Monday, January 26, 2015

How to Start Investing

This weekend I spoke with someone interested in investing and realized my experience might help others. I'll give some back story on what I've done and then make specific suggestions at the end. Feel free to skip the backstory.


I'm allergic to milk, but I'll always have a soft spot for pizza. When I was in the 7th grade (1995) my uncle and cousin took me to a pizza place in Chicago. They were discussing some sports star who had just gotten a $6 million dollar contract. My uncle asked "What would you do with a million dollars?"

I don't recall my answer, but my cousin's fascinated me: I'd invest it and live off of the interest. 6% on a million dollars is $60,000 per year. I was blown away. At that time I was probably spending about $200 a year (thanks mom and dad!) and couldn't fathom having let alone spending $60,000 dollars!

Since then I've been interested in investing.

Learning by Doing, Retirement Investing
My freshman year of college (2000) I opened my first retirement account when I started my internship with the State of Michigan. They had a 401K plan. That tax year but in Jan of 2001. My dad recommended opening a Roth IRA which I did with MSUFCU. It earned a fixed % (I believe 1.4)

During this time I began reading Forbes magazine and another investor magazine.

In 2002 I decided to move my Roth IRA from MSUFCU to Fidelity and put it into 'the market' I had no idea what I was doing and didn't get specific recommendations from anyone. I think people were afraid if they recommended xyz and I lost money I would be mad. I maxed out my IRA contribution (3K or 3.5K something like that), cashed out my MSUFCU money and opened a Fidelity account. Why Fidelity? Because my dad had a Fidelity account :) Without recommendations from anyone I decided to invest in some type of healthcare mutual fund.

For the next few years I maxed out my Roth contributions putting them in various mutual funds. Some while later (2006?) I realized this was not the best strategy. I learned about index funds and that they were better than mutual funds. Around this time I invested new IRA money in a NASDAQ Index fund (FNCMX) and what I thought was a S&P 500 Index fund, SPY (I later found out this is an ETF. Thanks Jason!)

Around 2012 or so I realized my mutual fund returns had been crap and decided to move everything into the S&P, which many investment vehicles benchmark again. As I was consolidating I realized my NASDAQ index fund had outperformed S&P so I left that alone (probably a mistake)

Now my retirement account consists of about 40% FNCMX and 60% SPY.

Other Investment Experience
I don't recommend any of these ideas for beginners, but I want to show my rounded out investment experience.

  • Business Loan (2003-2009)
  • Real Estate Purchase (2005)
  • Landlord (2007-2012)
  • Individual Stocks (mostly tech) (2012-2014)
  • Selling options (mostly tech (2012 0 2014)
  • Private Business Investment (2013)
  • Arbitrage (2013)
  • Bitcoin speculation (2013 - current)

Specific Suggestions

  1. Pay off high debts first. Think about returns. SPY returns about 8% / year. It doesn't make sense to earn 8% on investments while paying more than 8% for loans (ie. a credit card at 20%) However on the flip side it can make sense to borrow at low interest rates if you can loan out at higher rates. However this can be a dangerous game. It's something to keep in mind but a more experienced play.
  2. Credit card loans may be paid off more quickly with bank consolidation loans at lower interest rates, Lending Club or Prosper loans at lower interest rates, or 0% credit card balance transfers.
  3. Be aware retirement funds (401K, traditional IRA, Roth IRA) generally can't be used without penalty until retirement age. There are exceptions for things like first time home buying and medical emergencies.
  4. Have a cushion (1-2 months) of expenses in the bank before investing. It can be dangerous to invest funds into a brokerage account with Fidelity or OptionsHouse and have no cash in the bank. Then a car repair, medical expense, home repair, etc. can put one in a cash crunch needing to pull out their investments or use loans to cover the gap.
  5. Many employers have 401K retirement plans and will match employee contributions. Sometimes employers even match dollar for dollar up to a cap. This is a 100% risk-free return, probably the best deal anyone can get in their life.
  6. After maxing any 401K match money employers offer consider investing in a Roth IRA or traditional IRA. Open an account with Vanguard and invest in their S&P500 index product: VFINX.
Additional Information:

Sunday, January 25, 2015

Free Photos, Images, and Music for your Projects

Do you write blog posts, create presentations (hopefully with Prezi), or create video clips (hopefully with Camtasia)?

Adding media like music and pictures increases the effectiveness of your communications. Our brains process imagery faster than we process text.

It's also nice when you don't have to add attribution (putting the photo source to comply with copyright) unfortunately that typically means paying $30 at sites like Shutterstock (awesome selection though!). However there are some public domain sites that don't require attribution.

Free Photos

  1. Sometimes I start with a Google Image search to get my creative juices flowing. If I already have an idea in mind I just skip to step 2 though. I return back to Google Images if I can't find what I'm looking for.
  2. Pixabay - I go here first. Images are public domain which means you don't need to post attribution and can modify them at will. They have an OK selection. The Free Media image above was a combination of:
    1. Pixabay blank sign post
    2. Pixabay mountain background
    3. Some Gimp magic (image manipulation)
  3. Flickr - If I can't find a photo on Pixabay I'll go to Flickr. I often go to Flickr if I need a photo of a particular person like Bill Gates, Steve Jobs, etc. I check the search option for Creative Commons and use some nice CSS to overlay the attribution on top of the image. (for example I need a pic of the Winklevoss twins on my bitcoin Bulls site. )
  4. If those fail then I recommend trying Google Image Search I click on search tools and then usage rights then 'reuse with modification' however the process doesn't work so well. I'll probably go back to step 1 and try to come up with a different concept.

Free Vector Art
Vector images can be resized without distortion, from being tiny to fitting on pins all the way up to huge banners on the side of skyscrapers. Logos are often vector.

  1. Vecteezy - I haven't used this resource a lot, but I plan on doing more infographics this year and will be leveraging Vecteezy. Unfortunately their search doesn't have by license type and they permit a variety of licenses.

Free Music

  1. Incompetech - lots of great royalty free music! I've used incompetech music for my video projects since 2013. The default license requires attribution. For $30 you can purchase a license to skip attribution.

    Some Projects I've used Incompetech music on:
    1. My son playing with marbles.
    2. My brother playing a dance game. 
    3. This Video showing how to buy bitcoins.
    4. The intro to this btcjam webinar.
  2. YouTube Audio Library - I don't like this selection much, but your mileage may vary.
Free Video Clips
Sorry I don't know of any useful free resources.
  1. I have used Shutterstock in the past to purchase video clips.

What tools do I use to edit media?
  1. Images - Gimp I have Adobe Photoshop but I'm horrible with it. I use Gimp (free) for all my image editing. Gimp works on Windows, Linux, and Mac.
  2. Vector Images (can be resized with no loss of quality) Inkscape - Again I have Adobe Illustrator but I am horrible at it haven't tried using it. Inkscape (free) works on Windows, Linux, and Mac.
  3. Screen recording and Video Editing - Camtasia ($299). Fantastic tool from a local company.
  4. Sound editing - Audacity - take out noise, bump up volume, etc. Free tool that works on Windows Mac and Linux. I've never had a problem with the tool and never tried anything else.
  5. Making movies & rendering images - Blender. I'm just learning this tool. I haven't released anything I've done on it yet. Big learning curve!
Let me know in the comments if there is a category, tool, or resource I missed!