – Bad Wine In New Bottle is a post from Money Cone ^DISCLAIMER

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Or I could’ve simply named the post ‘Saving money by selecting the right light bulb’!

Once upon a time, selecting a light bulb was as simple choosing a 60 watt or a 100 watt bulb, depending upon how bright you want the bulb to be. There was one popular size, you screw in the bulb and you were done!

But light bulbs have come a long way. In case you haven’t heard, incandescent bulbs (the one’s we are all familiar with!) are being phased out. There are a lot more choices now and and bulbs come in a variety of types, shapes and sizes.

There are three competing technologies when it comes to light bulbs.

The technology of the past: Incandescent bulbs
The technology of the present: CFL bulbs
The technology of the future: LED bulbs

Before we get into specifics, here’s a handy cost-benefits table to help you decide which one is the right bulb for you. I’ve used a standard A19 bulb for comparison.

Standard A19 'Household' Bulb	INCANDESCENT BULB	CFL BULB	LED BULB
Cost per bulb	$1.66	$3.77	$14.50
Lifespan (at 3 hours a day)	333 days	4.56 years	27.39 years
Watts	60	13	7
Pros & Cons	Cheap, dimmable, instant start and highly inefficient	Isn't entirely eco-friendly as it contains small amounts of mercury vapor, not dimmable, delayed start	Expensive, highly efficient, eco-friendly, long lasting and heavy!
Energy cost per year (at 10c/kWh)	$6.57	$1.42	$0.77
Replacements	30 Incandescents = 1 LED 5 Incandescents = 1 CFL	6 CFLs=1 LED
Total Savings**	If you replaced an Incandescent with a CFL, over the lifetime of the CFL (5000 hours), you'll save $31.35 If you replaced an Incandescent with an LED, over the lifetime of the LED (30000 hours), you'll save $214.01	If you replaced a CFL with an LED, over the lifetime of the LED (30000 hours), you'll save $25.88

*Includes energy and replacement costs.

One caveat about bulb lifetime. I’ve used total lifetime hours for calculation. In reality this will be much less as each time you turn on your bulb, there is an impact on the life of the bulb. Voltage fluctuations too play a role. Also, even the most expensive bulbs don’t carry lifetime warranties. So take in these figures with a little bit of skepticism!

The Technology Behind Light Bulbs

A lot of progress has been made with light bulbs and we are finally at a point where we can phase out incandescents. Let’s take look at the technology behind these bulbs.

Incandescent Bulb

This is the bulb that Thomas Edison invented. It hasn’t changed much in its working principle. When current passes through a metal filament (usually Tungsten), it gives out heat and the side effect of the heat is light. It is encased in a vacuum (or with an inert gas) glass bulb. Otherwise the filament would react with oxygen and burn out.

If you are wondering why Incandescent bulbs are being phased out, it has to do with its poor energy efficiency. There are better choices today.

In a nutshell:
Price
Least expensive among bulbs

Power
Consumes a lot of power compared to CFLs and LEDs

Life
Very short life

Environment
Highly inefficient

Size
Standard

Dimmable
All incandescents are dimmable

Start time
No warm-up time delay

Compact Fluorescent Lamp (CFL) Bulbs

CFL bulbs work on a different principle than incandescent bulbs. CFL bulbs have mercury vapor and coated with phosphor which is activated by a magnetic or an electronic ballast which produces light.

CFLs last 5 to 15 times longer and consumes only 20%-33% of the power that an incandescent bulb consumes. Though they are much more energy efficient, these bulbs are not eco-friendly due to the presence of Mercury. CFLs require special disposal and should not be discarded with regular trash.

CFLs are also more expensive than incandescent bulbs.

In a nutshell:
Price
CFLs are cheaper than LED bulbs

Power
CFLs consume much less power than incandescent bulbs

Life
They last 5 to 15 times longer than an incandescent bulb

Price
CFLs are more expensive than incandescent bulbs

Environment
CFLs are not eco-friendly due to the presence of mercury

Size
The light output is determined by the surface area of the phosphor coating (that’s why CFLs are never transparent). Hence a larger output would mean a larger bulb

Dimmable
CFLs don’t do well with dimmer switches and require special circuitry to achieve that. Even with that, they don’t dim as gracefully as incandescent bulbs

Start time
CFLs have a start time delay and some may have an initial flicker. They also take a few seconds to warm up to their full potential.

Light Emitting Diode (LED) Bulbs

LEDs are probably where the future of light bulbs are headed! They have all the advantages of an incandescent bulb and power efficiency of CFLs and last a lot longer! LEDs are called solid state devices (no filaments).

As you saw in the comparison table above, to emit equivalent light of a 60 watt incandescent bulb, an LED bulb only requires 7 watts! The higher the wattage, the bigger your electricity bill! And an LED bulb lasts 30 times longer than an incandescent bulb.

The first thing you’ll notice about an LED bulb is that it is heavy! The bulb has metal heat sinks to absorb heat which helps in extending the life of the bulb.

In a nutshell:
Price
Expensive

Power
LEDs consume much less power than incandescent and CFL bulbs

Life
They last 8 to 15 times longer than an incandescent bulb and 4 to 5 times longer than a CFL

Environment
Very eco-friendly

Size
Looks futuristic due to metal heat sinks engulfing the bulb. Also heavy to hold

Dimmable
Technically LED bulbs are dimmable, but in reality, they don’t do well with traditional incandescent dimmers. Use dimmers marked specially for LED bulbs

Start time
Instant ons

Selecting a Light Bulb

With three different technologies with different energy requirements, you can no longer rely on just watts to select a light bulb. You have to deal with lumens and kelvins now!

Brightness
Lumens measure the brightness of a bulb. The higher the lumen rating, the brighter the bulb.

A 60W incandescent bulb is approximately 800 lumens. Use that as a reference when purchasing LEDs or CFL bulbs

Color Temperature

You can also set the lighting ‘mood’ by choosing the color temperature, expressed in kelvins.

An Incandescent has a color range of 2700K to 3000K.

As the picture to the left shows, the phrases warm white, cool white, soft white etc., can actually be expressed as numbers.

Watt
This measures energy consumed. The higher the wattage, the more your electricity bill!

Common Bulb Shapes

One other thing you should know about light bulbs is that each shape has a code. Usually a letter or a series of letters followed by a number.

The letter is a hint to the shape of the bulb and the number is the diameter of the largest part of the bulb expressed as eighths of an inch

Here are some common bulb shapes and sizes and their codes:

A19 – Standard bulbs with a maximum diameter of 2.375 inches (stupid imperial system)

PAR30/PAR38 – Floodlights.

What is the difference between PAR 30 and PAR 38?

PAR stands for Parabolic Aluminized Reflector and a PAR30 has a maximum diameter of 3.75″, whereas a PAR38 has a maximum diameter of 4.75″. These bulbs are normally used in recessed light fixtures and knowing the diameter helps since if the bulb is larger than the fixture you won’t be able to change the bulb even though both bulbs have the same base.

Normally, PAR30 is used indoors and PAR38 bulbs can be used both indoor and outdoors. Normally, not always! Check the label. You also have dimmable and non-dimmable types in these configurations. Look for those as well as dimmable bulbs are more expensive.

A Note About Dimmers And LED/CFL Bulbs

One thing you can take for granted in an incandescent bulb is dimming. Not so with LEDs or CFLs. By default, LEDs and CFLs are not dimmable. If you are replacing incandescents that have a dimming switch, you need to buy special dimmable version of CFLs and LEDs.

It is better to also replace your old dimmer with dimmer switches that are specially made to work with LEDs and CFLs. I had varying luck with my old incandescent dimmer. It sort of dimmed my dimmable CFL bulbs and didn’t dim my dimmable LED bulbs at all! Once I changed the dimmer as well, they dimmed pretty well.

Incandescent Dimmer

LED/CFL Dimmer

Incandescent Bulb Phaseout

Incandescent bulbs are being phased out beginning Jan 2012. The bipartisan bill, EISA ( Energy Independence and Security Act ), was signed by President George W. Bush in 2007.

Here’s what you need to know:

• Beginning 2012, 100 watt incandescent bulbs cannot be manufactured or imported into the US
• The next to go will be 75 watt incandescent bulbs beginning 2013, and 40 and 60 watts beginning 2014
• The stores will still be able to sell incandescent bulbs till their stocks run out
• Technically, there is no ‘ban’ on incandescent bulbs. You are not required to throw away your existing bulbs and if you find incandescent bulbs in stores, you are free to buy them

My Thoughts

Even though newer technologies like CFLs and LEDs have been around for quite sometime now, it took a while to perfect them and make them affordable. A number of countries have already banned incandescent bulbs. It is sad, this has become a political issue here.

A wider adoption of CFLs and LEDs will bring down the price rapidly and this can only happen when cheaper alternatives like incandescents are phased out.

Did you know that a bulb installed in 1901 is burning even today at the Livermore fire station in California?

And Let There Be Light! is a post from Money Cone ^DISCLAIMER

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If I were to pick stocks just for 2012, I would be speculating. I prefer stocks for the long term. My top picks for the coming year is not just for 2012, I would like to hold on to most of it even if the returns are less than spectacular.

These companies have weathered disappointing times before and I believe they can going forward as well.

Although, I am staying away from technology and financial stocks. With technology stocks, it is hard to predict where the next Steve Jobs will emerge from and with financials, it is hard to tell who is cooking the books or which way the feds might sway.

My top picks for 2012 and beyond:

Unilever N.V. (UN)
Unilever is a supplier of consumer goods dealing with packaged foods, household and personal care products. Unilever products are used in over 180 countries with more than 50% of their sales coming from emerging markets. Popular brands include Dove soap, Lipton teas and TRESemme hair care products.

I like Unilver’s breadth of products and its exposure to emerging markets. If we are going to bet on emerging markets, Unilever has had a headstart.

Walmart Inc. (WMT)
Walmart is the world’s largest retailer employing over 2.1 million people worldwide. Walmart operates in over 28 countries under 60 different banners and topped $400 billion in revenues last year.

Though the times are tough, I like Walmart’s ability to negotiate prices down with suppliers. Walmart’s aggressive push into emerging markets adds to its strength. Although the India deal fell through, I think it is only a temporary setback. Walmart has an EPS of 4.44

Altria Group, Inc. (MO)
Altria is a holding company that operates through its subsidiaries Philip Morris USA, for the manufacture and sale of cigarettes, John Middleton Co, for the manufacture and sale of cigars and pipe tobacco, UST LLC for the manufacture and sale of wine and certain smokeless products and Philip Morris Capital Corporation with its portfolio of leveraged and direct finance leases. Altria also holds 27.1% economic and voting interest in SABMiller Inc.

Even though there will always be the dual threats of litigation and regulation, Altria also has the advantage of being in a segment very few can enter. Its diversified portfolio of products, many of which are market leaders, puts Altria in a very strong position.

Nestle S.A. (NSRGY)
Nestle is the world’s largest food company operating in the nutrition, health and wellness sectors. With over 6000 brands and operations is almost every country in the world, Nestle’s sales were around 109 Billion (CHF) in 2010.

Nestle diverse portfolio of products, many of which are market leaders in its category, combined with its reach across the world gives it a distinct advantage over its competition. A stock to own for the long haul.

The Coca Cola Company (KO)
The Coca Cola Company is the world’s largest maker of non alcoholic beverages, it’s most famous brand being the Coca Cola carbonated drink. Coke products are sold in over 200 countries and employs over 139,000 people worldwide.

There are very few countries where Coca Cola doesn’t have a presence. There has even been an effort to get Coke into North Korea!

Exxon Mobil Corporation (XOM)
Exxon Mobil is one of the largest publicly traded corporations in the world by market cap. The company primarily engages in the exploration, production, distribution and sale of natural gas and crude oil. With operations in 21 countries, Exxon Mobil employs over 82,000 people worldwide.

If I’m going to bet on energy companies, I might as well bet on the largest!

McDonald’s Corporation (MCD)
McDonalds manages and operates more than 33,000 fast food franchises around the globe. It employs 1.7 million people in 119 countries. McDonald’s is the second largest fast food chain in the world.

McDonald’s stock has rewarded investors very well. A dollar invested at the beginning of the lost decade would’ve appreciated more than 54% towards the end of the decade. In addition, McDonald’s has increased its dividends every year since it started paying dividends in 1976.

Vodafone Group Plc (VOD)
Vodafone is a British telecommunications company with over 340 million mobile subscribers worldwide. It has a network reach in over 70 countries either directly managed or via its partners. Vodafone owns 45% of Verizon in the US.

Among global telecom providers, Vodafone is my favorite. It’s global reach makes Vodafone an attractive long term investment

Colgate Palmolive Company (CL)
Colgate Palmolive is known for its popular toothpastes marketed under the Colgate name. But Colgate also manufactures shampoos, gels, detergents and shaving products.

The firm also caters to the pet nutrition segment through its subsidiary Hill’s. Colgate products are sold in over 200 countries and employs over 39,000 people worldwide.

A majority of Colgate’s sales comes from outside of the US. It has a healthy profit margin and excellent track record. Though competition has been fierce lately, I’m sure Colgate will prevail.

Gold
The insatiable demand for gold from emerging markets like India and China will keep gold bugs happy for a long time. I consider Gold as a hedge. If we have another lost decade, this precious metal should do quite well. Market uncertainty feeds into this asset.

If we have a period of prosperity, Gold could swing either way depending upon how consumers in India and China react.

Either way, a little bit of gold shouldn’t hurt!

Closing thoughts
The stocks above don’t necessarily follow a theme or mean’t to provide diversification. In my opinion, stable low beta, defensive stocks are better positioned to smooth out market turbulences and provide investors some stability especially during these trying times.

Disclosure: Long on all stocks mentioned above.

10 Stocks For 2012 (& Beyond) is a post from Money Cone ^DISCLAIMER

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You do the usual, contribute to your 401K, you max out your IRA, you save and invest every month what you think is a pretty decent amount. But, at the present rate, if you were to retire at 65, can you tell what your income would be? Most don’t have a clue!

To be fair, this is not an easy exercise. You have to make a number of assumptions which may or may not hold up at the time of retirement, including Social Security cuts. But not having any idea whatsoever could be disastrous. Have a ballpark, a scientifically computed ballpark to go by so that you can adjust your savings rate accordingly.

In this post I’m going to show you how to find out what your income will be at retirement, if you continue saving what you are currently saving. No, no worksheets or spreadsheets or complicated calculations! Not on this blog! I want to highlight a FREE Retirement Income Calculator I found very useful.

The calculator is from the investment broker T. Rowe Price. But you don’t need to have an account there in order to use the tool. You don’t even need to register. Best of all, the tool is free!

In less than 5 minutes, you’ll know if your savings rate is enough for a comfortable retirement.

To illustrate this tool, I’ve taken a hypothetical example of a single male in his 30s, earning an income of $80,000, who wants to know how comfortable his retirement will be at his current savings rate.

Check out the slideshow below.

Retirement Income Calculator Slideshow

Click on the image to advance to next screen. If you are reading this on a RSS reader, visit this page and enjoy the slideshow!

Screen 1: Retirement Planner Overview
You enter your age, and whether you would like to include your spouse’s income for this calculation.

Also describe whether you are saving, preparing or living in retirement. This slideshow illustrates the first case.

Screen 2: Retirement Savings
In this screen, you enter your present salary, the amount you’ve saved so far and your contributions towards retirement like IRAs and 401Ks.

Screen 3: Asset Allocation
Asset Allocation is the distribution of your investments across various asset classes. With the first slider, you set you present allocation. The second slider is the projected allocation. Asset allocation changes with age. The closer you are to retirement, you take on less risk.

Screen 4: Social Security
The last screen computes your social security based on the current limits. You can either adjust this amount or not take SSN into consideration. I’ve left the number as computed by this tool.

Screen 5: Recommendation

Based on the information you entered, the tool computes your retirement income and makes recommendations.

At a glance, you’ll know if there is a shortfall and how much more you need to save, or adjust your asset allocation to achieve a comfortable income during retirement.

Whether you are preparing for retirement or saving for retirement or living in retirement, this is a great tool to identify and correct shortcomings.

The tool makes a number of intelligent assumptions and future returns are based on Monte Carlo simulations which take future uncertainty into account, not just averages based on historical returns.

Excellent free tool for the Do-It-Yourself investor!

Disclaimer: Not an endorsement of T. Rowe Price. Not a paid review.

HOWTO Calculate Your Retirement Income is a post from Money Cone ^DISCLAIMER

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Hunter@Financially Consumed with excellent advice on emergency savings

Betty@bettykincaid.com has an excellent post on Planning For Your Future. Not just good advice, but Betty shows you how to get there with a good collection of online tools.

Christa Palm @ MomVesting looks at a certain positive aspect of having a credit card!

Very interesting post by Joe @ RetireBy40 on saving money! I’ll have to try this one out!

I don’t own a Prius, but love that little car! Crystal @ BudgetingInTheFunStuff shares her experience with the Prius!

Barb @ Barbara Friedberg Personal Finance has a series on How to Live Well When Your Passion Doesn’t Pay Well. Though I’ve linked to the latest post, do check out the entire series.

Jeffrey @ Money Spruce has an in-depth review of USAA’s iPhone app.

101 Centavos with a HOWTO post on buying junk silver on eBay! Fantastic read!

Ken @ Arbor Investment Planner with an excellent post on Warning Signs of a Market Price Bubble.

I enjoyed WorldOfFinance’s post on credit scores: 6 Reasons Why Your Credit Score Matters.

Kris @ Everyday Tips And Thoughts shares her biggest tip on refinancing. I recently re-financed my home; I know the value of this tip.

Ashley @ Money Talks with an eye-brow raising, contrarian way to make money!

Mich @ BeatingTheIndex shares his thought on NAL Energy.

Daniel @ Sweating The Big Stuff with a thought-provoking post: IRA Contribution Income Limits Should Be Based on Tax Rates. I agree.

LaTisha @ YoungAdultFinances shares 5 easy ways to make extra money.

I learn’t a clever trick to snag free stuff using Google Alerts from this post at Little House In The Valley!

Buck Inspire’s first Podcast!

I find very little focus given to bonds by financial bloggers. I really enjoyed Robert @ DIY Investor’s blog with this two part series on Bonds.

Can Well-Run, Employee-Friendly Companies Outperform Stock Market Averages? Well find out at Squirrelers!

The Passive Income Earner with a very nice intro to DRIPs!

Sydney @ Untemplater shares select Inspirational Quotes To Start Your Week Off Right.

Got the stomach for some hot, hot sauces?! Check out Mrs. Accountability’s post: Gift Ideas for Those Hot Chili Pepper Lovers

If Stock Trading is Addictive, Options are CRACK. Darwin @ Darwin’s Money thinks so. I agree!

Money or your Life Ooh, that’s a tough one! A must-read from KrantCents.

Cash Flow Mantra shares his stock dividend plan for 2012. If this plays out right, CFM won’t have to worry about Social Security!

Miss T @ PrairieEcoThrifter with a HOWTO post on saving money!

Why Do Utilities Have Such High Debt and High Payout Ratios? If you’ve wondered that yourself, check out Dividend Ninja’s post!

Six Figure Investor on why you should use a Margin Account! Hmm!

Yet another hard hitting post by Roshawn Watson: Three powerful ways to decrease your financial stress.

Naughty or Nice? Don’t Put These on Your Credit Card. I know you want to read this post! Check it out at Square Pennies. Great post Maggie!

Well Heeled @ WellHeeledBlog on why she loves her old car! Wish I could say that about my car!

The Grouch @ The Biz of Life shares a dark secret behind windmills.

Paula@AffordAnything shares her secret to happiness. I loved this post!

Today I learn’t I share something in common with Sam@Financial Samurai! . Water!

Featured In The Following Money Carnivals

Totally Money Carnival #46: Countdown to Christmas @ Help Me To Save

Yakezie Carnival @ Broke Professionals

Canadian Finance Carnival #65 @ CanadianFinanceBlog

Yakezie Carnival – Mighty Ducks Edition @ 20′s Finance

Best of Money Carnival #132: December Todo List Edition @ RetireBy40

Carnival Of Financial Camaraderie # 10 @ My University Money

Festival of Frugality #307 @ Frugal Family Life

Yakezie Carnival: San Diego Edition @ BucksomeBoomer

Canadian Finance Carnival #64 @ Canadian Finance Blog

Carnival of Financial Planning – Thanksgiving Day Edition @ TheSkilledInvestor

Canadian Finance Carnival #63 @ Canadian Finance Blog

Canadian Finance Carnival #62 @ Canadian Finance Blog

Carnival of Financial Planning – Veterans Day Edition #210 @ GoodFinancialCents

Carnival Of Financial Camaraderie # 6 @ My University Money

Good Reads From Good Blogs! is a post from Money Cone ^DISCLAIMER

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"100% of our RETIREMENT FUNDS BEAT THEIR 5-YEAR LIPPER AVERAGE"

Lipper is a fund analytics company that’s been in business since 1973. It was started by a Securities Analyst, A. Michael Lipper, but was sold to Thomson Reuters in 1998. Lipper monitors and benchmarks active mutual funds, and now even ETFs, based on a number of criteria not just annual returns.

Lipper Average

The most common metric used by Mutual Fund companies is the Lipper Average. This is the average annual return of a fund among its peers, within a particular category, as categorized by Lipper. If a particular fund scored better than the average in its category, fund companies highlight this fact to promote the fund.

In the above ad, T Rowe Price is highlighting the fact that all the funds in their Retirement Portfolio, beat their 5 year Lipper Average.

Lipper Rank

RANK 2% of Lipper Global Flexible Portfolio Funds Category (3 or 235 funds)

Rankings are calculated for 1, 3 or 5 years among peers for a specific asset classification (small cap, large cap, emerging markets etc.).

Lipper Category

Lipper groups funds into five categories.

• Equity
• Mixed Equity
• Fixed Income &
• Money Market

Lipper Classification

From the above, funds are further classified based on the type. Examples are Emerging markets, S&P 500, Large Cap etc.

Lipper Benchmark/Lipper Index

Lipper has a series of benchmarks or indexes to track mutual funds based on their classification. For example there is a Lipper benchmark to track mutual funds that track S&P 500 called Lipper S&P 500 Fund IX, there is a Lipper benchmark to track emerging market mutual funds called Lipper Emerg Mkt Fd IX and so on.

There are over 160 of these indexes which track the total return performance of the largest funds within Lipper categories.

So what’s the difference between a Lipper Classification and a Lipper Benchmark? Lipper Benchmarks are applied only to active mutual funds whereas a Lipper Classification can be applied to passive ETFs as well as active mutual funds.

Lipper Leader

You may find some funds being touted as a Lipper Leader. This is an exclusive club in the mutual funds’ (& ETFs’) worlds. To be a Lipper Leader, a fund has to be among the top 20% of its peers when ranked against a specific metric – Total Return, Consistent Return, Capital Preservation, Expense and Tax Efficiency (US only ). Each of these categories is given a separate ranking – 5 being the highest and 1 being the lowest.

Lipper Leader ratings for USAGX

You can see how this can be useful to align your goals with your assets.

Criticisms And Gaming Lipper Statistics

You could be highly ranked by Lipper and you could’ve beaten your competition, but could still have lagged the market when it comes to returns which, ultimately is what matters to the individual investor.

Survivorship Bias

Lipper Average only tracks active mutual funds. A mutual fund that lagged behind the Lipper Average last year could’ve beaten the Lipper average this year for the same period! How could this be you may ask. Investment companies employ tricks such as merging lagging funds, to renaming them to closing them altogether. All these affect rankings even for past periods.

If a fund family touts that 100% of their funds have beaten the Lipper Average, it could very well mean the lagging funds were closed or merged into better performing funds. It does not necessarily mean that the investment company has extraordinarily talented managers.

Incubator Bias

Here’s another trick mutual fund companies employ to mislead investors. A mutual fund company would incubate a series of funds with its own money but wouldn’t release details about these funds to the public. Those that beat the Lipper Average are opened to the public and those that didn’t make the cut are quietly closed down. All their funds now beat the Lipper Average!

This is unfortunately, quite legal, if not ethical. Investors fall for this all the time.

As An Investor, How Can Lipper Ratings Help Me?

For one, you could use Lipper Ratings to screen mutual funds that meet multiple criteria, not just whether it beat the market or not.

Goto to Reuters’ Fund & ETF Screener Site
You can screen funds based on all the criteria I’ve explained in this post or you could restrict your screenings to just the Lipper Leaders.

Let me illustrate how useful this tool can be to the individual investor. Here’s a comparison of two ETFs that track the same index and are almost identical.

VWO and EEM both track the MSCI Emerging Markets index, but are from different fund companies. VWO is from Vanguard and EEM is from Blackrock.

Very similar returns of EEM and VWO (Emerging Markets ETFs). Using Lipper metrics to find out which one's better

On the face of it, it looks as though it doesn’t make much difference which ETF I choose. Both are passive ETFs that attempts to track a well known index.

But when I compare Lipper Ratings for these ETFs, here’s what I get:

EEM Lipper Rating

VWO Lipper Rating

Vanguard’s VWO is the clear winner here in all categories. You can see how useful this is when comparing mutual funds or ETFs with similar goals.

My Thoughts

Lipper Metrics are just a tool to help the investor navigate the ocean of ETFs and mutual funds. Having an understanding of this rating system should go a long way in making the right decision when it comes to investing.

Disclosure/Disclaimer:
The sample ads accompanying this post are meant for illustrative purposes only. This is not necessarily an endorsement by Money Cone.

Long on VWO. No positions in the other funds mentioned in this post.

If You Own Mutual Funds Or ETFs, Don’t Ignore This Metric is a post from Money Cone ^DISCLAIMER

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On one end we have the “99%” occupying not just Wall Street but public parks, bridges and roads and on the other, we have the 1% occupying everything else and who have our lawmakers literally at their beck and call. They even have lobbyists masquerading as presidential candidates and of course, all the money in the world!

But what if you don’t belong to either camp? You are not the 1% but you don’t necessarily agree with the “99%”. Isn’t it a prime tenet of capitalism that businesses should be able to charge what they please and that the market should decide what’s sustainable?

Occupy WallStreet and Move Your Money movements have cost banks dearly. The banks won’t reveal numbers, but according to the Credit Union National Association, Credit Unions added 650,000 new members bringing with them a staggering $4.5 billion in just 4 weeks!

According to the Move Your Money website, 10 million accounts may have been moved since the movement began in 2010.

“I’m happy with my Big Bank”

I'm happy with my bank, should I switch to a credit union?

• You were able to avoid the $12 monthly maintenance fee by maintaining an average daily balance of $1,500 or more
• You never had to chat up a teller thereby avoiding the $8.95 ‘pay to speak with me‘ fee
• You avoid the $35 overdraft fee by keeping a sufficient balance
• You avoid the $0.50 charge by entering the correct pin every time you use your ATM card

In short, you are not the 1%, but nevertheless, these fees don’t affect you.

Is it worth switching to a Credit Union?

For someone who is not living paycheck-to-paycheck, who has no beef with Big Bank’s minimum balance requirements, is it worth switching to a Credit Union?

Let’s say you could afford to save $500 every month for the next 10 years in your checking account. This could be from your direct deposit at the end of the month or could be from your tax refunds. But for this experiment, let’s assume you can manage to swing this. You don’t attract overdraft fees or monthly maintenance fees by keeping the required balance at all times during this period.

At the end of 10 years you would’ve earned $3,451.83 in interest alone if you switched to Alliant Credit Union.

At the end of 10 years you would’ve earned $0 in interest if you were to keep the money with Bank of America.

Alliant Credit Union pays interest on your checking, a darn good one too (relatively speaking) at 1.10%, as of this post. Bank of America pays zilch for checking accounts. One assumption I’ve made here is that the interest rate remains the same for the 10 year duration at the current rate of 1.10%. In reality this is bound to change with the prime rate. Right now this is at an all time low and will only go up in the next 10 years (so the $3,451.83 should be even higher).

If you are wondering why I chose these two banks, I have a policy of writing only about products and services I’ve used myself whenever possible. I used to be a Bank of America customer and now I am a member of Alliant Credit Union.

But do keep in mind that not all credit unions are good and not all banks are evil. But, the big banks usually march lockstep. Have you wondered why all four banks announced debit card fees at almost the same time and all of them cancelled it almost on the same day? Well the Justice Department is wondering as well. It is currently investigating the banks for anti-trust violations.

“But I’m not with BofA”

If you think BofA has been singled out, here’s what the other top banks offer as checking account interest rate (as of this post):

Citibank Checking Account Rate: 0.01%

Chase Bank Checking Account Rate: 0.01%

Wells Fargo Checking Account Rate: 0.01%

Is it worth switching to a Credit Union even if you are happy with your Big Bank?
Unless you think this is chump change, I think it is worth it. The good news is you have a choice. Laziness in this case could be costing you dearly.

How do I switch?

Bank of America has this nice resource on its website to switch from other banks to Bank of America.

I don’t see why you can’t use that to switch from BofA to a credit union.

If you are happy with your Big Bank, should you still switch to a Credit Union? is a post from Money Cone ^DISCLAIMER

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