Jane M. Young, CFP, EA
1. When grocery shopping, select items from the lower shelves, the more expensive items are usually placed at eye level.
2. Stock up when durable goods that you always need go on sale. Don’t buy something you wouldn’t otherwise buy just because it’s on sale.
3. Reduce impulse purchases at the grocery store – go less frequently, make a list and eat before you go. I know, I know, those strawberry shortcake cookies, with the cream filling and chocolate swirls looked so good. But a few days later …… what was I thinking??
4. When comparing prices check the unit price not the total price. You may pay less but you are probably getting less for your money.
5. Eat smaller portions of meat – you might even lose a little weight. Meat is very expensive, use more vegetables and less meat in you recipes.
6. When eating out, eat half of your meal at the restaurant and take the rest home with you. Most restaurants serve very large portions.
7. When eating out limit yourself to one glass of wine or drink tap water instead of coffee, tea or soda. Beverages can be very expensive relative to the cost your food.
8. If you are having an entrée avoid ordering appetizers or desert at the restaurant. Have drinks and appetizers at home before you leave or coffee and desert at home after dinner.
9. Eat something at home before you go out to meet friends. Limit your order to an appetizer or a side salad to be sociable.
10. Rather than celebrating at a restaurant, organize a potluck or take turns hosting a dinner party.
If you decide to buy gold as a hedge against inflation there are several options. One can invest in gold through mutual funds, exchange traded funds (ETF), gold bullion, gold coins, gold mining stock and gold futures. In selecting an investment vehicle keep in mind your reason for purchasing gold – it’s a doomsday investment. If the entire financial world is crumbling around you, your gold needs to be secure. If you buy gold, consider investment in gold coins. Some options include the American Eagle, the Vienna Philharmonic or the Canadian Maple Leaf. With gold coins you have possession, they come in commonly accepted denominations and they are portable.
An exchange traded fund (ETF) may seem like a convenient way to buy gold. However, when you purchase an ETF, you own shares in the ETF, you don’t have physical possession of the gold. If you decide to purchase a gold ETF make sure the company has gold reserves to cover 100% of the investor deposits. Some of the largest ETFs have recently come under scrutiny for this issue. Finally, be cautious with investments in gold mutual funds, gold mining shares and ETFs that may become inaccessible in times of extreme market distress or collapse.
I am starting a new on-going feature that will provide money saving ideas. My goal is to contribute something on saving money about once a month. In the current economy we need all the help we can get. If you have any money saving ideas please send them to me and I’ll include them in the blog. I’ll start with a few ideas that have worked for me.
• Start shopping for clothing at consignment stores. I love good quality clothing but hate to pay the price. For years I’ve been meaning to stop by this cute little boutique on the west side of town and I finally did. Three hours later and two hundred dollars poorer, I walked out with what would have cost me at least $1000 in a regular retail store.
• Save your change. Do you have loose change all over your house and car? I started putting all my loose change in a jar and I had over a hundred dollars saved up in no time!
• Identify and focus on one or two problem areas. We all have areas in our lives where we spend too much. Mine is spending too much eating out. I am trying to focus on this area by keeping groceries in the house, taking breakfast and lunch to work, going to restaurants when they have special deals, sharing a meal and going to a nice restaurant and eating at the bar (same chef ).
• Lengthen the time between personal care appointments such as hair-cuts and manicures. I used to get my hair cut every 4-5 weeks. I found I could go about 6-8 weeks without any problem. Do some of your own personal care and limit that professional manicure or pedicure to once a month or to special occasions.
• Take the time to really shop around for airline tickets. We recently saved $400 per ticket by shopping around and checking numerous different possibilities. Take advantage of opportunities to get airline miles on your credit card. I have two cards that give me airline miles and I make a point to put all of my large purchases on a credit card to get the mileage credit.
Jane M. Young CFP, EA, CDFA
I have frequently been asked about the wisdom of investing in gold to hedge against inflation. Generally gold is not a great investment, it is commonly thought of as a doomsday investment. Gold is very risky and exceptionally volatile. The value of gold is based on what people are willing to pay. The market value of gold can be highly dependent on irrational emotions. Over long periods of time the return on gold has mirrored that of inflation resulting in a real return close to zero. The current price of gold is exceptionally high; it increased almost 60% over the three years ending in 2008. Additionally, the cost to acquire and sell gold can be prohibitive.
Recent increases in government spending make inflation a greater threat. A threat of inflation makes gold more appealing. Gold usually holds its value at times when other assets are losing their value. The demand for gold generally spikes in times of economic instability and inflation. If the government becomes unable to sell treasuries to cover significant increases in government spending it will resort to printing money. This will result in inflation. Historically, inflation has lead to higher gold prices.
If you decide to reinforce your portfolio with gold to guard against inflation or economic instability it should only represent a small percentage of your portfolio – generally 5% and no more than 15%.