How does a strong dollar affect you?

You have probably heard it before: At the end of yet another melancholy rant about how bad things are in America, someone inevitably adds "... and then the dollar is so weak, too." Well, lament no longer because the dollar recently reached a seven-year high.

How is the Dollar Measured?

The U.S. dollar is used to measure so many things. The gold price is quoted around the world as so many U.S. dollars per fine ounce. Oil, too, is quoted as yea-many American dollars per barrel. Many other countries establish the value of their currencies against the dollar. So what do you use when you want to measure the thing that measures seemingly everything else? How do you answer the seemingly simple question: What is a dollar worth?

Pretty much the only way to measure the value of a currency is by comparing it to another one, and that is how you know whether it is strong or weak. You can measure the dollar against the Japanese yen, but what if Japan goes into recession and the value of its currency declines? That will increase the value of the dollar as measured in yen; but if Europe doesn't have that same weakness, the dollar won't increase as against the euro.

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Should you consider ETFs for your portfolio?

Exchange-traded funds (commonly known as ETFs) are a relative newcomer to the American investment scene, having been approved to be publicly traded by the New York Stock Exchange just over 20 years ago. However, in that time, they have managed to capture about $1.7 trillion in investor money. Why are they so popular, and should you consider investing in them?

Over the past 40 years we have witnessed a major shift in how America funds retirement. The chart below shows how private employer pensions and other defined benefit plans have been displaced by defined contribution plans (things like IRAs, 401(k) plans and others):

ici retirement assets Continue reading...

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Fire: Oh, that will never happen to me

Laughter and hooting filled the house as my wife had Karen and a few other friends over for a mid-morning tea. (Such are the joys of retired life.) The chirping of a cell phone rose from the pile of purses on the sofa. Nobody paid it any attention -- whoever it is can leave a message was the general sentiment. Sure enough, the chirping stopped. But then they heard it again. The girls noticed it, paused, but went right on with their story.

Then the phone chirped again. "Whose is that? Don't answer it!" After the ruffling of half a dozen handbags, Karen held up her little chirper. "Sorry, guys. It's Rick." Then she added, firmly, "I'll call him back later." Back into its pouch in the purse the phone disappeared, just like a little kangaroo.

It rang again. "Hey, Karen, maybe you should see what Rick wants."

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More about...Home & Garden, Insurance, Planning

You can learn how to make money investing: Just do it!

Several readers responded to our "Big Question" post by saying they'd like to see something about investing, and some elaborated that they'd like to see some advice for investing on a small scale. Small in scale obviously means different things to different people -- but I'll relate my experiences, for what it's worth.

My background is in finance and accounting. You'd think having 10 years of college, focusing on business and money, I, sooner or later, would know what I was doing with my money. You would be wrong. Coming out of college, I joined the rat race in the fast lane and zoomed past most of my peers, landing a top executive job in a fast-growing computer company at a young age, and ending up with a small minority stake in it. When it was sold to a major conglomerate, all the stockholders received generous payouts. I was 30 at the time and decided to retire. For my retirement, I wanted to come to America and study some more -- isn't that just the geeky "investment" to make?

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How to save big with a salvage title

What was your first reaction when you saw "salvage title" in the headline? Cringe and shudder? Outrage, that anybody could seriously suggest something so risky on a respectable site like this? In mixed company, no less? Step away from the ledge, slowly, exhale, and then hear me out.

I used to feel the same way … until my friend Peter showed me his "new" 4Runner. Peter is a super-frugalista, and he saw the surprise in my eyes. He laughed, "Hey, it's a salvage title -- I got it real cheap."

He bought his son one of those, seven years back, and that car has run problem-free all that time. So he thought, "Why not get one for myself?" Continue reading...

More about...Transportation

Are you ready for a major power outage?

Have you considered how your life would freeze to a standstill if a general outage cut electric power for more than two or three days? As every summer dawns, it's a question more and more people ask, because demand for electric power is growing inexorably, and summertime is when the grid always gets strained to the max. Many experts say all it will take is one unusually bad heat wave and a single computer glitch. The last major outage happened in the summer of 2003, and it affected over 55 million people.

Our lives depend on electricity more than just about anything else, but there are few things we take so for granted. (You couldn't read this post without it.) Environmentalists have effectively put a stop to all new construction of traditional power stations, and a growing portion of new construction is for clean energy sources. Clean energy may sound sexy, but it's still unreliable: Wind turbines generate electricity only when the wind blows, which might not be when you need it. Likewise, solar energy generation fluctuates with weather conditions. All it takes is one confluence of circumstances to shut down your power.

That's a mess. Once your cell phone's battery runs down, how will you recharge it? Think you can run down to the local Starbucks to get some coffee (your coffeemaker is dead, remember) and recharge your laptop, cell phone, tablet, iPod, toothbrush and shaver? Think again. All your neighbors will have descended on that little coffee shop en masse because they'll be without power too.

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One expense you have control of in ways you never thought

What do you spend most of your money on? For most people, their two biggest expenses are their home and car(s). If you remember the post comparing expenses in 1913 to 2012, you might recall the three things that Mr. Average spent most of his "raise" on were:

  • Housing (36 percent of the raise)
  • Income taxes (28 percent), and
  • Transportation (24 percent)

A majority of the increase in transportation has, arguably, to do with that wonderful instrument of freedom -- the automobile.

The choices we make

Our spectrum of choice in cars is, of course, wider than a mile. Egotistas spend big on the latest model of the coolest car. Hollywood celebrities once flaunted their beblinged Cadillac Escalades at the annual Oscar ceremony. That was before the 2002 recession. When that hit, it suddenly wasn't cool any more to be seen piloting a behemoth slurping down rivers of Mother Earth's precious resources. That's when the curtain went up on the eco-friendly Toyota Prius, which Cameron Diaz and other stars rode to the 2003 big event in their sipply little Priuses. Overnight, saving the planet with the Prius became California Cool.<

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More about...Credit, Insurance, Transportation

Your landline: Think twice before cutting the cord

A while ago, my wife and I did what we do from time to time -- ask if there's another cost-saving opportunity we've overlooked. I don't know about you, but the quest for fiscal prudence is generally at its highest in our household after some indulgent purchase. "Hey, look! We can compensate for this luxo-foobie by slashing costs here!" (Are we the only people who do this?)

The indulgence in question was an iPhone. My trooper wife had been braving modern civilization with a dumb phone. (Someone from the '80s would have called a slim, foldable phone which sends text messages anything but dumb, but that's a different subject.) It worked fine and was cheap, but, well, even it began to show signs of age. Cell phones not being fine wine, I decided to surprise her with an iPhone, to heck with the cost. She did not resist.

Soon, however, guilt replaced the excitement, prompting the aforementioned introspection.

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Synchrony Bank Review

Synchrony Bank may not be quite as well known as some of the Wall Street banks, but it actually ranks as the fifth largest savings bank in the nation by deposits, with close to $38 billion in assets.Synchrony Bank

Online banking portal

Online banking consumers are savvy, comparing banks' offers with a mouse click or two -- and the Synchrony Bank website seems to acknowledge this fact. It is definitely one of the easiest to use: All of their main products are shown prominently on the home page, along with the most important rate information.

Their four main products are:

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What are dividend reinvestment plans?

Three piggy banks in the sky

In my previous post, I listed three things you need to start investing. Number three was opportunities. Sometimes those opportunities are unique, one-off types of things; however, they can just as easily be something that's always been out there but you just weren't aware of them because you weren't paying attention to investing.

Let's explore one of those little-known opportunities -- one that's legit, good, and yet often overlooked because it's a little, well, boring. It's name, DRIP, doesn't help either.

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