Ron Peterson <ron[at]shell.core.com> wrote in message news:<10dko4a4rbuu32[at]corp.supernews.com> ...
- quote -

Bill Gates smade more than $200,000 when he left school, right?

When I discuss choosing colleges with others I always bring up WHY is
the school more expensive? For example, when discussing with
Engineers, I ask if they will benefit from U of M's higher tuition? I
usually point out that it's the U of M graduate engineering program
which is head and shoulders above many other graduate programs. The
calculus classes and physics classes being taken are the same, in some
cases being taught by a teaching assistant (not an experienced
professor), so the undergraduate cost may not have the same value as a
smaller engineering school.

But being on a campus with 40,000 people is not something all
universities can offer, so maybe that's why you'll pay the large $$
for an undergraduate degree. They usually have a good football team,
maybe that's what you are paying for?

My formula which I would suggest is more subjective. What degree and
what are you expecting to do when you graduate? If you want to be a
college professor, coming from prestegious universities is IMPORTANT,
if you want to get into the Harvard MBA program, getting good grades
is #1 and the university you get them from is #2.

It's the things you learn OUTSIDE the classroom which help you most in
life, so put a cost and price on that, then choose the college.

Jim

"HW \"Skip\" Weldon" <skip5700removethis[at]hotmail.com> wrote:

- quote -

I think that a 4 year degree amounts to about a 40% salary premium. If
your parents own the company, you do even better.

Another study indicated that investing in education gave about a 12%
return on investment, so a high priced private school may not be worth
it unless it gets you into grad school or gives you some contacts.

If the tuition and lost wages total more than $200,000, it's not a good
economic decision.

--
Ron

In article <dcline-C517E9.15584823062004[at]news.silcom.com> , Richard
Cline <dcline[at]silcom.com> wrote:

- quote -

????? Old wives tale. Do you honestly think that Bill Gates
has any self confidence issues? I think that this is nothing
more than snobbery. If someone needs a college degree to feel
important, they probably have a lot of other emotional issues
as well.

-john-

--
================================================== ==================
John A. Weeks III 952-432-2708 john[at]johnweeks.com
Newave Communications http://www.johnweeks.com
================================================== ==================

In article <40d9e07f.289782885[at]news.lth.se> , zaladin[at]home.se wrote:

There are numerous issues not identified in the simple wage comparison.
The person without the college degree will feel a lack of self
confidence in comparison. The person with a college degree will
probably marry another person with a college degree -- therefore the
family wage difference can be doubled.

Also, we need to look at the type of degree to get a comparison. The
degree in art is worth nearly nothing in direct wages. The degree in
engineering is very valuable in terms of direct wages. The intangible
value of the two degrees in not so widely different.

Dick

- quote -

["HW \"Skip\" Weldon" <skip5700removethis[at]hotmail.com> ] wrote:
[ 29 lines in misc.invest.financial-plan ]
===================

- quote -

This is a question that is too rarely asked when discussing financial
matters. Up until know, it has always been taken for granted that major
investments (owning your home instead of renting and investing in higher
education) has always been wise choices. But at some point, they're not.
For housing, for instance, if prices rise dramatically while rents stay
flat, house ownership becomes less and less attractive, and at some point
it is better to rent than to own (for instance, in a high-interest / high
initial house cost / low-inflation scenario, which is eeringly similar to
what we're having now...).

This applies to college as well. A very neat way of doing a cost/benefit
analysis of college investment, is to use the following definition of human
capital:

Human capital = present value of all future earnings up until retirement.

Then, college education will be a worthy investment if your total "human
capital" is greater after college than before. The cost of college can
consist of the following parts:

* Tuition, other fees, living expenses
* Foregone earnings and retirement benefits because of time spent in
college
* Interest rate on student loans

The benefit:

* Higher earnings after college, leading to a greater lifetime income.

Of course, many other non-financial variables matter as well (such as
"quality-of-life", job satisfaction, the intangible value of more
knowledge, etc), but they can be ignored for the purpose of this analysis.

Thus: To see if it is worth the price to go to college, compare total
discounted lifetime earnings with and without a college education. Let's
say we use an interest rate of 4%, expected inflation of 2%, a starting
wage of $30k yearly without college, and a starting wage of $50k yearly
with college (increasing by 2% per year). Using the familiar "present
value"-formula, we can then come to the following conclusion (assuming
college/work starts in your 18th year, and college finishes in the 21st):

PV noCol ... PV Col
Age 18: $30,000 ... $0
Age 19: $29,423 ... $0
Age 20: $28,857 ... $0
Age 21: $28,302 ... $0
Age 22: $27,785 ... $42,740
Age 23: $27,224 ... $41,918
Age 24: $26,701 ... $41,112

On Tue, 22 Jun 2004 16:04:12 CST, "John A. Weeks III"
<john[at]johnweeks.com> wrote:

snip

- quote -

What an interesting thought. Whether student-borrowed or parent-paid,
at some point college costs may not survive price/benefit analysis.

Anyone got a suggested formula that tells us at what price college
(higher ed) would be impractical?



-HW "Skip" Weldon
Columbia, SC

T R <traykoff[at]comcast.net> wrote:

- quote -

The value of all tangible property will go up. So you don't want to be
holding cash or low-interest bonds.

- quote -

Inflation will eliminate the national debt.

- quote -

Investing in yourself is always a good idea at any age.

How much do you pay to belong to a health club to make up for the
exercise you missed by having someone else mow your lawn.

--
Ron

In article <CMudnacWiKvBjEXdRVn-vA[at]comcast.com> , T R
<traykoff[at]comcast.net> wrote:

- quote -

If the dollar crashes for good, we are all going to have a whole lot
more problems to worry about than optimizing our retirement portfolio.
But in any case, you have to ask yourself who is going to be better
off...the person who is broke and living hand to mouth (and paycheck
to paycheck with thousands in credit card debt), or the person who
has established a low expense lifestyle and that is debt free and
has many thousands in investments? I think most people would want
to be in the 2nd scenario.

- quote -

Again, if those impact anybody, they are going to impact most everyone.
The person who is prepared for this by having their financial house
in order and has substantial retirement savings is going to be in
a much better position at age 60 if they find themselves jobless with
no hope of getting a replacement job.

- quote -

There is no certainty that anyone is going to live past their 20's, but
that doesn't mean that you shouldn't save for the future. The stock
market has had a historical run of about 11% in annual returns, and that
was with two global wars, global depression, oil crunch, nuclear war,
the rise and fall of communism, and nearly all of the major industries
of the late 1800's now being obsolete and long gone. Given all of that,
what makes you think that anything that happens in the future is going
to make the sum total value of the US ecomony suddenly become worthless?
Those are things that mentally ill paranoids think of, not well informed
and well adjusted rational people.

And suggesting gold as an investment? Gold has no real value. All it
is is a chunk of metal. You cannot even eat it like wheat or soybeans.
While gold has had a few short periods of up trends, it has been a
historical loser of value for everyone who invests in it. Why get
into something where you know that you have a 90% or greater chance
of losing money?

- quote -

That might not be as sure of a bet as it was a few decades ago. When I
went to college, it cost about $1000 per year for tuition. Nowdays,
the local state college is $16K per year. The education that I got I
get to keep for a lifetime, but the specific job skills only lasted
about a decade before they were obsolete. With techonolgy changing
so fast and skilled positions going overseas, the typical US worker
is going to have to retrain every 15 or so years. As a result, it
doesn't pay to spend more on education than what you can pay back in
15 years. That is why I think it is so silly for people to come out
of college with $80,000 and $120,000 of loans to train for a job
that makes only $40K or $60K tops per year--they will never get this
paid back in a lifetime, let alone before they have to go back to
school for the next career in 12 to 20 years. My point is that you
have to be a lot more selective about how you spend your educational
time and dollars, and avoid running up great sums of debt in the
process.

-john-

--
================================================== ==================
John A. Weeks III 952-432-2708 john[at]johnweeks.com
Newave Communications http://www.johnweeks.com
================================================== ==================

"John A. Weeks III" <john[at]johnweeks.com> wrote in message
news:140620041047569254%john[at]johnweeks.com...

- quote -

I guess it is only responsible when giving this advice as a certainty to
mention the potential downside. Every dollar you put away in your 20's could
be next to worthless in your 50's, etc. So many things are moving in a
unique way right now at a macro level that past is not prologue. What
happens if the dollar crashes for good? What happens if inflation
skyrockets? Do people really appreciate the present value of all the US
government's obligations going forward for the next 40-50 years? What about
the impact of oil supply. Or terrorism?
Sure you could hedge by putting your money into international funds or gold
or whatever, but then again, everything might turn out well, and you hedge
turns into a hog. There is no certainty about what $1 of saving in your 20's
will turn into.

Don't forget that (often) one of the most certain investments you can make
in your 20's and 30's is in your career and skill set. In my situation I
think a pretty good investment is paying somebody $20/hr of my time to mow
the lawn, so that I can put that much extra time into my career.

In article <5ecbb247.0406151108.5ce5edc4[at]posting.google.com> , Panache
<cool_womanizer1979[at]yahoo.com> wrote:

- quote -

It depends on your specific 401K plan. They all differ. Some
have just a few funds to pick from. Some have a large variety
of funds to pick from. Although less common, some 401K's allow
you to pick stocks and exchange traded funds. Most all 401K's
will have some type of fixed income, usually a money market style
account for holding cash.

If your 401K offers some type of match or discount, you should
take advantage of that as much as you. The one exception is where
you are allowed to buy your company stock--avoid that unless you
have absolutly no other choice. You don't want to get stuck
holding the bag like the Enron folks did.

-john-

--
================================================== ==================
John A. Weeks III 952-432-2708 john[at]johnweeks.com
Newave Communications http://www.johnweeks.com
================================================== ==================

- quote -

John,

Thanks for the helpful reply. Your point about reconsidering my
decision of thinking to buy a house is well taken. If I start maxing
my 401K, most of what I can save will go there...which is good. As I
understand, I can play with the 401K money the way I want right? Like
I can invest part of it in stocks, partly in index funds and when I
want to make some profits, I can sell and leave the cash sitting
there.

Thanks,
Panache

note- I do not see original post on google.

"John A. Weeks III" <john[at]johnweeks.com> wrote in message news:<140620041047569254%john[at]johnweeks.com> ...
- quote -


I would invest $300/month into an IRA, then use the rest for debt if
401k is already taken from gross pay. With the $300/month, I would
open 3 mutual find accounts (large cap fund, small cap fund and one
other which interests you). IRA contributions are yearly, so you
won't get the time back to deposit the money later.

If 401k contributions will be part of $1500, then I would contribute a
percentage each month which equals at least $300/month. Purpose is to
start the habit of saving.

With the remaining $1200, I would follow John's advice of paying off
debt first. Credit card, then car. Then I would stash away about
$3000 cash in a savings account which you never touch. Then I would
start increasing the savings amount to 401k/IRA account/ house
purchase.

For the house purchase, I would suggest that you learn how easy it
will be to GET RID OF the house you buy prior to purchasing. Condo's
don't always sell quickly, single family fixer uppers don't sell
quickly either. Buy something which you could stay in for 7 years or
so, but also sell if you needed to.

Depending on your investment agressiveness, you could rent out the
house/condo after you live in it and save more money for a family home
or more desirable location.

jim

In article <cakj5f$chk$0[at]pita.alt.net> , Ignoramus8649
<ignoramus8649[at]NOSPAM.8649.invalid> wrote:

- quote -

I am trying to illustrate the power of the time value of money.
I used the $1, $10, $100, and $1000 because they are nice round
numbers.

Rather than worrying about the exact rate of return, think about
the effect of time. If I am in my 40's, and I save $100 per year,
I have a far greater chance of hitting those once or twice in a
lifetime bull markets (like we saw in the 90's). In that case,
putting away $100 a year in my 40's could have the same or even
bigger impact of saving $1000 a year in my 50's.

Your point on the rate is well taken, the US stock market has
had a historic return of just over 11%. That is all that bad
over the long run.

-john-

--
================================================== ==================
John A. Weeks III 952-432-2708 john[at]johnweeks.com
Newave Communications http://www.johnweeks.com
================================================== ==================

In article <140620041047569254%john[at]johnweeks.com> , John A. Weeks III wrote:
- quote -

John, are you saying that a dollar saved grows to the value of $10
within ten years? This would imply annual compound growth of 25% after
tax. Hardly a believable number.

i

In article <5ecbb247.0406140242.57ec49f7[at]posting.google.com> , Panache
<cool_womanizer1979[at]yahoo.com> wrote:

- quote -

This is a good attitude to start with. Every dollar you put away
in your 20's is worth $10 of savings in your 30's, $100 in your
40's, and $1000 in your 50's. Even though I knew that mathematically
when I was in my 20's, I was unteachable at that age, and I would
have had to have someone hit me over the head with a frying pan
before I would have done something smart like saving money.

- quote -

It appears that the thing that you haven't realized yet is that debt
is a killer. It sucks the life-blood out of a person. It makes you
a defacto slave working for the lender rather than working for yourself.

- quote -

decisions when it comes to money. I would use that emotion to get mad
at the lenders, and pay them off to get rid of them. If you have
$1500 in available cash each month, I would nuke that credit card
bill in 3 months. I would suffer with whatever car you currently
have, even if it is a total beater, and save up the money to pay
for the better car in cash. We are only talking 6 to 9 months
here. Inside of a year, you could be totally debt free, and have
a nice car that is totally paid for.

- quote -

I would advise to think carefully before doing this. You have a
lot of life changes ahead of you in the next few years. First
jobs often last a year or two, after which, you start picking
career positions. Even if you stay at this job, you might be
moved to take a better position. Then there are girlfriends and
an eventual marriage. And starting a family. Or you might just
toss the whole thing and move somewhere else.

Bottom line, in your 20's, there is just too much stuff going
on to really commit yourself to a house. I'd rather see you
spend the time to really decide where you want to go in life,
get the family situation figured out, and save up a 20% down
payment for the house that you want to spend your 30's & 40's
living in.

- quote -

Yes. I would max out the 401K. Then max out any IRA options that
you have. Since this is money that you don't see, you don't miss
it.

- quote -

I do not suggest buying individual stocks. The overhead of commissions
and fees make it an inefficient way to handle money. The game is
also rigged against you since you don't have the time to analyze
companies like the big firms do. I'd stay out of it and spend your
time picking a few good funds.

- quote -

This depends on your time frame. If you really do want to buy that
house in the next few years, then you are short-term investing. That
means money market, CD's, government bonds, and other low risk lower
return instruments.

If you are more on the 4 year plus time frame, then you can go for
higher return items, but you run the risk of having the market be
in a down cycle when the time comes to pull the money out.

- quote -

As a younger person, you should have mostly exposure to the market,
with a little fix income stuff thrown in. As you age, you reduce
the exposure to the market, and take on more fixed income. At 25,
I would suggest 80% market, 20% fixed. I would have the 401K mostly
in the market, and your savings outside of the 401K more in fixed
since you want the non-401K money for a house.

As far as diversification, most mutual funds are diversified
since they invest in multiple industries, and more than one firm
in each industry. There are some funds that focus on specific
industries. You need to be careful with them since an industry
that is in favor today could easily tank tomorrow.

Morning star has a fund style grid. You need to look this up
and learn about it. Your goal is to pick funds from different
boxes in the grid. For example, if you have a Large Cap Growth
fund, the next fund you pick would not be from that same box.
Rather, and Mid-Cap Blanced Fund or Small Cap Value fund might
be the next logical choice. Try covering more grid squares
rather than more funds in one grid square.

When I say fund, I mean either mutual fund, or exchange traded
funds. Exchange traded funds are the rage today, and in general,
they are a great way to invest. ETF's that are based on indexes
are an excellent way to invest in the indexes given that they
have very low expenses and they are very tax efficient.

If you really want to play the market with a little money,
lets say no more than 5% or 10% of your empire, take a look at
picking some sector funds that focus on one industry. Fidelity
is a good source of information. Check out the Fidelity
Select funds. Some of these funds have high current returns,
others are in the tank. Your goal is to pick one that is high
and will stay high, or is low but ready to make a move.

Good luck!

-john-

--
================================================== ==================
John A. Weeks III 952-432-2708 john[at]johnweeks.com
Newave Communications http://www.johnweeks.com
================================================== ==================

Hi,

I am a recent graduate and have got a job recently. Like most people,
I am just entering a world from having no money to having some left at
the end of each month. And, I want to start saving early...

I am 25...have abt $3800 in student loans on my credit card(at 2.9%
interest until I payoff). I plan to buy a used car...for abt 8k - 9k.
I can save approx $1500 p/m after paying installments for my car
(approx 2 yrs) and loan. I know it is adviced to pay off credit card
loans before investing, but since the APR is low, I plan to pay it off
slowly (That is a good decision, right?)

My short term financial goals: I want to buy a house after two years
or so. I am trying to decide how I should start saving.

Is is a good idea to max my 401k at such an early age or should I
start doing that after sometime? The amount that I put in my 401 k, I
plan to invest some of it in an index fund as I have read that its the
best option to beat or atleast meet the market. How should I invest
the rest? I am thinking of playing in the stock market a little.

Is there a way to save money to buy a house? How should I best
diversify my portfolio...like what percentage should be 401 k, what
should be stocks...etc.

This might sound like a vague question but please give me some advice
on the best way I should diversify to meet my financial goals.

Thanks,
Panache