I’m basically responding to a comment posted in the HQ Net Worth page:

“WTF? When are you planning on retiring?”

I guess the comment was directed at my funds in my retirement account (Roth IRA).

Eligibility

Roth IRA: Single filers up to $95,000, join filers up to $150,000 (for full contributions

Traditional IRA: Under 70.5 years old, no income limit

Note: Both of them require that the funds be salary from job. So you can’t just use money lying around.

Maximum Annual Contribution

$4,000 or 100% of salary. There are additional “catch up” contributions for individuals 50 and over.

Contribution Deductibility

Roth IRA: Since these are post-tax dollars, contributions are not tax deductible.

Traditional IRA: Deductions may be tax deductible.

The idea with a roth is you pay taxes now rather than later. This is perfect for me because I’m a student and my limited income is already taxed at the lowest bracket.

Federal Tax Advantages

Roth IRA: Tax-free growth
Traditional IRA: Tax-deferred growth

Withdrawals

Roth IRA: Can withdraw contributions anytime without penalty or tax*.
Traditional IRA: May withdraw without penalty anytime after 59.5 years of age.

With the roth you can withraw your contributions after 5 years if you meet one of the following requirements:

1. you have attained the age of 59½
2. you die (well, you don’t withraw personally.)
3. you become disabled
4. to pay for the purchase or construction of your first home ($10,000 lifetime maximum)

#4 is the best reason for me to use a Roth IRA since in 5+ years I’ll hopefully buy my first home and the contribution I take from the Roth IRA will be tax-free.

Conclusion

According to various articles like this one at moneychimp. A traditional IRA *may* equal a roth IRA but will never surpass it. So I suggest choosing the roth IRA over a traditional IRA. The fact that you don’t get to deduct contributions to your roth IRA is purely psychological. It’s not simply a matter of pay now or pay later, but a roth IRA can easily exceed a traditional IRA. One of the best benefits that applies to young people is that you’ll be able to withdraw funds to purchase your first home. Even if you aren’t young anymore, you should consider a roth IRA.

So in essence I don’t plan on retiring anytime soon in response to the comment, but at my current tax bracket, it is still very beneficial to use a roth IRA even at my young age.

If you’re interested in a Roth IRA, do you research. Here are some great places:

Moneychimp 1 2
About.com 1 2

Finally added a Site meter as of 4 pm today. I’ll get an idea of traffic on my blog and where it’s coming from now.

My post “Thoughts on penny stocks” was mentioned in the…

… 35th Festival of Frugality hosted at Punny Money. I guess I should add that just because you’re frugal doesn’t mean you should purchase penny stocks. David Hasselhoff, hehe…

… Carnival of Investing #35 hosted by Journey to Financial Freedom.

… Carnival of Personal Finance 61 hosted by Frank the Financially Savvy Atheist.

… Carnival of Capitalists by Barry Moltz’s Blog

Thanks.

As a customer…
I’ve always loved Netflix ever since my brother joined 3 years ago. He’s moved out and I’ve got my own Netflix subscription now. You don’t have to be a hardcore movie lover to enjoy what Netflix has to offer. People see the term “unlimited” rentals and figure that they have to be watching movies all the time to get the most out of the service. The average cost per rental is in fact not that bad. For the $17.99 3 DVDs out at a time plan I pay $19.25 total (7% NJ tax).

Here’s how much it cost on average per rental:

# of movies / average cost
3 / $6.41
4 / $4.81
5 / $3.85
6 / $3.21
7 / $2.75
8 / $2.41
9 / $2.14
10 / $1.93

In an unlikely situation where you rent 3 per month. You’d pay $6.41 to rent each dvd, but for a whole entire month. I usually get between 6-8 dvds per month. It’s also about a matter of convenience, last month I saw seasons 1 and 2 of the Sopranos (8-disc total) and one or two other movies through netflix. I didn’t have to waste gas to drive to a video store to return or pick up any rentals. All the return envelopes are prepaid. From a customer standpoint, I love Netflix.

As an investor…
I have no clue. Seriously. I’m doing research and looking at what kind of growth is priced into the stock already and what kind of growth I think they can achieve.

As I said before I’m going to try for various bank bonus deals to pad my wallet. I just cashed in on the Netbank bonus found here. I opened up a free checking account at Netbank with no minimums and no direct deposit required last month. The terms say you are suppose to keep $500 in there for one month get the bonus but I only had it in there about 11 days before they credited me the $75 bonus. The other bonuses listed on that page for the money market account and CD do not seem worth the hassle.

The next bonus:
My next bonus is going to be from Principal Bank. There is a $50 bonus for opening a student savings and checking account online. $50 minimum to fund both accounts so $100 total. Part of the terms state:

“$50 account closing fee if funds not left on deposit for at least six months.”

So I guess I’ll have to call them and find out if I have to leave all initial in there or just the bonus money for 6 months. Free 50% return on $100 isn’t bad though. Maybe I’ll call after I get my bonus

Other bonuses I’ve done in the past:

Bank of America – $60 for opening up student checking and regular savings account. $125 funding. They have a better bonus available now. $100 for opening a checking account online. Check it out here.

Christian Community Credit Union – $75 bonus with direct deposit. $100 to fund account. I just use PayPal to initiate an ACH transfer and it counts as direct deposit. Offer can be found here if you’re interested.

VirtualBank – I got a $20 bonus from them. $100 to fund the account. In order to get the bonus, a “friend” must refer you. E-mail me if you need a referral.

ING Direct – $25 bonus when my brother referred me. $250 initial funding. Same as with VirtualBank, e-mail me if you need a referral.

e-mail-> hejustlaughs@gmail.com

In case you’re wondering, I’ve never recieved any backlash for recieving the bonus and then withdrawing all my money. The point of these bonuses is they want you to try out their banking services, so why not take them up on their offer? ING Direct is the only one that I still use, but they are lagging behind Emigrant Direct’s interest rates so that might change very soon.

After reading about the new online brokerage Sogoinvest, I decided to go and open an account. They currently have a 90 day promotional period with trades for $1. At the basic level they are suppose to offer no-frills $3 real-time market trades.

Sogoinvest seems to offer automated trades like that of which Sharebuilder offers. I’m going to try them out in the next couple of days and will report back. Noticably they don’t offer stop loss orders and GTC (good till canceled) orders for some reason.

http://www.sogoinvest.com
edit 8/22/06:
Follow-up on my experience here.

After a conversation about penny stocks with a friend, I’ll share some of my thoughts on penny stocks. I believe penny stocks are one of the most risky investment vehicles in the stock market. Here’s why:

1. Often the small market cap of the company allows for easy price manipulations in pump and dump schemes.
2. They are highly susceptible to hype. When the hype eases off, the share prices can deflate with it.
3. Disclosures on most of these companies are often not great. Companies listed on pink sheets are not required to file to the SEC and are not as regulated. Most information about penny stocks are not reliable and sometimes biased. The companies can be on the brink of bankruptcy and you may not even know it.
4. Liquidity is not always there. You may find yourself unable to unload your shares.

The biggest lure to penny stocks is that people are hyped into the potential upside of the stock. Supposedly the idea is that if you buy shares at $0.25 and the stock moves to $0.50, you’ve doubled your money! $1000 would also buy you 4000 shares! Well, more often than not, people realize there is a downside as well as an upside and can see shares plummet to less than a penny. Look at Plasticon International.

I’m not saying all penny stocks are trash. The idea of successfully investing in penny stocks to me is similar to throwing a needle into a haystack and then waiting till midnight to look for that needle. Many scamsters will have people believe that great companies such as Wal-mart started out as penny stocks is downright lying. Wal-mart was $0.05 on opening day ONLY if you adjust in dividends and splits. Wal-mart was never really a penny stock for it opened at $32.50.

The pump and dump schemes are the worst. Rationally thinking, no stranger in his/her right mind would ever mass mail a legitimate stock tip without malicious intentions. However, the greed of naive investors gives way to irrational thinking. Here’s an thought, if you want to catch pump and dump schemes in action, just check your spam. Every once in awhile gmail’s spam filters will let through a spam email hyping a penny stock. I like to track the stock’s rise (if I read the e-mail quick enough) and then collapse thinking about the investors (if we can call them that) that lost money.

All in all, if penny stocks are still your thing. Good luck.

It seems the talk about account holders being assigned new account numbers was true. However, you can just simply look at your last month’s account statement now available to get your new account number without talking to a CSR or whatnot.

Summer is generally the only time I have the chance to actually work a job so it’s the months where my net worth increases. It’s also the most tempting months to blow it all on fun too. I’ve been doing a good job so far increasing my net worth this summer. I hope it’ll stick though, and I won’t have to dip into the funds during the semesters.

This month I’m going to pursure all the free money opportunities available to build up a cash reserve.

Generally I am not for “trading” stock but however I spotted an extremely tempting opportunity yesterday I had to try out.

SCT dropped 75% yesterday on news of their CEO resigning and reports of a substantial loss this quarter. 75%… in one day? I saw this as a market panic and I couldn’t resist buying in a small position. The stock bounced back up 50% today and I’m locking in the gains . The only thing is I didn’t have much cash and I didn’t want to sell my other holdings so the 50% gain is on a $300 position. I was also afraid I might be wrong and would be kicking myself for unloading my other positions to lose money in a speculative play.