Subject: Beginning Investors

Investing is just one aspect of personal finance. People often seem to have the itch to try their hand at investing before they get the rest of their act together. This is a big mistake. For this reason, it's a good idea for "new investors" to hit the library and read maybe three different overall guides to personal finance - three for different perspectives, and because common themes will emerge (repetition implies authority?). Personal finance issues include making a budget, sticking to a budget, saving money towards major purchases or retirement, managing debt appropriately, insuring your property, etc. Appropriate books that focus on personal finance include the following

Another great resource for learning about investing, insurance, stocks, etc. is the Wall Street Journal's Section C front page. Beginners should make a special effort to get the Friday edition of the WSJ because a column named "Getting Going" usually appears on that day and discusses issues in, well, getting going on investments. If you don't want to spend the dollar or so for the WSJ, try your local library.

What I am specifically NOT talking about is most anything that appears on a list of investing/stock market books that are posted in misc.invest.* from time to time. This includes books like Market Logic, One Up on Wall Street, Beating the Dow, Winning on Wall Street, The Intelligent Investor, etc. These are not general enough. They are investment books, not personal finance books.

Many "beginning investors" have no business investing in stocks. The books recommended above give good overall money management, budgeting, purchasing, insurance, taxes, estate issues, and investing backgrounds from which to build a personal framework. Only after that should one explore particular investments. If someone needs to unload some cash in the meantime, they should put it in a money market fund, or yes, even a bank account, until they complete their basic training.

While I sympathize with those who view this education as a daunting task, I don't see any better answer. People who know next to nothing and always depend on "professional advisors" to hand-hold them through all transactions are simply sheep asking to be fleeced (they may not actually be fleeced, but most of them will at least get their tails bobbed). In the long run, an individual is the only person ultimately responsible for his or her own financial situation.

Beginners may want to look further in The Investment FAQ for the articles that discuss the basics of mutual funds, basics of stocks, and basics of bonds. For more in-depth material, browse the Investment FAQ bookshelf with its recommended books about personal finance and investments.

Subject: Buying a Car at a Reasonable Price

Contributed-By: Kyle Busch (kbusch at velocity.net)

Before making a purchase, especially a large one, most buyers ponder an equation that goes something like: What is it going to cost me, and will that equal what I am going to get?

Consider that equation when buying your next vehicle. Naturally, you want to get the most vehicle for the money you spend. Here are several tips that will help you to get more for your money.

First, and foremost, consider eliminating some of the steep depreciation cost incurred during the first three years of vehicle ownership by purchasing a 2- to 3- year-old used vehicle.

The price can be further reduced by paying cash. However, if you need to finance your next vehicle purchase, consider doing the following to keep its cost closer to the "as if you were paying cash" figure.

      • Take the time to carefully identify your current and your future transportation needs, and choose an appropriate vehicle.Transportation represents different things to different people. For some drivers, it represents status in society. Other drivers place greater emphasis on reliably just getting from point A to points B and C. The more closely that you match your driving needs with the vehicle you buy, the more driving pleasure you will experience and the more likely you will want to hold on to the vehicle.
If you can't fully identify your transportation needs or the vehicle that can best satisfy them, consult the April issue of Consumer Reports at a public library. The publication groups vehicles into categories, provides frequency-of-repair information for many vehicles, and gives vehicle price information. It is a good idea to identify 2 or 3 vehicles in a particular category that meet your transportation needs.This enables some latitude when shopping for the vehicle.

   • Identify how much you can afford to spend per month on transportation. A rule of thumb suggests that the cost to rent an apartment per month should not be greater than 25 percent of your monthly net pay.The cost of an auto loan should not exceed 10 to 12 percent of your monthly net pay. In some instances, leasing a vehicle could be a better option than taking out a loan.

 • The vehicle down payment should be the largest possible, and the amount of money borrowed the lowest possible. In addition, borrowing money for the shortest period of time (i.e., a 24-month loan rather than a 48-month loan) will reduce the overall cost of the loan.

 • Identify the various loan sources such as banks, savings and loans, credit unions, and national lenders (i.e., go online to ask jeeves.com and specify "automobile financing sources"). In regard to national financing vs. local financing, it can be useful to determine what the cost of a loan would be from the national sources, but accept a loan from a local source if the loan cost is comparable or nearly comparable between the two. Compare the APR (annual percentage rate) that each of the sources will charge for the loan. The cost of a loan is negotiable. Therefore, be certain to inform each source what the others have to offer. In addition to the loan's APR, remember to also compare the other costs associated with a loan, such as loan insurance and loan processing costs.

 • Be certain to read and understand any fine print contained in the loan contract. Insist that the loan contract gives you the option of making payments early and that the payments will be applied on the loan principle with no penalty or extra cost if you payoff the loan early.

 • Do not settle for a vehicle that does not entirely meet your transportation needs because of low dealer or manufacturer incentive financing.Sometimes dealers or manufactures offer extremely low APR financing on vehicles that the dealer is having a hard time selling. That's why it helps to have initially identified the correct vehicle before encountering the sales pitches and other influences of buying a vehicle.

                                                                                                                                                      Next page