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Friday, August 25, 2006

Reducing Land Line Phone Bill

Every month I get my land line bill, it's an annoyance to see the bill filled with all kinds of fees and taxes even though we don't make too many local calls using our land line. Unfortunately, we need the land line for access to internet as a backup during emergencies when our high speed internet is not working. Fortunately, when I called my local phone company, I found out that the company offers pay per call plan which would reduce our monthly bill to some extent. Basically, we will need to pay about 10 cents per local call if we make it. Like all plans, with this plan also you pay a fixed, minimum service fee and of courses, the taxes. However, the advantage of this plan is that if we don't make too many local calls, which is the case for us, we don't have to pay for it. So this plan, worked out less expensive for us than the monthly unlimited plan.

I think most phone companies offer such pay-per-call plans. However, I haven't seen them advertise it nor list it on their Web sites. So it pays to call them up and ask the CSR about it.

posted by Ruby @ 6:11 AM 0 comments

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Wednesday, August 23, 2006

Minimizing Taxes - Keeping Track of Cost Basis for DRIP Purchases

Recently purchased a few shares of a stock using the DRIP plan. Since I am not sure if I will purchase additional shares over time, I decided not to reinvest dividends. The quarterly dividends that I earn require me to pay taxes in the year in which they are earned. This can cause potential problems down the road if I am not careful about keeping track of my reinvested dividends and adjusting my cost basis for share purchases accordingly. The reinvested dividends require me to pay taxes on it in the year in which they are earned, so in order to avoid paying taxes again later on when I sell my shares, I need to be careful about increasing my original cost basis to account for these reinvested dividends, otherwise I will end up paying more in taxes.

I find it easier to just withdraw the quarterly dividends to keep things simple. In addition, receiving the dividends every quarterly gives kind of a good feeling and can also act as a motivation for not withdrawing my money. I believe that it will be easier to keep track of cost basis when ever I put additional money in the plan to purchase additional shares.

posted by Ruby @ 10:26 AM 0 comments

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Monday, August 21, 2006

Minimizing Tax Bite - Favorable Changes for 401k beneficiaries

Just read an article at Yahoo Finance that changes have been made recently related to the 401k beneficiaries under the Pension Reform Law. The new changes are more friendlier for the non-spousal beneficiaries who would not have to withdraw the entire money from 401k on the death of their benefactor. So basically, the new law would expand the period over which non-spousal beneficiaries can withdraw the money. So for example, instead of withdrawing the entire $100,000 from 401k at one time, which would result in higher tax payments in the year of the withdrawal, the non-spousal beneficiaries would be able to withdraw the money over their life expectancy. So most likely, as they would be withdrawing smaller sums of money every year, the taxes they would have to pay would hopefully be lower than if they had taken withdrawn the entire 401k pot. Of course, there are still many paperwork and other requirements that non-spousal beneficiaries will have to fill out. To me these changes are especially good, if some one can't leave money to his/her spouse for some reasons - now they can leave it to their children. Hopefully, the children would not have the needs to withdraw the money immediately and can withdraw it over time, while simultaneously minimizing their taxes.

posted by Ruby @ 7:27 AM 0 comments

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Saturday, August 19, 2006

To DRIP or not to DRIP - Coca Cola versus Pepsico

Not surprisingly, Pepsico's competitor, Coca Cola (Symbol: KO) also has a DRIP. Like Pepsico's, I like Coca Cola's DRIP also as it has minimal charges in my view, and the DRIPs of both Coca Cola and Pepsico seem to be comparable in most respects. For example, like Pepsico, Coca Cola also requires a person to be an existing shareholder before he/she can buy additional shares through its DRIP.

The thing I like about many DRIPs is that they allow small investors to invest in a company's stock with a low minimal balances (in many cases, in $10-$250 range) and without paying commissions in most cases, while also allowing investors to add money to the plan over time, again without worrying about paying brokerage commissions. However, in most cases, the plans charge some fee when selling shares through the plan. In addition, many plans do not allow investors to buy or sell shares on any day of their choice but the plan buys shares for investors only on certain dates of the month. This can be a drawback if an investor wants to take advantage of a drop in the firm's share. However, by the time, the DRIP buys shares for him/her, the price of that company's stock may already have risen back.

In addition, not all firms' DRIPs are created equal. For example, DRIPs of some firms may impose various charges to set up an account, to purchase additional shares whether via cash or by electronic funds transfer, pay monthly maintenance fee, as well as when reinvesting dividends. And what I have seen is that these excessive charges are not limited to DRIPs of unknown firms but many good and large firms also impose such fees. For example, DRIPs of McDonalds and WalMart have many charges associated with them; not surprisingly, I am not very fond of them. I think it will be much cheaper to buy simply shares of such companies (if I want to buy them) directly through discount brokers rather than those these companies directly where over time a person could end up paying much more commissions and fees.

posted by Ruby @ 8:26 AM 0 comments

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Thursday, August 17, 2006

Pepsi woman to become CEO

Read recently that PepsiCo has named its current CFO, Indra Nooyi, to be its next CEO. She will the company's firm woman-CEO. It's a big achievement for Indra Nooyi as well as women in general. From what I read about her, she has been a very good CFO and supposedly was responsible for shifting PepsiCo's focus on healthy products which is what most consumers want these days. She's a Yale graduate More about Indra Nooyi

PepsiCo seems to be quite an employee and shareholder friendly firm. From an employee's perspective, it's remarkable that the firm promoted a woman candidate to be its CEO. From shareholders' perspective also, the company has been very good in my view. The company allows ordinary investors to buy its stock directly via its Dividend Reinvestment Plan. I found the fee/commissions for its DRP very reasonable compared to those for other companies. However, the main drawback I have found with its DRP is that you must be an existing shareholder and have 5 shares of PepsiCo registered in your name. So basically, at least initially, you need to buy shares from else where - which in my view, unnecessarily complicates things for small investors. Not sure why the firm does not allow a non-shareholder to buy shares from it directly like many other firms do such as ExxonMobil. Oh well - at least once you have 5 shares and are interested in its DRP, PepsiCo does allow you to purchase additional shares at no cost and with low minimum purchase amounts which is very good. More information is available through Pepsico's Web site:

Pepsico's DRP Plan Info

posted by Ruby @ 5:29 AM 0 comments

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Tuesday, August 15, 2006

Is now a good or bad time to buy stocks?

Read an article recently by Ben Stein on Yahoo Finance regarding whether its good or bad time to buy stocks. Reason being there is lot of uncertainty right now because of problems in the Middle East as well as whether the feds will continue to raise interest rates etc etc. As per Ben Stein, a lot of people are saying its a bad time to buy stocks because of this uncertainty but he makes a case that right now, many of the stocks are cheap and it may be a better time to buy stocks.

I have also been listening to conflicting reasons from various "stock experts" but to me, what Ben Stein is saying made sense to me. I'm not a financial expert nor am aware of Ben Stein's record but I have myself felt like buying stocks when the market has been rising (only to see my stocks collapse later on) and tried to stay away from the market when the prices had collapsed and the stocks were available at "bargain price". Seems it part of the human psychology. If any one wants to read the article further, the article can be accessed through Yahoo Finance or using the following link:

Ben Stein's article

posted by Ruby @ 7:36 AM 0 comments

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Saturday, August 12, 2006

Become a billionaire

Recently, have been going through a book called "How to be a Billionaire" by Martin S. Fridson. The book is very good and interesting. It profiles many billionaires like Ross Perot, J. Rockefeller, H. L. Hunt and others and reviews some of their habits, as well as the strategies and key principles they used to become billionaires. As per the book, some of the principles used by the billionaires include:

Rules are breakable

Develop a thick skin

Make mistakes, then learn from them

Frugality pays

Enjoy the pursuit

Hard work is essential

Keep on Growing

Copying pays better than improving

Hold on to your equity

Use financial leverage

You can learn more about the book at Amazon.com or by clicking the link below:

How to be a Billionaire: Proven Strategies from the Titans of Wealth

Labels: rev

posted by Ruby @ 10:23 PM 0 comments

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Thursday, August 10, 2006

Cable guy

This is my first post. Had been reading other blogs for a while, so finally decided today to sit down and post to my own blog. I believe there's a high degree of correlation between one's thoughts and the one's achievements, so that's how I ended up with the name "Thoughts and Riches" for my blog.

My day started with a visit from Comcast cable men to fix my internet. For some reasons, almost every day, the cable signal had been getting so low that I couldn't even connect to the internet. Finally, I had Comcast come and do something to fix it. In the past year or so, had Comcast come 3-4 times and every time, they say they have found the solution and fixed it, I still end up with the same problem after a few days. Hopefully, won't have too many problems at least for a while.

Personally, am not too fond of Comcast because their charges are way too high (about $57 for internet without Cable TV; about $43 if having Cable TV) and the service is so so. In addition, their phone bill payment service is not the greatest. Just to pay the bill over the phone takes several minutes and the worst part is that I need to have my 14-digit handy when paying my bill. That's because no matter what option I select on my phone, it still requires me to enter my account number even if I am calling from the phone number that's listed on my Comcast account (even though the recording says that if I am calling from the phone number listed on my account, I won't need my account number). Between entering my information and the Comcast system then repeating it, it feels like its taking for ever. The company provides bill payment over the internet but unfortunately, doesn't allow payments by credit card which is what I want to use. Unfortunately, Verizon and other companies don't offer DSL or cable in my area, otherwise would have switched by now.

As for Cable TV, it has become a joke for us. We get Basic Cable and there's hardly any cable channel that we like to watch (except may be for the networks for which I don't need cable any ways). I called them recently to cancel my cable TV but found out that they will charge us an additional fee to disconnect. Apparently, some one from Comcast will need to come to our neighborhood to manually disconnect me so that I don't get Cable TV but can still get high speed internet. Apart from this disconnection fee, of course, my internet rate would have also shot up by almost $16 every month, so I decided to just put up with it and continue having cable TV. I wish there was more competition to Comcast in our area!

posted by Ruby @ 11:54 PM 0 comments

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Favorite Quote

"If you look at what you have in life, you will always have more. If you look at what you do not have in life, you will never have enough".
- Author Unknown

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