Top 10 Personal Finance Myths

Unfortunately, one of the factors that will prevent many people from becoming financially successful is their own false beliefs about money and their personal finances. Take a look at my top 10 money myths, and hopefully you can avoid the consequences of believing in them.1. If I get a raise that bumps me into a higher tax bracket, I’ll actually take home less money.
Buzz – WRONG! Moving into a higher tax bracket only increases the rate of tax paid on the last dollars you earn. For example, let’s say you’re filing single, your old salary was $40,000 a year and your new salary is $43,000 a year. According to the Canada Revenue Agency’s 2010 federal tax rate schedules, when your salary was $40,000, your federal marginal tax rate was 15% and now with a salary of $43,000, your marginal tax rate is now 22%.The key to unlocking this personal finance myth is the definition of the word “marginal.” In this situation, your first $40,970 of income is still taxed the same way it was before you got your raise. With a $40,000 income, your take-home pay was $34,000 ($40,000 less 15% in federal tax). If you make $43,000, you will take home after federal tax a total of $36,407.90. This is because it is only the extra $2,030 above $40,970 which is taxed at the 22% – not the whole $43,000.2. Renting is like throwing away money.
Do you consider the money you spend on food to be thrown away? Or, how about the money you spend on gas? Both of these expenses are for items you purchase regularly that get consumed and on the surface they appear to have no lasting value, but they are ultimately necessary to carry about daily activities (unless you can walk or take the transit everywhere). Rent money falls into the same category.Even if you own a home, you still have to “throw away” money on expenses like property taxes and mortgage interest (and likely more than you were throwing away in rent). In fact, for the first five years, you are basically paying all interest on your mortgage. For example, on a 25-year, $300,000 mortgage at 5% interest, your first 60 payments would total about $105,000. Of that you “throw away” about $71,000 on interest payments and you only put $34,000 into equity of your home.3. You always get what you pay for.
Higher-priced items are not always higher quality. While there is sometimes a correlation between price and quality, it is not necessarily a exact correlation. A $2 chocolate bar may be tastier than a $1 bar, but a $10 bar may not taste significantly different from a $2 bar. When determining an item’s true value, look past its price tag and examine the true indicators of value. Does that generic Tylenol stop your headache? Is that home well-maintained and located in a good neighborhood? When doing a proper analysis, you’ll know when paying the higher price is worth it or alternatively, when it isn’t (and you’ll be on your way to understanding the principles of value investing).4. I don’t have enough money to start investing.
It’s true that some brokerage firms require you to have a minimum amount of money to invest in certain mutual funds or even to open an account. The truth is, it is easy to start investing with very little money thanks to online savings accounts. While traditional bank savings accounts generally offer interest rates so low that you would barely notice the interest you accrue, an online savings account will offer a more competitive rate based on how the market is currently doing. As of April 2010, it is common to find online banks offering 1-2% interest. With recent news that interest rates in Canada will be going up, we could be in the 3% range within a year or so. A 3% return is a pretty good return on your low-risk savings account investment when you consider that stocks historically return an average of 7-10% annually. Also, some online savings accounts can be opened with as little as $1. Once you’re in a position to start investing in stocks and mutual funds, you can transfer cash out of your online savings account and into your new brokerage account.Alternately, you could open a brokerage account with minimal funds through one of the online trading companies that have cropped up. However, this may not be the best way to start investing because of the fees you’ll pay each time you purchase or redeem shares (generally $10 – $30 per trade).5. Carrying a balance on my credit card will improve my credit rating.
Carrying a balance and paying it off slowly does not prove your credit worthiness. All this will do is take money out of your pocket and give it to a credit card company in the form of interest payments.If you want to use a credit card as a tool to improve your credit score, all you really need to do is pay off your balance in full and on time every month. If you want to take it a step further, do not charge more than a small percentage of your card’s limit because the amount of available credit you have used is another factor involved in the calculation of your credit score.6. Home ownership is always the best way to invest your money.
Just like all other investments, home ownership involves the risk that your investment may decrease in value. While commonly cited stats say that housing appreciates at somewhere between the rate of inflation and 5% per year, if not more, not all housing will appreciate at this rate. Owning a home is a major responsibility and there are easier ways to invest your money, so don’t buy a home unless you are attracted to its other benefits.Another factor is the psychological element – I once heard a partner of a large accounting firm say that he credits much of his wealth to the fact that his mortgage payment is “forced savings.” So, that’s true.. if you don’t think you have the discipline to invest the money you save from not having a mortgage… you’re probably not going to be better off financially.7. “I’ll save more later when I make much more money.”
That’s just another excuse for not saving, in fact, that’s a really lame excuse. Claiming that a higher income will be your source to good financial habits, is simply lame. You can need to take control of your own finances, now… not later.8. The stock market is tanking, so I should sell my investments and get out npw before things get any worse.
When the stock market goes down, you should really keep your money in the market. This way, you can ride out the dip and eventually sell at a profit. In fact, stock market lows are a great time to invest even more. Many seasoned investors consider a decline in the market to be a “sale” and take advantage of the opportunity to pick up some valuable investments that are only experiencing a temporary dip. You might want to do some reading on Benjamin Graham or Warren Buffet – who are both proponents of this method. A common expression out of Buffet’s mouth is “Be fearful when others are greedy and greedy when others are fearful”.9. Timing the market is easy
You always hear successful stories of those who have timed the market and have made fortunes. We rarely hear of the thousands who time the market but lose fortunes. Studies and reports show that marketing timing does not work for 95% of us, unless you have money to burn, don’t try to time the markets.10. I’m young – I don’t need to worry about saving for retirement yet… or, I’m old – it’s too late for me to start saving for retirement.
The younger you are, the more years of compound interest you have ahead of you. Compound interest is like free money, so why not take advantage of it? Someone who starts saving and earning interest when they are young won’t need to deposit as much money to end up with the same amount as someone who starts saving later in life, all else being equal.On the flip side, you shouldn’t worry if you’re older and you haven’t started saving yet. Of course, your $100,000 nest egg may not grow to as much as a 20-year-old’s by the time you need to use it, but just because you may not be able to turn it into $1 million doesn’t mean you shouldn’t try at all. Every extra dollar you invest will get you closer to your goals. Even if you’re near retirement age, you won’t need your entire nest egg the moment you hit 65. You can still put money away now and make a considerable sum by the time you need it at 70, 80 or 90.

US Markets in green on Friday; Dow 30 up over 345 points, Nasdaq Composite, S&P 500 up nearly 1%

US Markets were trading in the green on Friday with Dow 30 trading at 30,678.80, up by 1.14%. While S&P 500 was trading at 3,701.66, up by 0.98% and Nasdaq Composite 10,690.60 was also up by 0.71 per cent

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US Markets in green on Friday; Dow 30 up over 345 points, Nasdaq Composite, S&P 500 up nearly 1%
Earlier today, Indian stock markets ended the week on a winning note. It was the sixth straight gains for equity markets. Source: Reuters
US Markets were trading in the green on Friday with Dow 30 trading at 30,678.80, up by 345.25 points or1.14 per cent. While S&P 500 was trading at 3,701.66, up by 35.88 points or 0.98 per cent and Nasdaq Composite 10,690.60 was also up 75.75 points or 0.71 per cent. A Reuters report said that today’s strength was on the back of a report which said the Federal Reserve will likely debate on signaling plans for a smaller interest rate hike in December, reversing declines set off by social media firms after Snap Inc’s ad warning.

Source: Comex

Nasdaq Top Gainers and Losers

Source: Nasdaq

Earlier today, Indian stock markets ended the week on a winning note. It was the sixth straight gains for equity markets. The BSE Sensex ended at 59,307.15, up by 104.25 points or 0.18 per cent from the Thursday closing level. Meanwhile, the Nifty50 index closed at 17,590.00, higher by 26.05 points or 0.15 per cent. In the 30-share Sensex, 13 stocks gained while the remaining 17 ended on the losing side. In the 50-stock Nifty50, 21 stocks advanced while 29 declined.

SPDN: An Inexpensive Way To Profit When The S&P 500 Falls

Summary
SPDN is not the largest or oldest way to short the S&P 500, but it’s a solid choice.
This ETF uses a variety of financial instruments to target a return opposite that of the S&P 500 Index.
SPDN’s 0.49% Expense Ratio is nearly half that of the larger, longer-tenured -1x Inverse S&P 500 ETF.
Details aside, the potential continuation of the equity bear market makes single-inverse ETFs an investment segment investor should be familiar with.
We rate SPDN a Strong Buy because we believe the risks of a continued bear market greatly outweigh the possibility of a quick return to a bull market.
Put a gear stick into R position, (Reverse).
Birdlkportfolio

By Rob Isbitts

Summary
The S&P 500 is in a bear market, and we don’t see a quick-fix. Many investors assume the only way to navigate a potentially long-term bear market is to hide in cash, day-trade or “just hang in there” while the bear takes their retirement nest egg.

The Direxion Daily S&P 500® Bear 1X ETF (NYSEARCA:SPDN) is one of a class of single-inverse ETFs that allow investors to profit from down moves in the stock market.

SPDN is an unleveraged, liquid, low-cost way to either try to hedge an equity portfolio, profit from a decline in the S&P 500, or both. We rate it a Strong Buy, given our concern about the intermediate-term outlook for the global equity market.

Strategy
SPDN keeps it simple. If the S&P 500 goes up by X%, it should go down by X%. The opposite is also expected.

Proprietary ETF Grades
Offense/Defense: Defense

Segment: Inverse Equity

Sub-Segment: Inverse S&P 500

Correlation (vs. S&P 500): Very High (inverse)

Expected Volatility (vs. S&P 500): Similar (but opposite)

Holding Analysis
SPDN does not rely on shorting individual stocks in the S&P 500. Instead, the managers typically use a combination of futures, swaps and other derivative instruments to create a portfolio that consistently aims to deliver the opposite of what the S&P 500 does.

Strengths
SPDN is a fairly “no-frills” way to do what many investors probably wished they could do during the first 9 months of 2022 and in past bear markets: find something that goes up when the “market” goes down. After all, bonds are not the answer they used to be, commodities like gold have, shall we say, lost their luster. And moving to cash creates the issue of making two correct timing decisions, when to get in and when to get out. SPDN and its single-inverse ETF brethren offer a liquid tool to use in a variety of ways, depending on what a particular investor wants to achieve.

Weaknesses
The weakness of any inverse ETF is that it does the opposite of what the market does, when the market goes up. So, even in bear markets when the broader market trend is down, sharp bear market rallies (or any rallies for that matter) in the S&P 500 will cause SPDN to drop as much as the market goes up.

Opportunities
While inverse ETFs have a reputation in some circles as nothing more than day-trading vehicles, our own experience with them is, pardon the pun, exactly the opposite! We encourage investors to try to better-understand single inverse ETFs like SPDN. While traders tend to gravitate to leveraged inverse ETFs (which actually are day-trading tools), we believe that in an extended bear market, SPDN and its ilk could be a game-saver for many portfolios.

Threats
SPDN and most other single inverse ETFs are vulnerable to a sustained rise in the price of the index it aims to deliver the inverse of. But that threat of loss in a rising market means that when an investor considers SPDN, they should also have a game plan for how and when they will deploy this unique portfolio weapon.

Proprietary Technical Ratings
Short-Term Rating (next 3 months): Strong Buy

Long-Term Rating (next 12 months): Buy

Conclusions
ETF Quality Opinion
SPDN does what it aims to do, and has done so for over 6 years now. For a while, it was largely-ignored, given the existence of a similar ETF that has been around much longer. But the more tenured SPDN has become, the more attractive it looks as an alternative.

ETF Investment Opinion

SPDN is rated Strong Buy because the S&P 500 continues to look as vulnerable to further decline. And, while the market bottomed in mid-June, rallied, then waffled since that time, our proprietary macro market indicators all point to much greater risk of a major decline from this level than a fast return to bull market glory. Thus, SPDN is at best a way to exploit and attack the bear, and at worst a hedge on an otherwise equity-laden portfolio.