Personal Finance Articles

Article / Updated 08-02-2022

Some people are better at bargain hunting than others. What usually separates the clueless from the pros is that the pros know what something is worth. The same is true for finding bargains on Wall Street. You need to know what a stock is worth, and low price isn’t always a bargain. Value investors hunt for bargains, but they buy only after performing some careful research and crunching the numbers. When you spot a stock that seems to be underpriced, ask the following questions to determine whether it’s a real buy: Is this stock down due to market conditions? If the broader stock market is down, possibly due to an economic slowdown or recession, chances are good that most other stocks are down too. If the share price falls but the company’s fundamentals remain strong, this stock may be the bargain you’ve been looking for. (If the market is up but the stock is down, the stock isn’t necessarily a loser. The drop in share price may be an anomaly representing a good buying opportunity. Ask more questions.) When market conditions turn sour, a rational reason for indiscriminate selling is when investors experience a liquidity crisis. Desperate for cash but unable to sell their worst money-losing investments, investors in this situation sell what they can, typically their most liquid stocks and bonds. Often these may be their best investments, but the need for cash forces them to sell. This scenario provides a bargain for the value investor. Is this stock down because of sector news? If bad news comes out of one stock in the sector, traders may flee from stocks in the same sector. If a good company’s stock takes a hit because of another company’s misfortune, that’s a bargain waiting to happen. Is the stock down because it’s not in a sexy industry? At the peak of the tech bubble, anything that wasn’t a technology stock (pretty much anything that functioned as a part of the economy prior to 1980) was considered out of fashion, and their stock prices fell as a result. However, they continued to post earnings and revenue growth. The industrials, manufacturers, food processors, and other standard bearers became value stocks in the late 1990s. Value investors were rewarded for their patience and conviction when the tech bubble burst and investors returned to more traditional companies. Is this stock down because of problems specific to this company? If investors have fled for good reason, sell shares in the company if you own them or avoid buying if you don’t. However, keep in mind that the market tends to overreact and that some negative news can be very short-lived, especially if it’s not true. A passing bit of bad news can trigger a good buying opportunity, but if the news points out fundamental problems in the company’s success or operations, watch out. Be wary of the following: Declining sales or earnings Excessive debt Little or no cash flow Scandal Illegality, such as falsifying documents or insider trading If this stock has a lot of issues, the beautiful thing about the stock market is you don’t have to hang around. Money can stagnate or even rot in a dead stock, but if you sell and put the money into a true value stock, you may be able to recoup some of your losses.

Article / Updated 08-02-2022

Over the years, day traders have developed many different ways to manage their money. Some of these are rooted in superstition, but most are based on different statistical probability theories. The underlying idea is that you should never place all of your money in a single trade, but rather put in an amount that is appropriate given the level of volatility. Otherwise, you risk losing everything too soon. Calculating position size under many of these formulas is tricky stuff. That’s why brokerage firms and trading software packages often include money management calculators. Optimal F is only one method. There are other methods out there, and none is suitable to all markets all the time. Folks trading both options and stocks may want to use one system for option trades and another for stock trades. If that’s your situation, you have one big money management decision to make before you begin: how much money to allocate to each market. Optimal F The Optimal F system of money management was devised by Ralph Vince, and he’s written several books about this and other money management issues. The idea is that you determine the ideal fraction of your money to allocate per trade based on past performance. If your Optimal F is 18 percent, then each trade should be 18 percent of your account — no more, no less. The system is similar to the fixed fraction and fixed ratio methods, but with a few differences. The following figure shows the equation for finding the number of shares of stock, N, to trade according to the Optimal F method. F is a factor based on the basis of historical data, and the risk is the biggest percentage loss that you experienced in the past. Using these numbers and the current price, you can find the contracts or shares you need to buy. If your account has $25,000, your biggest loss was 40 percent, your F is determined to be 30 percent, and you’re looking at a stock trading at $25 per share, then you should buy 750 shares: The Optimal F number itself is a mean based on historical trade results. The risk number is also based on past returns, and that’s one problem with this method: it only kicks in after you have some trade data. A second problem is that you need to set up a spreadsheet to calculate it (so read Ralph Vince’s book if you want to try it out). Some traders only use Optimal F in certain market conditions, in part because the history changes each time a trade is made, and that history doesn’t always lead to usable numbers.

Article / Updated 08-02-2022

The Kelly Criterion is a method of management that helps you calculate how much money you might risk on a trade, given the level of volatility in the market. It emerged from statistical work done by John Kelly at Bell Laboratories in the 1950s. The goal was to figure out the best ways to manage signal-noise issues in long-distance telephone communications. Very quickly, the mathematicians who worked on it saw that there were applications to gambling, and in no time, the formula took off. Using the Kelly Criterion for trading is only one method. There are other methods out there, and none is suitable to all markets all the time. Folks trading both options and stocks may want to use one system for option trades and another for stock trades. To calculate the ideal percentage of your portfolio to put at risk, you need to know what percentage of your trades are expected to win as well as the return from a winning trade and the ratio performance of winning trades to losing trades. The shorthand that many traders use for the Kelly Criterion is edge divided by odds, and in practice, the formula looks like this: Kelly % = W – [(1 – W) / R] W is the percentage of winning trades, and R is the ratio of the average gain of the winning trades relative to the average loss of the losing trades. For example, assume you have a system that loses 40% of the time with a loss of 1% and that wins 60 % of the time with a gain of 1.5%. Plugging that into the Kelly formula, the right percentage to trade is .60 – [(1 – .60)/(.015/.01)], or 33.3 percent. As long as you limit your trades to no more than 33% of your capital, you should never run out of money. The problem, of course, is that if you have a long string of losses, you could find yourself with too little money to execute a trade. Many traders use a “half-Kelly” strategy, limiting each trade to half the amount indicated by the Kelly Criterion, as a way to keep the trading account from shrinking too quickly. They are especially likely to do this if the Kelly Criterion generates a number greater than about 20 percent, as in this example.

Article / Updated 07-25-2022

If you plan to do any Ethereum development, you’ll likely be using Solidity, one of the most popular programming languages for smart contracts. Let’s take a look at some basic Solidity syntax. When you write Solidity source code, you save that code in a file with the extension .sol. A Solidity program has several main sections, as follows: Pragma: This tells Solidity what versions of the compiler are valid to compile this file. Comments: Developers should use comments for documenting code. Import: An import defines an external file that contains code that your smart contract needs. Contract(s): This section is where the body of your smart contract code resides. Declaring valid compiler version in Ethereum smart contracts The pragma directive should be the first line of code in a Solidity file. Because the Solidity language is still maturing, it is common for new compiler versions to include changes that would fail to compile older programs. The pragma directive helps avoid compiler failures due to using a newer compiler. Here is the syntax for the pragma directive: pragma Solidity <>; Here is a sample pragma directive: pragma Solidity ^0.4.24; All statements in Solidity end with a semicolon. The version number starts with a 0, followed by a major build number and a minor build number. For example, the version number 0.4.24 refers to major build 4 and minor build 24. The caret symbol (^) before the version number tells Solidity that it can use the latest build in a major version range. In the preceding example, Solidity can use a compiler from any build in the version 4 build range. This is a way to tell readers that your program was written for 0.4.24 but will still compile for subsequent version 4 builds. Although using the caret in the pragma directive provides flexibility, it is a better practice to drop the caret and tell Solidity exactly what compiler version you expect. Commenting your Solidity code Adding comments to your code is an extra step that adds a professional look and feel to your Solidity code. A well-commented source code file is easier to read and understand and helps other developers quickly understand what your code is supposed to do. Even simple comments can cut down on the time required to fix bugs or add new functionality. Comments can also provide input for utilities to generate documentation for your smart contracts. You can use single-line or multiline regular comments. Single-line comments start with two forward slashes. Multiline comments start with the /* characters and end with the */ characters. Here is an example of Solidity comments: // Here is a single line Solidity comment /* I have a lot more to say with this comment, so I’ll use a multiline comment. The compiler will ignore everything after the opening comment characters, until it sees the closing comment characters. */ A third type of Solidity comment is called the Ethereum Natural Specification (NatSpec) directive. You can use NatSpec to provide information about your code for documentation generators to use to create formatted documentation the describes your smart contracts. NatSpec directives start with three forward slashes and include special tags with data for the documentation. Here is an example of using NatSpec directives: /// @title Greeter smart contract /// @author Joe Programmer /// @notice This code takes a person's name and says hello /// @param name The name of the caller /// @return greeting The greeting with the caller's name Check out NatSpec documentation for additional information. Importing external code into your Ethereum smart contract The import section is optional but can be powerful when used correctly in your Ethereum smart contract. If your smart contract needs to refer to code in other files, you’ll have to import those other files first. Importing files makes it as though you copied the other code into the current file. Using imports helps you avoid actually copying code from one place to another. If you need to access code, just import the Solidity file that contains it. The syntax for importing other files is simple. You use the import keyword and then provide the filename for the file you want to import. For example, to import the file myToken.sol, use this syntax: Import 'myToken.sol'; Defining your Ethereum smart contracts In the last main section of Solidity, you define the contents of your smart contract. It starts with the keyword contract and contains all of the functional code in your smart contract. You can have multiple contract sections in Solidity. That means a single .sol file can define multiple contracts. Here is an example contract section: contract HelloWorld { string private helloMessage = "Hello world"; function getHelloMessage() public view returns (string) { return helloMessage; } } Inside the contract section is where you define all of your variables, structures, events, and functions. There's a lot more to the contract section of your code, but for now, you know how to set up a Solidity smart contract. Once you master the basics of Solidity, you can continue to develop more complex code and the sky's the limit.

Article / Updated 07-25-2022

Originally, blockchain was just the computer science term for how to structure and share data. Today, blockchains are hailed the "fifth evolution" of computing. Blockchains are a novel approach to the distributed database. The innovation comes from incorporating old technology in new ways. You can think of blockchains as distributed databases that a group of individuals controls and that store and share information. There are many different types of blockchains and blockchain applications. Blockchain is an all-encompassing technology that is integrating across platforms and hardware all over the world. A blockchain is a data structure that makes it possible to create a digital ledger of data and share it among a network of independent parties. There are many different types of blockchains. Public blockchains: Public blockchains, such as Bitcoin, are large distributed networks that are run through a native token. They're open for anyone to participate at any level and have open-source code that their community maintains. Permissioned blockchains: Permissioned blockchains, such as Ripple, control roles that individuals can play within the network. They're still large and distributed systems that use a native token. Their core code may or may not be open source. Private blockchains: Private blockchains tend to be smaller and do not utilize a token. Their membership is closely controlled. These types of blockchains are favored by consortiums that have trusted members and trade confidential information. All three types of blockchains use cryptography to allow each participant on any given network to manage the ledger in a secure way without the need for a central authority to enforce the rules. The removal of central authority from database structure is one of the most important and powerful aspects of blockchains. The figure shows the concept of how blockchains come to agreement. Blockchains create permanent records and histories of transactions, but nothing is really permanent. The permanence of the record is based on the permanence of the network. In the context of blockchains, this means that a large portion of a blockchain community would all have to agree to change the information and are incentivized not to change the data. When data is recorded in a blockchain, it's extremely difficult to change or remove it. When someone wants to add a record to a blockchain, also called a transaction or an entry, users in the network who have validation control verify the proposed transaction. This is where things get tricky because every blockchain has a slightly different spin on how this should work and who can validate a transaction.

Article / Updated 07-19-2022

Copyright © 2015 AARP After you figure out your full retirement age, you can get a ballpark idea of your monthly benefit. Currently, the average retirement benefit is about $1,328 per month (in January 2015), but benefits go much higher, depending on your earnings history and when you begin collecting. It’s easy to get at least a rough estimate of your retirement benefits. Just use one of the SSA’s online calculators — the Social Security Quick Calculator or the Retirement Estimator. The Retirement Estimator is especially useful, because it also gives you projected amounts for retiring early at 62, waiting for the full retirement age, or delaying all the way until 70. (You also can get estimates customized to your personal situation by using AARP’s Social Security Benefits Calculator.) If you use the SSA’s Retirement Estimator, you’ll see roughly how much Social Security you could get, especially if your earnings don’t skyrocket or crash between now and the time you retire. If you haven’t yet done so, you can use the Retirement Estimator as a starting point to think about how much money you can count on in retirement. Whether the Social Security numbers look small, large, or in between, remember that Social Security is meant to be just one part of your financial foundation. You stand to get much more money if you can delay collecting Social Security past your full retirement age. For example, if you were born between 1943 and 1954, your Social Security payment at 62 is 25percent lower than if you wait until 66 (your full retirement age). If you hold off to age 70 — four years past your full retirement age — the benefit balloons by 32 percent. These differences can add up to real money over the years — or decades. Consider the following example: Elisa was born in 1953 and wants to know how she would be affected by choosing different dates to retire. She goes to the Retirement Estimator tool and quickly types in some basic information, including her name, Social Security number, state of birth, and mother’s maiden name. She also plugs in the $160,000 she earned last year. The Retirement Estimator lists the estimated payments she would get for retiring at three different ages. If Elisa waits until her full retirement age of 66, she’ll get about $2,615 per month. If she waits until 70 to collect benefits, she’ll get about $3,512 per month. And if she wants to start as soon as possible, at 62, she’ll get a more modest $1,930 per month. Elisa knows that longevity runs in her family, so she wants to find out how much she’ll collect from Social Security if she lives to 90. To get the answer, she calculates the number of months she would receive benefits in three different cases — starting at 62 (336 months), starting at 66 (288 months), and starting at 70 (240 months). Then she multiplies the number of months by the estimated benefit provided by the online tool. If Elisa starts the benefit at 62 and lives to 90, she could end up with more than $648,000 over her lifetime, not even counting increases for inflation (336 months between 62 and 90, multiplied by the estimated benefit of $1,930 per month for benefits starting at 62). If she starts at 66, her lifetime collection would exceed $753,000. And if she starts the benefit at 70, she ends up with more than $842,880. The difference between starting benefits at 62 and at 70 comes to $194,400 for Elisa. Your decision on when to begin retirement benefits makes a real difference in your monthly income. The numbers here are based on a retirement age of 66 and a monthly benefit of $1,000. They may differ based on your year of birth and other factors. Credit: Source: Social Security Administration Waiting to take retirement benefits beyond your full retirement age could prove especially important for Baby Boomers and, right behind them on the age ladder, members of Generation X. For people born in 1943 or later, the retirement benefit expands at a rate of 8 percent per year (or 2⁄3 of 1 percent per month) for each year you delay claiming (up to age 70) after reaching full retirement age. Year of Birth Yearly Rate of Increase Monthly Rate of Increase 1933–1934 5.5 percent 11⁄24 of 1% 1935–1936 6.0 percent 1⁄2 of 1% 1937–1938 6.5 percent 13⁄24 of 1% 1939–1940 7.0 percent 7⁄12 of 1% 1941–1942 7.5 percent 5⁄8 of 1% 1943 or later 8.0 percent 2⁄3 of 1% If you were born on January 1, refer to the previous year.

Article / Updated 07-19-2022

Credit impacts two major and basic consumer credit instruments that most people need when they get started on life’s journey: credit cards and loans. You may think that you know how these instruments work, but things have changed because of regulations like the CARD Act and the financial meltdown that threatened banks with failure due in large part to lax underwriting standards. Getting a credit card Getting credit for the first time used to be easy. All you had to do was drive to your nearest gas station and fill out an application for a gas card and then wait for the mail to arrive with your new plastic. If you were a city dweller, the trip may have been on foot to a department store, which would often grant credit on the spot. Both types of credit were relatively easy to get, and they reported your credit history to the three bureaus so that you built a credit history quickly. More and more department store and gas cards are tightening their standards to reflect tightened credit conditions. You can try for cards issued by banks that use a national transaction network such as Visa. Though these cards are more versatile and powerful than their earlier counterparts, they’re also harder to get. Getting that first card now requires a new approach. To begin with, you need a credit history. But how do you get a credit history without credit? Two of the most popular ways are to use someone else’s credit or to use a secured credit card. Use other people’s credit In most instances, when you use another person’s credit, the other person is a family member or a person with whom you have an emotional attachment. Why? Because using someone else’s credit can be dangerous to that person if you mess up. Only someone who really likes you is willing to risk helping you get started. You can piggyback on another person’s credit in two ways. The most popular way is to be added to the person’s account as an authorized user. The other way is to have the person cosign for you. Become an authorized user Being named an authorized user on someone’s credit account enables you to have his or her credit history reported on your credit report while you use a card for which the other person is solely financially responsible. The card statement goes to the account owner, she pays the credit card company, you pay the card owner, and the card’s credit history is reported in both your and the owner’s files. Problems with this approach can arise if the account owner defaults or is late with payments, because then those negative marks go on your credit history, too. Another common pitfall is that you overcharge and the account owner has to ask you for more money than you have available, which can cause a rift between you. Cosigners Cosigning on an account is more often than not a recipe for disaster, and it’s not usually recommended. The cosigner’s credit history doesn’t show up on your credit report. Instead, all that shows up is your own payment history. The statement for a cosigned account doesn’t go to the cosigner, so unless you share the information, the cosigner has no idea what’s happening to the account. Often, the cosigner first hears of a problem when a collector calls and demands an overdue payment. Unfortunately, if you make late payments, the delinquency history appears on the cosigner’s credit report, and negative information stays on the cosigner’s credit history for a full seven years. If you decide to go the cosigning route, its’ a good idea to commit to paying this bill before almost any other. You also need to have the courage to keep your cosigner informed of any changes in your financial picture, especially if you may be late on a payment. Using secured cards A secured card looks and works just like a credit card but is backed by a cash deposit at the bank that issues the card. Typically, your deposit qualifies you for a credit card with a limit equal to that deposit amount. As a result, limits on secured cards tend to be low, but the real value here is to establish a credit history so that you can get an unsecured card and reallocate your deposit to a better purpose, like your emergency savings account. You can find and compare secured cards on a number of websites. Two good sources include Bankrate.com and Creditcards.com. You want to balance services, fees, and interest rates to find the best card for you. Use savings for credit Most banks are happy to lend you your own money. If you accumulate some savings in a passbook account, you can use the savings to secure an installment loan of the same or a lesser amount. With 100 percent collateral in cash for the loan, the interest rate should be very low. Make sure that the loan is reported to the credit bureaus so that you build your credit.

Article / Updated 07-19-2022

The world of credit can be complex, unforgiving, and very expensive! Consumers need effective protection. The result is a series of laws, protections, and agencies whose purpose is to keep the credit game honest and give consumers a fair opportunity. The Fair Debt Collection Practices Act The Fair Debt Collection Practices Act (FDCPA) limits debt collectors’ activities and spells out your rights. Highlights include Prohibiting collectors from abusing you or being deceptive. Applying the law to most personal debts. Defining when and where a debt can be collected. Requiring a validation notice that specifies how much you owe and what you should do if the debt isn’t yours or has been paid already. Allowing you to end contact with a collector. Giving you the right to sue for breach of the rules. The Bankruptcy Abuse Prevention and Consumer Protection Act The Bankruptcy Abuse Prevention and Consumer Protection Act (BAPCPA) revised the process of getting a fresh start when you are overwhelmed by debt. The major provisions in this law include Mandatory credit counseling Stricter eligibility Fewer debts discharged and fewer state exemptions Tax returns and proof of income required for means test Mandatory five-year Chapter 13 plan if over your state’s median income Mandatory financial management education Time between Chapter 7 filings increased to eight years Your lawyer Here are some points to consider when looking for a consumer attorney: Ask a friend for a referral. Look for someone who specializes in debt. If you already have a lawyer, ask her for a specialist recommendation. Check your local American Bar Association affiliate or attorney association for lawyer referral services. Look for someone your gut says you can work with. A good attorney who charges more can be a bargain if you get resolution quickly. Get all agreements in writing. Consumer credit counseling Nonprofit consumer credit counseling agencies act as intermediaries on your behalf with creditors who won’t listen to you. They offer their services for free or for a nominal cost. You can find a good agency online at Debtadvice.org or qfinance.com or by calling 800-388-2227 or 866-703-8787. Look for third-party accreditation and HUD certification. Statute of limitations laws Each state has a law called a statute of limitations (SOL) that sets a limit on how long a debt collector can sue you in court. This protection isn’t automatic; you have to ask for it. What do you need to know and do? If a debt is past the SOL, the creditor can’t successfully sue you in court to collect it. Credit reports show a delinquency for seven years. The period used to figure how old your debt is starts when you miss a payment and never make another one. Your state attorney general Every state has an attorney general. One of their primary responsibilities is to enforce their states’ consumer protection laws. Every state has a consumer protection statute prohibiting deceptive acts and practices. If you decide to ask them for help, make sure you are organized and to the point, and have the pertinent information at hand. The Consumer Financial Protection Bureau The Consumer Financial Protection Bureau, or CFPB helps protect consumers from victimization. Here are the major protections this agency delivers: Use the question-and-answer service for inquiries. File your complaints with the CFPB here. The CFPB forwards your beef to the company and works to get an answer. It requires anyone who issues credit or prepaid cards to give you better, more easily understandable terms-and-cost disclosures. The CPFB assures that paperwork is understandable. It helps set rules on transaction fees for interchange activity. It closely regulates consumer credit counseling, debt settlement, and debt collectors. The Credit Card Accountability, Responsibility, and Disclosure Act Congress enacted the Credit Card Accountability, Responsibility, and Disclosure Act (CARD Act) to give you a fair playing field in the area of credit cards. Here are your major protections: Credit card companies can’t raise card interest rates except under specific circumstances. Also, double cycle interest billing is no longer allowed. You get 45 days’ notice of changes. You can opt out of changes. Card companies can’t issue cards to people under 21 who have no income. Creditors must give you at least 21 days after a bill is mailed to make your payment. All payment amounts above the minimum payment must be applied to the balance with the highest interest rate. If you exceed your credit limit, the card company must ask you whether you want that transaction to be processed. The Fair and Accurate Credit Transactions Act The Fair and Accurate Credit Transactions Act (FACT Act or FACTA) helps you in your dealings with credit bureaus. You must be told about any negative action taken as a result of information contained in your credit report. You can find out what information is in your personal file. You can get a free copy of your credit report at least every 12 months if you ask for one. The data in your file must be accurate, verifiable, and current. Only those who have a legitimate business purpose can see your file. The Federal Trade Commission Although the FTC doesn’t deal with individual consumer complaints, it does protect consumers by accumulating and analyzing complaints and then taking industry-wide action to address issues that you bring to it. Here are the five divisions that you may find useful: Advertising practices: Enforces truth-in-advertising laws. Financial practices: Protects you from deceptive and unfair practices in the financial services industry. Marketing practices: Responds to Internet, telecommunications, and direct-mail fraud; spam. Privacy and identity protection: Protects your financial privacy and helps consumers whose identities have been stolen. Enforcement: Sues to address these issues.

Article / Updated 07-19-2022

Many real estate investors pick inspectors as an afterthought or simply take the recommendation of their real estate agent. But inspect the property inspectors before you hire one. As with other service professionals, interview a few inspectors before making your selection. You may find that they don’t all share the same experience, qualifications, and ethical standards. For example, don’t hire an inspector who hesitates or refuses to allow you to be present during the inspection or won’t review the findings with you upon completion of the inspection. The inspection is actually a unique opportunity for most property owners and, because you’re paying, we strongly recommend that you join the inspector while he’s assessing your proposed purchase. What you learn can be invaluable and may pay dividends throughout your entire ownership. When an unscrupulous contractor later tries to tell you that you need to completely replumb your property, you can recall that your property inspection revealed only isolated problems that can be resolved inexpensively. (Of course, inspectors, especially ones who aren’t good, can make mistakes, so you should also dig into discrepancies raised by different real estate–related people. In other words, get a second opinion.) About half of the states now have a license or certification requirement, whereas a few only have trade practice guidelines. This regulation is all relatively new because in 2000 virtually no governmental licensing or supervision of inspectors existed. Regardless of whether your state has strict licensing or certification requirements, every real estate investor needs to look out for her own interests and look for telltale signs of potential problems. Red flags include inspectors who are affiliated with a contractor, offer a special discount if you call who they recommend, or credit their inspection fee toward work. Only consider full-time, professional inspectors. Hire an inspector who performs at least 100 comprehensive inspections per year and carries errors and omissions insurance. Such coverage isn’t cheap and is another key indicator that the person is working full-time in the field and is participating in ongoing continuing education. Many inspectors are licensed general contractors, but not all home inspectors have designations or credentials specifically relating to inspecting real estate. One of the best certifying trade associations for professional property inspectors is the American Society of Home Inspectors (ASHI), which was founded in 1976. In addition to home inspections, many ASHI members are qualified and experienced enough to assist you with your due diligence physical or structural exterior and interior inspection of multifamily residential properties and all types of commercial properties. You can find certified inspectors and more info about the inspection process including tips and checklists at the ASHI website. Some individuals or companies adopt names that at first glance may indicate adherence to certain professional practices. For example, a fictitious but potentially misleading name is “Professional Property Inspection Association.” Do some research to find the best state or regional association and one whose qualified members adopt a code of ethics. For example, in California, the California Real Estate Inspection Association is the group that offers education and designations for real estate inspectors. Review a copy of inspectors’ résumés to see what certifications and licenses they hold. A general contractor’s license and certification as a property inspector are important, but also find out whether they’ve had any specialized training and whether they hold any specific sublicenses in areas such as roofing, electrical, or plumbing. These can be particularly important if your proposed property has evidence of potential problems in any of these areas. For example, if a property has a history of roofing or moisture intrusion problems, an inspector who’s a general contractor and roofer is an extra plus. The inspection report must be written. To avoid surprises, request a sample of one of the recent inspection reports that has been prepared for a comparable property. This simple request may eliminate several potential inspectors but is essential so that you can see whether an inspector is qualified and how detailed a report he will prepare for you. Check out the following figures for a sample interior inspection checklist. Source: Robert S. Griswold Sample interior unit inspection checklist (page 2 of 2). The advent of digital photography is a boon to property inspectors and makes their sometimes mundane and difficult-to-understand reports come to life. Select a technologically savvy inspector and require her to electronically send you her report, including digital photos documenting all the conditions noted. Recently, some inspectors have begun using advanced, non-invasive technology via an infrared or thermal imaging camera to produce images of heat radiation and identify energy efficiency concerns and electrical issues, as well as moisture intrusion scans inside walls or around plumbing fixtures. With the report in the electronic realm, it’s a simple process to email this information as needed. Although the cost of the inspection should be set and determined in advance, the price should be a secondary concern because inspection fees often pay for themselves. Just like many other professional services, there is a direct correlation between the pricing of your inspection and the amount of time the inspector takes to conduct the inspection and then prepare the report. If the inspector only spends a couple of hours at your new 20-unit apartment building, the report will surely be insufficient and your money not well spent. Finally, require the finalists to provide the names and phone numbers of at least ten people who used the company’s services within the past six months. Randomly call and make sure that these clients were satisfied and that the inspector acted professionally and ethically.

Article / Updated 07-19-2022

Gold is a finite element (literally — it’s the symbol au on the table of elements) and has all the necessary qualities needed as money. It’s durable, portable, and divisible. It’s malleable enough to turn into coinage. It doesn’t decay or tarnish and is indestructible. In ancient times, it became an ideal medium of exchange and a store of value ever since. In short, it’s nearly an ideal form of money, especially when compared to other forms of money (such as paper and digital currencies). When you juxtapose gold against modern world currencies, such as the U.S. dollar, the euro, the British pound, and the Japanese yen, you come away with some compelling points. The following figure provides a snapshot of gold’s price performance since the beginning of this century (as of the first trading day in January 2000). Gold began in early 2000 at a price of $288, and when you measure its performance with the price in mid-2020 (June 30, 2020) — $1,817.50 — you get a 531 percent total gain (sweet!). But how well did gold do against other conventional investment assets? Take a look in the following sections. Gold versus the financial world in general So how did gold stack up versus the titans of the financial world? Gold’s “Tale of the Tape” Asset Price Jan. 2, 2000 Price June 30, 2020 Total Gain/Loss Dollar Amount $ Total Gain/ Loss Percentage % Gold $288.05 $1,817.50 $1,529.45 530.97% Silver $5.29 $18.58 $13.29 251.22% Dow Jones Industrial Average (stocks) $11,501.85 $25,812.88 $14,311.03 124.42% Nasdaq (Stocks) $4,186.19 $10,063.67 $5,877.48 140.40% S&P 500 (Stocks) $1,455.22 $3,100.29 $1,645.07 113.05% Average Savings acct* $100 $120.50 $20.50 20.5% Inflation** $1.00 $1.53 $0.53 more 53% * Assuming a savings account balance of $100 for comparison purposes. ** Inflation rate for the sake of comparison. What would $1.00 buy in January 2000, and what would it cost to buy that same item in June 2020? (source: www.bls.gov/data/inflation_calculator.htm) Well, well, well. The table speaks volumes about the past 20-plus years. How many people knew that gold — a dead rock — outpaced the stock market so dramatically?! Time to break it down: Gold crushed it! Generating a gain of more than 530 percent is awesome — who would have thunk it? It beat everything by a country mile. Our companion metal, silver, came in second place with a 251 percent gain — not too shabby! Next comes the primary stock indexes. Nasdaq came in at 140 percent, then the Dow Jones (DJIA) at 124 percent, with the S&P 500 index coming up at 113 percent. The savings account is there for those folks too skittish at investing and playing the safe route. But safety often means that you settle for a much lower return. In this case, you’re getting an average of 1 percent per year, ending up with 20.5 percent. And it didn’t beat inflation. Inflation — our yardstick and the nemesis of savers everywhere — was up 53 percent for the same time frame. The amazing thing is that the general public barely noticed the blistering performance of gold (and silver, too) during that time frame. The question is, how high can gold go once the general public starts to participate? Gold versus stocks versus currencies You see in the prior section how gold was the 800-pound gorilla in the battle royale versus other mainstream investment vehicles, but it’s important to measure gold versus its primary competitors such as stocks and currencies. In this, you’re comparing “apples to apples.” When you’re comparing gold to stocks, for example, I don’t advocate that you should be 100 percent in one or another. I could put on my “stock hat” and make a strong case for stocks in some economic conditions (such as the 1980s), and I could put on my “gold hat” and make the case that gold is superior in other conditions (such as 2020–2025). The bottom line is I think both stocks and gold are important and needed in your portfolio. The only thing is that you rebalance the percentages of your portfolio between regular stocks and gold-related investments. You keep more in stocks when times are good for stocks and more in gold when times are good for gold. But always have something in gold (say 2 to 5 percent of your investable assets at a minimum), even when it’s not doing as well because it excels as a hedge and a backup form of “portfolio insurance.” Sometimes you don’t see the market crash or financial crisis coming, and afterward you’ll be glad you were diversified and had some gold and/or silver on hand. Gold plays an important role as money and as a hedge against the issues of government-issued money, which is also referred to as fiat money. As this article is being written, all the major currencies — the U.S. dollar, the euro, the British pound, the yuan, the Japanese yen, and other currencies — are losing their value (depreciating) slowly but surely. Some currencies are rapidly losing their value such as those in Venezuela, Zimbabwe, and Argentina (more to come!). The main reason currencies lose their value is because they can easily be overproduced by the country’s central bank and typically at the behest of the country’s political leaders. Because paper currencies are easily inflated, each unit of currency (dollar, euro, yen, and so on) loses value — not so for gold. As the data from the World Gold Council (WGC) confirms, the mining of gold typically adds about 2 percent to the above-ground global supplies of gold. It’s very difficult to extract it from the earth, which is part of the reason gold can retain its value versus central bank–issued currencies. You can use this article to find out how gold stacks up as a tangible investment amidst all the investment choices available today. Part of what makes “money” retain value is scarcity. If it ceases to be scarce and easily created (usually leading to overcreating it), then this leads to its diminishing value. Some gold experts even make it a big point of their speeches that a paper/digital currency will always revert to its intrinsic value, which is “zero.” Gold, meanwhile, outlived every currency in the past two millennia and likely will do so in this millennium.