US Dollar – Euro from Jan 22, 2001 (1.0656) – Jun 27, 2008 (0.6339)
Dropped 40.51%

US Dollar – British Pound from Jan 22, 2001 (0.6827) – Jun 27, 2008 (0.5018)
Dropped 26.50%

US Dollar – Chinese Yuan from Jan 22, 2001 (8.2781) – Jun 23, 2008 (6.8634)
Dropped 17.09%

US Dollar – Canadian Dollar from Jan 22, 2001 (1.5026) – Jun 27, 2008 (1.0108)
Dropped 32.73%

US Dollar – Australian Dollar from Jan 22, 2001 (1.7969) – Jun 27, 2008 (1.0411)
Dropped 42.06%

US Dollar – Singaporean Dollar from Jan 22, 2001 (1.7367) – Jun 27, 2008 (1.3631)
Dropped 21.51%

I am not suggesting President alone is the only one responsible for the declining US Dollar. Federal Reserve should take plenty of heat for its fiscal policy. Why in the world does the Federal Reserve even exist? To bail out the so-called “struggling” Financial company like Bear Sterns?

If financial institution like Bear Sterns went under because of the sub-prime lending and Citibank had to write off tons of bad loans, you would think the financial industry was the main victim. But if you think about it. Aren’t the borrowed-money will make it back to the financial institution anyway? Borrower borrows money from the bank to pay the seller. Seller uses the money to pay the outstanding mortgage. And who owns the mortgage? The financial institution.

The Federal Reserve has no business bailing out companies from going under; the same way I don’t think the government should be in business of bailing out homeowners for buying a property they cannot afford. Where is accountability? You have the Federal Reserve ponies up $30 billions to help out JP Morgan buying out Bear Sterns. Keep printing money Bernanke and let’s see how low US Dollar can go.

So who is actually profiting from this fiasco? The way I see it, it’s the financial institution. They get the money from the Federal Reserve they do not deserve to buy out companies who went under and as a result, they become even more powerful than they once were. So when the financial industry tells you there is a crisis, take it with a grain of salt.

Don Harrold says it best on this video below. Subscribe to his Youtube Channel and listen to what he has to say. You will see his perspective on how the Wall Street keeps giving you one bad advise after another and making money at the expense of YOU and your hard earned money.

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Under the Federal law, you are entitled to one free credit report per year from each of the three major Credit Reporting Agency; Equifax, Experian, and Trans Union. Most of the time, the reports are pretty similar. If your objective is just to monitor your credit report activity, I would recommend to just get one report at a time. Instead of getting 3 reports only one time in one full year, you get 1 report 3 times a year, therefore minimizing the time interval between each report; allowing you to catch any suspicious activities early.

I set an annual reminder on my outlook to request a copy of my free credit report from Experian at the end of April, Equifax at the end of August, and Trans Union at the end of December.

To request your credit report, go to AnnualCreditReport.com and check the box of the agency you want the credit report from. Credit score is not included in the report. This is not an offer or solicitation. The site is maintained by the three major credit reporting agencies to comply with the federal law.

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This is what he said on March 11, 2008 (Tuesday) before the collapse of Bear Sterns on March 14, 2008 (Friday) when the news broke out about the sub-prime crisis.

Should I be worried about Bear Sterns in terms of liquidity and get my money out of there?

And this is his exact answer

No no no. Bear Sterns is fine. Do not take your money (mumbling) … If there is one take away other than the plus 400 points, Bear Sterns is not in trouble. They are more likely to be taken over. Don’t move your money from there. That’s just being silly. Don’t be silly.

And today he came on CNBC and said what he meant was not to take your money out of Bear Sterns (as in if you own an account with them). He claimed he wasn’t referring to the common stock of Bear Sterns. Nice try Jack Ass. If there is one thing you can learn from this, always go the opposite of what Jim Cramer recommends. He is what some call a contrary indicator.

While checking for some videos on youtube about this Bear Sterns fiasco and Jim Cramer’s comment, I came across this video by Don Harrold. He talked about Bear Sterns, Jim Cramer, Federal Reserve, and JP Morgan.

Did you know that Federal Reserve is not exactly what you call a traditional Federal Agency. This is the wikipedia entry. The Federal Reserve System is the central banking system of the United States. Created in 1913 by the enactment of the Federal Reserve Act, it is a quasi-public (part private, part government) banking system composed of

1. the presidentially-appointed Board of Governors of the Federal Reserve System in Washington, DC;

2. the Federal Open Market Committee;

3. 12 regional Federal Reserve Banks located in major cities throughout the nation acting as fiscal agents for the U.S. Treasury,
each with its own nine-member board of directors;

4. numerous private U.S. member banks, which subscribe to required amounts of non-transferable stock in their regional Federal Reserve Banks;

5. various advisory councils

Numerous private U.S. member banks? Isn’t that interesting? And one big news came out yesterday (on a Sunday when the market is not open) about JP Morgan Chase to buy out Bear Sterns for $236 millions or $2 a share (It’s a $57 stock before the news broke out on Friday). And Federal Reserve will provide the fund of up to $30 billions to JP Morgan Chase to seal the deal. JP Morgan Chase? One of the numerous private U.S. member banks? Well, you can draw your own conclusion.

The video is very informative. I learned a great deal from it and it has a lot of information of which this article is based on.

He referred to a letter from Thomas Jefferson to Secretary of Treasury Albert Gallatin in 1802 that goes like this

I believe that banking institutions are more dangerous to our liberties than standing armies. If the American people ever allow private banks to control the issue of their currency, first by inflation, then by deflation, the banks and corporations that will grow up around [the banks] will deprive the people of all property until their children wake-up homeless on the continent their fathers conquered. The issuing power should be taken from the banks and restored to the people, to whom it properly belongs.

My deepest sympathy to those who lost their money in Bear Sterns. And words to others who are yet to suffer similar fate … IT IS your hard-earned money. Be careful where you invest your money. No one will take a better care of your money than yourself.

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Here we go. I talked a lot about personal finance lately. And no, I am not abandoning network marketing. Part of Owning Your Life is to be financially free. You could achieve that by generating passive income and residual income. And of course, network marketing is one vehicle you could use to generate those income.

And how is that related to Personal Finance? Everything. You can create all the passive income and residual income you can get your hands on, but if you don’t know how to manage those income; you are pretty much taking two steps forward and one step back (or worse 2 steps or more) in your quest to be financially free.

I have a friend who just get started in investing, or so he thought. He came from a well-to-do family. He is in his early 20′s and have a bright future ahead of him. I came to him about a month ago presenting the idea of investing in real-estate. He was very interested in it but unfortunately he just invested his money somewhere else. He told me he really hated the idea of having his money sitting in money market account earning interest.

I was happy that he finally thought about investing. He asked me to review some of the documents he received from this investment. He asked a few questions that I found really odd. “I won’t lose money right?” “I will get an 8% return right?” “The worst thing is I just wont have any return right?”

I asked him “Did you ask all these questions before you invested your money?” He said “No” and I asked “Why not? It’s your money. Do you not think you have the right to ask all those questions no matter how stupid you think those questions are?” And his response was “I don’t know.”

He told me he doesn’t want his money sitting in a money market account earning 4-5% interest and he doesn’t mind investing in this investment as long as he doesn’t lose the money he invested. The objective of the investment is to have an annual return of 8% over the next 4 years. So let me get this straight. He doesn’t want a 4-5% return but he is fine with a 0% return because there is a chance of an 8% return? And the worst part is, he is NOT allowed to withdraw his money for 4 years without incurring penalties for doing so.

At the end of the day, I would rather sound dumb and have all my money in my bank than trying to look smart and be penny-less.

I came to a conclusion that he invested his money because of the thrill-factor. I’ve done that in the past and the results were never good. You put your money in a stock, hoping it’ll go in a direction you want without doing your due diligence on why you invested in that stock in the first place. I am sure most of us have done it. It is a SURE-WAY of losing your money in no time. I did.

I gave my friend a lecture about it but I don’t think he got what I was trying to say. Then I realize, he probably need to experience it first hand what I experienced to understand what I was telling him. Yeah, real estate sounds boring compared to stock market or forex. But it’s the boring one that is there for me in the end. I learned it the hard way.

Now, if you invest your money the way my friend just did … Is it investing or is it gambling?

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One of my article, Is Self-Directed IRA for you? is included in today’s Blog Carnival for Personal Finance titled 91 Ways To Wealth: The Carnival of Personal Finance, Epic Journey Edition hosted by The Digerati Life.

To those of you who don’t know, Blog Carnival is a blog event where articles on a specific topic are published. So think of Blog Carnival as an online magazine; published on regular schedule, often weekly or monthly.

A Blog Carnival is hosted by someone on his or her site. Bloggers can submit the articles that are relevant to the topics and the host will select which articles will be included in the Carnival. Normally each person is allowed to submit only one article per Carnival per publication. You can submit articles to as many Carnivals as you want as long as the article submitted is relevant to the Carnival being published.

Blog Carnival is an effective tool to market your site. Many sites have experienced a spike in traffic when their articles are included in the Carnival. We’ll see whether that transpires into new traffics for my site. Most of my visitors are my friends and their friends and may be their friends as well. See, I am doing network marketing even with this site.

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I did research on Self-Directed IRA on the internet and I found a few companies that offer the IRA. I got a few recommendations from friends as well. I evaluated each company to see which one suits my situation better. One of the main criteria that I looked at was the annual maintenance fee. Since they provide similar service, the fees will be the deciding factor.

1. Entrust Group

Entrust Group has 2 options for annual maintenance fee. The first one is based on number of assets and the second one is based on the asset value. The application fee is $50. Purchase, sale, or exchange of any asset is $95. The termination fee or asset transfer fee is 0.5% of the asset value being transferred with a minimum of $150.

• Number of Assets

Annual maintenance fee is $250 per asset. The fee is paid when the asset is acquired. There is no maximum annual maintenance fee.

• Asset Value

This option uses a tier system (based on your asset value) with a maximum annual maintenance fee of $1850.

2. Sunwest Trust, Inc.

A friend of mine used Sunwest Trust and recommended it to me. The company is based out of Albuquerque, NM. The breakdown of the fee is pretty straight forward. Application fee is $50 and the annual maintenance fee is 0.5% of your asset value with a minimum of $190. The fee includes one transaction per year and $10 per transaction thereafter.

(Update 11/02/2009) As of January 1, 2010, the annual maintenance fee is $225 and the additional transaction is $25.

3. Equity Trust Company

This company is based out of Elyria, OH. The application fee is $50. The company uses a tier system for the annual maintenance fee with a minimum of $190 and a maximum of $1850 depending on your asset value. There is no transaction fee. Termination fee is $200.

4. Pensco Trust Company

Application fee is $50. The annual maintenance fee uses a tier-system based on the asset value with a minimum of $200 and no maximum. The maintenance fee is assessed quarterly. Purchase/sale/re-registration of property is $100 for domestic and $1000 for foreign ($100 if done through domestic LLC.) Termination fee is $150 + $50 per deed.

5. Guidant Financial Group (Auriga)

Auriga is a product offered by Guidant Financial Group. It gives investor check-book control on the Self-Directed IRA account by setting up an LLC that is attached to the Self-Directed IRA account.

I couldn’t find the fee information on the internet so I called them up. I asked how much it costs to setup an account with Guidant Financial and the first thing he said was ‘Right now, we have a $500 discount special’. I know immediately it is going to cost a fortune just to setup an account and I was right. It costs $4000 (who cares about the discount at this point) to open an account with them. I don’t remember what the annual maintenance fee is. If I have a $10 millions in my IRA account, I might consider it but as it stands, no way.

As for my personal choice, I go with Sunwest Trust. For the amount of money I want to invest, it provides the best value for my money. You should evaluate each options before deciding which plan is better for you. Most (may be all) of the accounts have a termination fee. At this point, I am not going to worry about that simply because I will use the account for a few years. By then I will save enough money from the annual maintenance fee that the termination fee will not matter.

I spoke with a representative from Sunwest Trust and she told me I should setup a Limited Liability Company (LLC) and have my Sunwest Trust account acts as the sole owner of the LLC (Others suggest against it so please consult your tax professional before deciding which way to go.)

The fund can be moved to the LLC immediately upon availability. The LLC provides greater flexibility than the IRA account does. When the fund is deposited into your LLC account, you can treat the LLC account like your checking account. You can write a check to purchase the investment immediately. If your fund stays in your Self-Directed IRA account, you will need to notify your plan administrator whenever you want to spend the fund in your account. That process will take time. So if time is of the essence, LLC can be the difference between investing and losing out on a deal.

(Update 06/19/2007) I did some research on setting up an LLC and how much it costs annually. It is expensive. Since I will only invest in one asset at this time, the cost of setting up an LLC is not justified. Please evaluate your own situation before deciding whether LLC is suitable for you.

(Update 06/25/2008) I added the review for Sterling Trust Company based on the comment.

6. Sterling Trust Company

At Sterling Trust, they don’t use the term Self-Directed IRA. They use Flex IRA and it also allows you to purchase precious metals like gold. The application fee is $25. The annual maintenance fee is $75 for the first year and 0.1% of the account value thereafter with a minimum of $75 and maximum of $550. In my case that maintenance fee would translate into $50. Sounds like a better deal than the $250 I paid over at Sunwest Trust.

But here is the kicker. There is a processing fee for purchasing a property AND there is a fee for holding the property in the Flex IRA account. Processing fee is $175 per property and Sale fee is $100. The holding fee is $100 per property ($200 per debt-financed property.) I am assuming the $100 is for free-and-clear property (no mortgage) while the $200 is for property with a mortgage.

All those fees add up pretty quickly. The low annual maintenance fee is pale in comparison to what I have to pay in real-estate processing and holding fee. This account is suitable for someone who buy and hold the property (minimal transaction) and have at least $50,000 worth of asset in real-estate.

Termination fee is $200; pretty comparable to other accounts I have reviewed here.

Case Study 1: You have $50,000 to invest in ONE property (with mortgage)

With Sunwest Trust, you would pay $250 (0.5% x $50,000) in annual maintenance fee.

With Sterling Trust, you would pay $75 (0.1% x $50,000 = $50 but there is a $75 minimum) in annual maintenance fee and $200 in Holding Fee (1 property) for a total of $275. (excluding the $175 one-time processing fee for purchasing the property)

In this case, the better option is Sunwest Trust.

Case Study 2: You have $100,000 to invest in ONE property (with mortgage)

With Sunwest Trust, you would pay $500 (0.5% x $100,000) in annual maintenance fee.

With Sterling Trust, you would pay $100 (0.1% x $100,000) in annual maintenance fee and $200 in Holding Fee (1 property) for a total of $300.

In this case, the better option is Sterling Trust.

If you own 2 properties, your annual fee with Sterling Trust will go up by $200 in holding fee; which make Sunwest Trust a better option because you do not need to pay the Processing Fee for purchasing the property (free 1 transaction per year.)

Conclusion: The higher the value of your account, the lower the annual maintenance fee you would pay with Sterling Trust (0.1% vs 0.5%); although you need to take into account the number of properties you own since you are paying $200 per property with Sterling Trust and NONE with Sunwest Trust.

Please evaluate your own situation to find which option better suits your need.

© Joey Rosario - visit the author for more great content.

My SEP-IRA account hasn’t had any contributions in a few years, so I am going to roll it into the Traditional IRA account as well. I figure it’ll be easier to maintain one account with one brokerage firm instead of maintaining 2 separate accounts with 2 separate brokerage firms. Since ROTH-IRA is an after-tax retirement account, it’s staying the way it is.

My 401(k) was fully invested in a small-cap mutual fund. It has performed admirably well. It’s up 11.67% YTD; up 7.36% in 2006, and up 13.78% in 2005. I cashed out last Friday and move all the asset to a newly-opened Traditional IRA at TD Ameritrade. Well, the money won’t stay there for long because I am going to open a Self-Directed IRA and move about 80% of the funds there. I am still doing research on who I will have my Self-Directed IRA account with. If you have any recommendations, please use the comment forum.

(Update 06/20/2007) I have reviewed a few companies that offer Self-Directed IRA account.

What is a Self-Directed IRA?

A Self-Directed IRA is simply another type of IRA account. The main difference between a Self-Directed IRA and a Traditional IRA is that a Self-Directed IRA allows you to invest in a non-traditional investment that include but are not limited to real estate, franchises, mortgages, partnerships, and tax-liens. You won’t be able to do this type investment with your Traditional IRA account.

The investment you make with a Self-Directed IRA is not to be made for personal use or personal benefit (other than a return to the IRA account itself) or IRS will deem it as a distribution and tax you for it (on top of a 10% penalty that might be applicable.)

A friend of mine presented an opportunity to invest in a real estate project with the objectives of capital appreciation and cash flow generation. I reviewed the detail and I felt it’s a project I should invest in. Having missed so many opportunities in the past to invest in real estate, I will not let another opportunity passes me by.

I will use the fund from my Self-Directed IRA to invest in this project. Evaluating the risk-reward, I feel investing in real estate makes more sense in the long run than putting the money back in mutual fund; considering I will not be eligible to take the distribution for another 20-30 years. This will allow me to diversify my IRA portfolio as well.

Suggested Reading Material

Retire Rich With Your Self-Directed IRA: What Your Broker & Banker Don’t Want You to Know About Managing Your Own Retirement Investments

Disclaimer: I am not an investment advisor and I do not give recommendation of any kinds. Please consult your investment advisor before making any investment decisions.

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Next time when you want to contribute money to your IRA account, don’t use your cash to fund it. Consider selling your stock that has declined in value, up to the amount you want to contribute; and use that money instead. Your contribution to IRA is tax-deductible and you can write-off the capital loss from the stock sales as well.

And the best part is if you like the stock and you want to hang on to it, you can always buy the stock back in your IRA account. Since the IRS treat you and your IRA account as a separate entity, the ‘Wash Rule’ does not apply.

I wish I had known this earlier. Well, my mistake … your gain.

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According to the author, DITM option play is good for beaten-down growth stock. Marvell Technology has been in the 52-week low ($15.25) range for the past couple of days. On May 17, 2007, the company reported its revenue rose 22% over a year ago but missed Wall Street revenue expectation of 24% increase.

I’ve been following MRVL Stocks for a while and it has been a good performer up until last year when the news on accounting scandal involving backdating options surfaced. Apple (AAPL) suffered from the same misfortune but has recovered quickly.

Anyway, regarding the DITM option, here is a few criteria the author suggests:

1. Option should be less than $1 in premium

2. It should expire no earlier than 4 months (4 -7 months)

3. Beaten-down growth stock

Holding options expiring in 4-7 months with less than $1 premium seems like a safe play. I entered into the option play this morning 15 minutes after the market opened. MRVL opened at $15.55. I bought 5 Nov 07 12.50 (ULJKV) call at $3.90. That’s about 5 1/2 months to expiration. The premium in this case $12.50 (strike price) + $3.90 (price I paid for the DITM option) – $15.60 (stock price at the time of purchase) is $0.80.

My break-even points is $16.40 ($12.50 strike price + $3.90 I paid for the option). I omit the commission from the equation for easier explanation. My play satisfies Criteria 1 and 2. We’ll find out whether this play will satisfy Criteria 3.

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Research in Motion (RIMM); the maker of Blackberry has been going up nicely as well; a trend that has been developing since late April. The comeback-kid Amazon (AMZN) gives back a little today. The stock has gained over 50% in the last month.

Apple (AAPL) has been unstoppable since breaking its resistance in the beginning of the month. It hit its 52-week high 2 trading business ago.

One stock that has been trending down is Chicago Mercantile Exchange (CME). It is a $500+ stock, pretty comparable to GOOG at $482. Well, the stock has been on a tear in the last 4 years. Up more than 10 folds. Look at the chart. It is an option-trader paradise. It swings wildly from month to month. Let’s see the closing price at the option-expiration.

May 18, 2007 $519.90

Apr 20, 2007 $555.89

Mar 16, 2007 $527.00

Feb 16, 2007 $574.76

Jan 19, 2007 $577.33

Dec 15, 2006 $533.00

In the last 6 months, only one time it didn’t happen. Although during that period, the stock hit as high as $596.30 (Jan 24) and as low as $547.46 (Jan 30), a span of 4 trading days. Just imagine. Is that mouth-watering or what?

This brings me to the MAX-Pain Theory. If you’ve been trading options for a while, I am sure you’ve heard of it. I will talk about this in another article. I will share some successful trades using this strategy.

Anyway, it’s 10.24 PT (13.24 ET) so there are less than 3 hours to go before the end of trading session. Heading into a long holiday weekend, I expect the stock to give back some of the gains.

Have a wonderful weekend and drive safely …

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