Let me ask you this: Is it entertaining and worrisome to any one else that Mexico gets the free pass in this whole illegal immigration fiasco? Two small bits of reading before an opine…

1) This is an article that reveals that, surprise surprise, while the Mexicans and their American supporters want us to give illegals in the US driver’s licenses, Mexico seems to have a tight policy against that. They require proof of citizenship to obtain a license. Makes sense, eh? Oh and to cut this argument off before it starts, the issues is not with preventing illegals from getting around, it is the fact that a driver’s license is really our only form of legal documentation outside of a Social Security card or passport.

2) Pork spending is still out of control, but it is better, one recent report is saying. Coming from Citizens Against Government Waste, one of my favorite groups, the new fiscal year will be welcomed in with nearly 8,000 “earmarks”, more commonly known as pork barrel projects. This looks to amount to $18-20 billion next year.

It is out of control, even if they did reduce it. For some people an apology isn’t enough to rid the bad taste of offensive words (haven’t mentioned Al Sharpton in a while…), for me, meager reductions in the amount of unnecessary spending isn’t enough. Every single one of those fat cats are to blame and it reeks of electoral grossness.

Don’t think it is a big deal? Let me lay a number on you. According to the IRS, last year there were about 135 million tax income tax returns filed, both individual (133 million) and corporate (2 million). That’s about $148 a return. While that is a good chunk of change for the average person, it’s not a deal breaker. But how about this. Now, take that $148 each year, put it into an IRA retirement account at with a return of 6% over 35-40 years, you are looking at $20,000.

Here’s another way to look at it. These elected officials are taking your power, in the form of your hard earned money, to preserve their own. They are using your dollars that you earn sitting in that factory or behind that desk every day in a job that many times consumes your life to fund projects most people will never see nor care about, all so they can come back to your hometown and stomp eight months before the polls open to keep their power.

Young people, people my age, you have to rise up. We can stop this pattern of fiscal abuse. We can reduce our deficit, we can call for responsibility, we can stop this madness. Each day as you try to get your careers off the ground and get your life going, the government stands with gun in hand to take the money you earn. It’s time to say no to the porkers. It’s time to make your voice heard next November.

While the Republicans were a joke of fiscal responsibility and the war is bleeding us dry, if you think it will be any better under Democrats, you are sorely mistaken.

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Lots of things have been changing in my life recently and I no longer have the money to max out my Roth IRA. But sometimes it’s not how much you put into the account, but how much money you make off the money that is already in the account. I decided that I need to start being a smarter investor. My speculative stock picks need to be researched so I don’t go into purchasing shares of a company and get hit with a 70% loss. I decided to cut most of my losses and proceed with a better plan. I decided to sell five stocks so I could purchase $1,100 shares of a new stock.

I sold all my Apple (AAPL 45% gain), Circuit City (CC 70% loss), Sirius (SIRI 15% loss), PanHandle Royalty Trust (PHX 50% gain), Intel (INTC 30% gain) shares which totaled a little over $1,200 and lost $60 dollars in commissions using my Share Builder account. This is when I realized that my old way of investing was not working. Unless you purchase a ton of shares of a company, you will not realize a great “money return”. For example- You can have a stock that went up 100%, but if you only bought $75 worth of shares. Then your real profit is only $34 dollars.

Starting now, I am purchasing stock in much larger increments which will diminish the damages of the trading commissions and also allow me to take advantage of larger profits. I also realize that I can also lose a lot more money too. That is a chance I am willing to take. I purchased $1,000 dollars worth of Nintendo (NTDOY.PK), which is now worth over $1,300. I could sell $300 dollars worth of stock to take my 30% profit off the table or all of it and the commission will be less than 1%.

After selling all of the stocks that I recited earlier, I decided to purchase $1,100 worth of E*Trade stock (ETFC). I purchased my shares using a limit order at $11.98 per share. E*Trade’s stock has fallen ever since the whole mortgage mess that happened this summer. Lots of analysts say that after everything starts calming down, the company will be worth something again. The PEG is less than 1.0, which means it is considered undervalued. I am hoping that E*Trade will bounce back to its $20.00 stock price which will give me a 67% profit.

In conclusion, if you are with a traditional online broker like E*Trade, or Share Builder make sure your profits won’t be eaten up by commissions. Buying stocks or ETF’s in larger sums of money will produce a much bigger payday for your portfolio. If you are buying in smaller increments try finding a totally free online broker. Zecco is the only one that I’ve found. I have never used this company, but I think I will once I have my life all straighten out.

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Today was the big day to sell my SunTrust holdings. I sold about $1000.00 (15 shares) after paying the commission. It reached its 52 week high and increased it by another 4%, so I thought that it was a great time for me to sell and purchase new securities. My portfolio will finally look a lot more balanced than what it used to be. SunTrust was originally 78% of my portfolio (because it was a rollover balance from my 401(k)) and now it’s only 19%.

I like SunTrust stock. I believe that they will still be going up for sometime now. They’re an extremely conservative bank & loan company, so they grow at a slow but steady pace. They are expanding at a very nice rate, and they rarely try risky endeavors. They’re stock rarely splits (once in almost 20 years), so they rely heavily on growth for the ultimate appreciation.

I have also decided what stocks I will be purchasing this month. I have listed the stock symbol and why I will be purchasing that precise stock.

Symbol Name

DPZ DOMINO’S PIZZA INC – I think Domino’s is the most successful pizza company out there. They keep their prices low and still deliver a great product. They are successful in a boom or bust economy which is always great.

INTC INTEL CORP – Intel recently signed their deal with Mac; which increased their market share by 20%. I think that Mac is a wonderful company, but I am waiting for their stock to go down a bit. I like Intel because with every Mac that is sold, Intel makes money. Good deal!

SU SUNCOR ENERGY – One of the leading oil companies in Canada with huge expansion plans for the next 10 years.

THI TIM HORTONS INC – Tim Hortons recently broke away from their parent company Wendy’s. Tim Horton’s will be expanding throughout the U.S.; which will be eating away some of the market share from Dunkin’.

TXN TEXAS INSTRUMENTS INC – Texas Instruments are the leaders in almost every electronic market in the U.S. They develop the leading college and high school calculator, to the high end DLP TV’s. They’re stock is low and is ready for me to buy it.

VCLK VALUECLICK INC – ValueClick keeps on taking away Google’s web advertising on a daily basis. They’re stock has gone up more than 25% this year and seems like they will keep on going up next year.

WAG WALGREEN CO – Great company and delivers growth every year.

WAIN WAINWRIGHT BANK TRUST CO – This is an “environmentally friendly” bank in the North East. After reading about this company, I found that they have only lost 5% of their customers to either death or moving; which means people love this bank. With proper expansion, they will be an extremely valuable asset. This stock also splits on a yearly basis; which is nice for the young investor.

WEN WENDYS INTL INC – Best fast food company in the world. They have awesome food at a cheap price. That is a great combination in North America.

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Shopping for a retirement account can be very time consuming and sometimes even confusing. Personally, it took me over a month to find the right place to open my retirement account. Because I am so nice to the devoted eFIPO.com readers I will breakdown the best places for you to start your retirement account.

Before you start shopping, you need to ask yourself some basic investing questions. Here is a short quiz, designed by yours truly, to give you pointers for your investing future. It’s like a Cosmo quiz (for the ladies) or a FHM quiz (for the men). If you answer them based on your independent lifestyle it should give you some good information. So answer them truthfully.

Where should I invest?

What you should do based on your score.

40+ — With 10k to invest or more- Consider getting individual stocks if you are experienced enough to diversify your portfolio. I recommend using Sharebuilder because they have some great investing programs for first time investors.

—-With less than 10k to invest- Stick with mutual funds. You probably don’t have enough money to properly diversify your portfolio. INGDirect, Fidelity, and Vanguard have some great mutual funds to get started. I recommend getting in long-term growth investments such as: small-value cap funds, international funds, large cap growth funds.

30+, but less than 40 — Mutual funds, and ETF’s are the way to go. INGDirect, Fidelity, and Vanguard have some great mutual funds to get started. Go into sectors that you know about. They also have a MorningStar rating for the fund’s financial strength. Go with the highest rated ones for less volatility.

20+, but less than 30 — Mutual funds are sometimes referred to as plain, but they usually work. I still recommend using INGDirect, Fidelity, and Vanguard for your mutuals funds. Stick with large growth funds, large-value funds, and other sectors you feel comfortable with.

10-20 — Yup, you guessed it mutual funds. Invest using balanced funds, and large growth funds.

Recommended books to read about stocks and mutual funds

Rule #1
Jim Cramer’s Real Money
The Intelligent Investor
The New Buffettology
The Four Pillars of Investing

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I received this really great question about 401(k)’s and Roth IRA’s: “So my mom just surprised me and said that I have a very small chunk of money in a ROTH IRA account with Fidelity that she opened for me over 5 years ago. She said it’s less than $2500 (which I think I get fee taken out because of it). So I would like to transfer the money from my 401(k) to this account. I no longer work for the company and they told me I should roll it over. So here are my questions.

1. Can I roll over my entire or partial amt of my 401K into this Roth IRA?

2. Will my 401K penalize me a fee for this rollover other than the tax I will have to pay for going into a Roth fund?

3. I understand the rules that since my Roth IRA account is over 5 years old and I can take what I have in there out with no penalty and tax free. So with this in mind, does this apply also if I were to put in my new rolled over money or do I have to wait to withdraw another 5 year time frame on this new deposit of money?”

This is a tough question, and it will force me to put on my thinking cap. About three months ago I went through the same scenario. I rolled my entire 401(k) balance into two different Roth IRAs with no problem. The one difference that I see here is that I actually left the company I worked for and it sounds like you are staying. Most of the time companies do not let you take your 401(k) prior to leaving the business unless you are in a huge financial problem. I do not recommend taking any money out of your 401(k) because of the taxes and penalties. Check with your Human Resource department and ask them.

Secondly, if you were to leave the company and transfer your 401(k) balance to a Roth there is something you must do first. You have to open up a Traditional IRA before you make the roll-over. Your 401(k) balance is pre-tax money just like a Traditional so you have to open that first. There shouldn’t be any fees tied with the transfer, but again check with your HR department. After you transfer your funds you can later move it into a Roth IRA. At this point you will have to pay regular taxes on the amount of money you are transferring over. Eventually (In the year 2010), they will be allowing straight roll-overs from your 401(k) to a Roth. So if you have a large 401(k) balance you might want to do it in increments so that you won’t get pushed up to a higher tax bracket.

Your last question is partially true. You can take out the contributions you made to your Roth IRA after five years (again HIGHLY do not recommend this), but the interest that has accrued in the Roth will be taxed and penalized. If you do not like where your Roth IRA is housed then transfer it to another brokerage or mutual fund company.

A rule of thumb that I think young investors should follow is - If you have less than $25,000.00, invest in a good mutual fund. If you have over $25,000.00 you can consider investing in single stocks and ETFs. Remember that diversification is still key, and always do your homework before you invest in single stocks. Unless you are Warren Buffet consider staying in a mutual fund.

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I received this really great question about IRA’s: “What kind of IRA should I get? Do you think I should just put my money in a fixed IRA?”

Even though I think this is a very easy question to answer many people do not really know what to do with their IRA. First, single individuals with modified adjusted gross income (MAGI) of $95,000 or less should contribute to a Roth IRA. There are so many benefits to the Roth IRA such as tax-free earnings, borrowing from the plan (I do not recommend this), and there are no minimum distributions during your lifetime.

The second part of the question can be answered using this calculator. Let’s say you save the maximum annual contribution of $4000.00 a year which is ~$333.0 a month (in this example assume the contribution rate stays the same).

Fixed plan with the highest paying APR of 5.12% (according to Bankrate):
In 30 years you will have a total amount of $284,583.00 with total paying interest of $164,702.00. This is still pretty good return because all you invested was $119,880.00

Growth plan using the S&P average return of 11% over 80 years of data:
You will have a total amount of $942,466 with a total paying interest of $822,285.00
While still putting in a total of $119,880.00

It seems incredibly self explanatory doesn’t it? Well unfortunately, I know more people in a fixed IRA then a mutual fund IRA. So if you are in a fixed get out of it! Open one up using an online brokerage firm like INGDirect, Fidelity, and Vanguard.

Recommended Books for This Topic

The Four Pillars of Investing

The Money Book for the Young, Fabulous & Broke

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MSN Money has a great article about using the change rattling in your pocket to make big time bucks. By using the super power of compound interest and Roth IRA you will be able to transform your change into a great nest egg for retirement. Read it and tell me what you think. Do you have anything to add on to this article? What other mutual funds or individual stocks have performed higher than 10% per year?

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Continuation of Social inSecurity�

I know many of you might not be looking at the day you retire, but maybe by planning now you could be very rich later on. Most people when they are young (high school ’til graduation year in college) have most of their things purchased and paid for by their parents such as: car, insurance, cell phone, medical, rent, clothing, and probably some other things. This is the perfect time in life to begin saving the most you can. There are three saving methods that people age 18-25 should consider. They are easy, flexible, and will benefit you in the long run.

First being an IRA (Individual Retirement Accounts), specifically the Roth IRA. This retirement account is aimed directly at younger people trying to save money while they are working. *Go to this website for the specifics* The most important benefit about the Roth IRA is that the money that is put into the account will grow TAX-FREE for life by using after tax money. This is the only true savings vehicle that you will never have to pay taxes on EVER as long as you follow the guidelines properly.

Here is a real example on what can happen if you put $150.00 a month into an Roth IRA at age 18 at 10% compounded yearly. At 50 years old you will have $421,250., and at the tender age of 59� you will have 1,117,325. Why such a huge jump in nine years? The incredible miracle of compound interest. It is what makes starting to save early such a wonderful thing. This website shows you how powerful a retirement account can be. Even if you end up having a hundred million dollars in interest you will NEVER pay any kind of taxes. INGDirect, Sharebuilder, Scottrade, and Fedelity are great companies that will offer you some great deals on IRA’s. Check them out and start as early as you can.

Saving for a home of your own should be a priority in most people’s lives. I don’t know many people that want to live in their parent’s house or an apartment till the day they die. Most people make the mistake of saving much too late for their homes and have to take out a bigger mortgage then originally planned. Saving early in a high yield savings account through INGDirect can really help you make the transition from an apartment to a house much easier. Usually, you want to have either 10-20% of the purchase amount in cash when buying a house. Realistically, 10% is a great down payment, so aim for 10%. For example, if your first house costs $130,000 you will need $13,000 to purchase it unless you have wonderful credit. Remember your first house doesn’t have to be your dream house, so DO NOT buy a house that you know you cannot afford, even if the mortgage company says you can. Houses make some of the best long-term investments possible. Read “ The Automatic Millionaire Homeowner” if you really want to start jumping in the real estate market.

The final savings vehicle usually will only be offered if you work for a medium or large company, but this savings program alone will make you want to work for corporate America. It is called the 401(k) plan (or 403(b) if you are working for non-profit). If you’re company offers a matching contribution plan, you CANNOT pass up this golden opportunity to make a ton of money. When you purchase in to the 401(k) Plan, most companies will match a certain amount, usually 4-6%, of your eligible contribution. For example if you were to make $2000 a month and you put 5% of your pay into the 401(k) plan (a hundred dollars a month) your company would usually match that contribution of $100. That is a direct 100% return on your money. You can’t get much better than that. So if you work for a company that offers a matching contribution (do not enroll unless they offer a matching program - I will talk more about this in a later discussion) enroll in it today!

These savings vehicles will make you so completely rich that you will not have to worry about Social Security at all. Remember if you want to be rich follow my advice, but if you want to work ’til you’re eighty and live paycheck to paycheck be my guest. Just don’t complain when all your friends are sitting at the beach while you are still working because they read this post and started saving.

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