Expectant fathers and mothers are often told that it’s never too early to start saving for college. Unless they have an unusually precocious child, most parents have 18 years to accumulate enough savings to pay for college expenses. Then again, if their child is unusually precocious, maybe a free ride on an academic scholarship is in the future.
However, no one really warns newlyweds that it’s never too early to start saving for day care or preschool. Depending on the choices availabe in your area, day care or preschool can be quite expensive, as in more expensive than tuition at a public university.
For the 2006-2007 academic year, UC Berkeley assesses $3,899.75 per semester for undergraduates who are California residents. Double that for the entire academic year and a college-bound parent is paying $7,799.50.
Challenger School, in comparison, charges annual prepaid tuition for five all-day preschool of $14,905 and all-day kindergarten of $10,087. And, parents don’t have 18 years to save up for this sum.
I attended the Guangzhou Convention of Overseas Scholars in Science and Technology last month in Guangzhou, China. Needless to say, my most recent trip to China left me extremely impressed. Here’s a quick run down of the hits and misses.
- The Convention. Very organized. Had no problems with the convention, the accommodations or the transportation. A lot of companies staffed a booth at the convention. Though, for a country the size of China, I was expecting a bigger crowd—something akin to a MacWorld convention. Guangzhou seemed much more accessible than during my prior visit. In fact, I was a bit hesitant to attend the convention at first because of my prior memories of being stuck in a Guangzhou traffic jam many years ago. I am now a convert.
- Guangzhou Subway. The subway took us directly from the China Hotel to the Guangzhou International Convention and Exhibition Centre. The subway automatically announces station stops in Chinese and English. Very convenient, especially since the Convention provided a free subway pass to travel between the hotel and the convention hall, and to move about in Guangzhou. The subway colors were a bit spartan though. A splash of color would certainly have warmed up the place.
- Xiaolingtong (小灵通). The Convention provided free mobile phones to participants. Had read about xiaolingtong in the press for quite some time, but this was my first time using it. We were given a stripped down cell phone that vaguely resembled my first cell phone in functionality. No advanced features, but very compact and probably all I needed for a 3 day convention.
- Friendship Store. The Friendship Store from the 80s had disappeared. Instead of traditional Chinese goods, this new edition sports Western brands. I even learned that Henckels sells cookware. I’ve only seen Henckels knives in the United States. Could certainly use a Friendship Store in my neighborhood. However, I’m not sure who their target audience is. Seems to me that Chanel is a bit expensive for the average (and even above average) Chinese. As for foreigners, who heads to China to buy American and European goods?
- Taxis. The great thing about traveling in Hong Kong and Guangzhou is that taxis are a viable alternative to the subway system. You can get around very cheaply in a taxi, unlike in the United States.
- Traffic. YouTube has a video on India traffic. Guangzhou wasn’t as crazy, but it did leave me baffled at some points. I simply cannot understand motorcycles driving on the sidewalk.
- Follow Hong Kong. This year, Hong Kong finally started banning smoking in most public spaces. I returned to the United States before I could benefit from the new law. Hopefully, this trend will spread to China.
- Skyscrapers Aplenty. The only thing reaching for the sky were the buildings. Mature trees were far and few between. Need to plant more trees so that the city dosn’t become a concrete jungle—like Los Angeles.
- Smog. Haven’t seen such brown haze since I left Los Angeles. And, even in L.A., the smog only obscured the faraway mountains. In Guangzhou, even nearby buildings didn’t appear clearly. Indoor smoking and outdoor pollution. Yuck!
- Growth Trend. Each time I visit China, I am surprised by its most recent accomplishments. It’s not the United States, and not even Hong Kong. But, give it a decade or two to grow and iron out some of its problems and it’ll be close.
The Los Angeles Times ran an interesting article today on pay option loans. Essentially, these home loans work just like credit cards in that each month the lender only requires a minimum amount due. This minimum amount though does not even cover the interest due, leading to negative amortization. In other words, by just paying the minimum amount due, the borrower owes more and more each month.
One conclusion you can reach is that negative amortization loans are bad. However, the real lesson I see is the danger of throwing good money after bad. Let’s take a look at the article. The homeowner bought a house in Corona 11 years ago. In that time, his house appreciated in value, growing from $129,995 to over $400,000. The lesson could have been about a savvy real estate investor. Instead, the borrower proceeded to strip out the equity from his house to pay off credit card debts, purchase a car, travel internationally, and invest in stocks and commodities.
Let me restate this. The homeowner pulled money out of an asset that had tripled in value for him over 11 years, and poured it into discretionary spending and investments that ended up losing money for him. Therein lies the big lesson here. You don’t have to read Rich Dad, Poor Dad to figure what went wrong here.
Taking cash out when refinancing isn’t like withdrawing money from your bank account. You take $40 out of your checking account at the ATM and the money is yours. You take $40,000 out when refinancing and you have to pay the money back. That’s the difference.
Los Angeles Times:
A Loan That’ll Get Ugly Fast
When the first Chinese arrived in America, they were literally searching for gold. Today, the goal is no different. However, instead of gold, the rush is for cash, real estate, stocks, bonds, and mutual funds. With new financial options available to the modern Chinese, the age old challenge remains. So long as you have a piece of gold in one hand, someone will try to charm, sucker or connive it away from you.
Learn how to protect what you earn, then learn how to grow and invest it. If you do use credit cards, learn how to spot the pitfalls of different accounts. Find credit cards that charge you low interest rates and fees if you maintain a revolving balance. And, while you are using your credit card, why not find one that either pays you money back or offers frequent flyer miles you can use for your next trip.
If you invest in stocks or mutual funds, study the different investment options available to you. Learn how to reduce your investment costs and, if you have an investment advisor, understand how his interest may conflict with yours. Only then can your investments grow instead of being anchored down by constant, heavy fees whether or not your investments are doing well.
While the dot.com meltdown may have sobered up investor expectations as well as lightened up brokerage account balances, the interest in stocks, bonds and mutual funds remain. However, the one thing that has not changed is determining what the best approach is to investing. Should an investor just buy an index fund? Or, would selecting individual stocks or offer a more profitable path?
To evaluate individual stocks, you can read Value Line at your local library. Or, your brokerage might offer complimentary Standard and Poor’s Stock Reports. You may also consider one of the many investment newsletters available. Regardless of which approach you take, and you don’t have to abide by one approach only, track your results.
Quicken is an outstanding product that helps you manage your personal finances. One outstanding feature is the ability to group your stocks into goals. Instead of grouping stocks by growth or income, you can set up some new categories such as where you obtained your stock tip. If the tip came from a television program, a web site, a friend or through your own research, assign that stock to the source of the tip. Then, when you view your portfolio by goals, you can see whether you are a better stock picker than your favorite financial program or the writers of whichever newsletter you subscribe to.
- Fool.com Offers stock market news, investor advice, and subscription newsletters.
- MSN Money – Investing Offers stock quotes and market reports.
- NASDAQ Offers stock quotes and market data.
- NYSE Offers stock quotes and market data.
- SEC EDGAR Offers securities filings.
- Yahoo! Finance Offers stock quotes, company profiles, and stock screeners.