Many ways to invest your money

This was originally published on Monday, September 25, 2017, in the Pacific Daily News.  Click here to subscribe to the PDN.

There are many types of investments and investing styles to choose. Which you choose depends on your goals. The best portfolio is a diverse one. Here are some investments that may interest you.

Bank products. Banks, credit unions and financial institutions usually provide the safest and most convenient investments. Savings accounts usually have a higher interest rates than a checking account. Money market accounts earn slightly more than a savings account and sometimes have a limit on withdrawals. Money Certificates and Certificates of Deposits earn more than your traditional savings account. These products are not risky and therefore do not earn a lot of interest.

Bonds. A bond is a loan you give to a government, a federal agency, corporation or other organization in exchange for interest payments over a term plus the original amount loaned. There are a wide variety of bonds. The most popular are Treasuries through the federal government. Some bonds fluctuate like the stock market. The risk of the bond depends on the type of bond.

Stocks. Stocks are a piece of ownership of a corporation. The money you make or lose depends on how well the company performs and the type of stock you own. Another factor is the how well the stock market performs.

Investment funds. Many investors pool their money with a specific strategy of how they will earn money. They can feature a wide variety of investment plans. Publicly offered funds must be registered with the Securities and Exchange Commission. These include mutual funds and exchanged-traded funds. Hedge funds are private and are usually exempt from registering with the SEC.

Annuities. An annuity is a contract between an insurance company and the investor. The insurance company makes periodical payments. The most common annuities are fixed and variable. They are usually tax-deferred but do have certain fees and expenses including high commissions.

Retirement. There are several ways to save for retirement and manage the income once you retire. The most popular are a 401(k) and the Individual Retirement Arrangements. Both offer tax benefits and compound your investment over time. Many larger companies offer retirement plans in which they match your contributions to a certain percentage.

Insurance. Life insurance products should be included in a financial plan. There are many forms and variations. They are usually used to meet a specific goal as you age and can be quite complex. Some of the most popular are term life, whole life, and universal life.

Real estate. Buying real estate as an investment has grown in popularity. Turn to any home improvement channel and you will find numerous shows on flipping property. Depending on the rental or selling market it can be quite lucrative. Renting real estate can be quite labor intensive and may require a security net between renters if you have a mortgage to pay on the property.

Michael Camacho is president and chief executive officer of Personal Finance Center. He has more than 20 years of experience in retail banking and at financial institutions in Guam and Hawaii. If there is a topic you’d like Michael to cover, please email him at moneymattersguam@yahoo.com and read past columns at the Money Matters blog at www.moneymattersguam.wordpress.com.

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Save money on transportation costs

This was originally published on Monday, January 23, 2017, in the Pacific Daily News.  Click here to subscribe to the PDN.

When it comes to saving, every little bit counts. But when you are on a tight budget, sometimes finding that little bit can be difficult.

The second-largest purchase for most is your vehicle. Owning and operating your vehicle also accounts for the second-largest expense. The model budget suggests that 15 percent to 20 percent of your budget should be dedicated to transportation. This includes your car loan, insurance, fuel and maintenance.

Here are some tips for saving on transportation costs.

  • Drive sensibly. Hard braking, rapid acceleration and speeding are the quickest way to waste fuel. The Department of Energy’s website states aggressive driving can lower your gas efficiency by 33 percent. Over time, you will save hundreds of dollars on fuel and maintenance costs.
  • Regular servicing. Take your vehicle in for routine checkups. Change your oil at the manufacturer’s suggested times. Rotate tires as needed and keep the engine tuned. Keep tires inflated to the proper pressure. Doing these simple tasks can save hundreds over the year.  Preventive maintenance also gives your mechanic a chance to inform you of any potential issues you may need to address before it becomes a serious problem and costs more to repair.  Purchase a tire pressure gauge and check your pressure once a month. Inspect your tires when you check your pressure. Look for uneven wear, low tread or items stuck in the tire. Improperly inflated or over-worn tires don’t just lower your fuel mileage, it can also lead to flat tires or blowouts.
  • Don’t idle. We all know it is hot on Guam, but letting your vehicle idle while waiting for someone to “just run in and out” can eat up your fuel. It’s much more sensible to shut your vehicle off and start it back up when you are ready to leave.
  • Air your car out. Getting into a hot car and turning the air conditioner on right away doesn’t allow for the heat to escape. Instead, the air conditioner must work harder to remove the heat and cool the car. A hard-working air conditioner uses more fuel. Save some money by driving a little while the car cools off before turning on the air conditioner.
  • Use the correct motor oil. Read your owner’s manual and use the recommended grade motor oil. The incorrect motor oil can increase the friction in the engine causing it to work harder. Look for the motor oil that reads “energy conserving” on the label.
  • Teenage drivers. If you have a teenager who earns good grades, they may be able to qualify for a discount on your car insurance. Insurers see good grades as a measurement of responsibility.
  • Do-it-yourself. If you are good with your hands, consider doing minor car repairs. The internet is full of tutorial videos that can walk you through changing wiper blades, lights, fuses and other small maintenance necessities. Even changing your own oil can save you money. If you aren’t sure how, ask your friends or family if they are knowledgeable on minor car repairs.
  • Car parts. Car parts are quite expensive. If the part isn’t available here, ask your mechanic what part number is needed and look for the item online. You’ll be surprised at the difference in prices. If they don’t ship to Guam, ask a friend or family member in the U.S. mainland, send the part to them. They can then forward it to you.

Michael Camacho is president and chief executive officer of Personal Finance Center. He has more than 20 years of experience in retail banking and at financial institutions in Guam and Hawaii. If there is a topic you’d like Michael to cover, please email him at moneymattersguam@yahoo.com and read past columns at the Money Matters blog at www.moneymattersguam.wordpress.com

Small things can give big savings

This was originally published on Monday, January 16, 2017, in the Pacific Daily News.  Click here to subscribe to the PDN.

When your budget is tight, it’s hard finding ways to save. Sometimes, the simplest little tips can make a huge difference.

Start your new year off right and start saving money. To start, switch your thoughts from being a spender to being a saver. Through practice and persistence eventually saving will become natural and yield long-term results.

  • Pay for what you need. It is normal to want to live comfortably but rent or purchase a home that is within your price range. Paying for extra space is not practical.
  • Refinance your mortgage. Take advantage of lower interest rates. If you lower your percentage even by half a percent, you can save thousands of dollars over the life of the loan. If you have a $100,000 fixed mortgage for 15 years and change the interest from 7 percent to 6.5 percent, you can save $5,000 in interest charges. If you can handle higher payments, consider a 15-year mortgage versus a 30-year. Let’s say that same $100,000 at 7 percent is for 30 years. If you convert it to a 15-year mortgage, you can save more than $75,000. If refinancing costs will exceed the savings, keep your existing mortgage and pay more every month. This effectively results in savings as well.
  • Insurance. If you rent a home, be sure you purchase renters’ insurance. Know what you are covered for and pay only for what you need. Ask about discounts for which you may be eligible. Bundling your car, home and life insurance can also reduce your bill.
  • Weatherproof your home. Evaluate your home for holes and cracks that let warm air in and cool air escape. Talk to your local hardware representative for the best types of materials to plug the areas of concern. Spending a little more on the best grade material will save you more.
  • Window treatments. Living on Guam, we receive a lot of sun, which heats our homes. Purchase window treatments that block the sunlight and keep the house cool. Consider tinting your windows to keep UV rays out of your house as well. Many residents use their storm shutters not only for storm protection but to keep the sunlight out too.
  • Plant trees. If you put in trees on the sides that are most exposed to the sun, the shade they provide will keep the house cool.
  • Roof coating. There are all sorts of different roof coatings. When recoating your roof, choose one with good reflective properties and that’s guaranteed to last long. Keep your roof white by water blasting periodically.
  • Convert lightbulbs. Old incandescent lights may cost less to replace but overall they consume much more power and also create heat. Slowly convert your lightbulbs to CFL or LED .
  • Conserve water. Inspect your home for leaks and drips. Pay attention to the sound of running water, especially when no one is using water. Water leaks can become serious problems if not fixed immediately.
  • Cable, phone and internet. Pay only for what you need. If you hardly spend time at home, you probably don’t need all the premium channels. Many of the popular channels now have apps to watch on your computer, smartphone and tablet. If you call the U.S. mainland or other countries frequently, check with your provider to see if they have calling plans. Bundled plans are also a good way to save money.

Michael Camacho is president and chief executive officer of Personal Finance Center. He has more than 20 years of experience in retail banking and at financial institutions in Guam and Hawaii. If there is a topic you’d like Michael to cover, please email him at moneymattersguam@yahoo.com and read past columns at the Money Matters blog at www.moneymattersguam.wordpress.com

Tips for buying your first car

This was originally published on Monday, September 19 ,2016 in the Pacific Daily News.  Click here to subscribe to the PDN.

Q:  I am about to buy my first car.  My credit score is good and I have money to make a down payment. Do you have any tips for a first-time buyer?

A:  Buying your first car is a huge event and a moment you will never forget.  It can be quite daunting with all the choices that are out in the market. Although you are eager to purchase a car, take some time to really make a sound decision and get the best deal.

  • Research. There are many choices in the market. Decide what is going to fit your lifestyle. If you are single, do you need a seven-passenger vehicle? Look for vehicles that are in your price range. There are many websites that you can go to research the type of vehicle you want. Find out how happy people are with past models. Does the company have a good safety record? Visit several different dealerships and test drive a few cars that you are interested in. Don’t be afraid to ask questions.
  • Prefinance. You can obtain financing from the car dealership but the interest rates are generally higher than most financial institutions. Start with your financial institution and see how much they are willing to lend you. It is best to find out what they think you can afford versus finding a vehicle you really want and not being able to be approved for the amount to purchase it.
  • Negotiate. Don’t be afraid to put a number out there. You may start off lower than what you want to pay and work your way up. Sometimes you can get a few extra amenities added for the same price. Purchasing a car is an investment you will be paying off for the next few years.  The less you have to pay, the better.  Negotiate on the base price of the car and not monthly payments. Review exactly what is being offered in the price. If you don’t need heated seats, don’t pay for them.  Know the full purchase price which may include processing fees, taxes, delivery fee and registration, just to name a few.
  • New or used. While you are at the dealership looking at new cars, take a look at some of the used vehicles. Ask the salesperson to see some of the cars they used for the showroom and test drive last year’s models. These gently used vehicles have low mileage and are still in excellent condition.
  • Insurance. Don’t forget to factor that you will have to pay insurance on your new vehicle. Go to your insurance company and ask them for a quote on the vehicle you have chosen. Add that into your purchase price and monthly payments. Don’t forget to ask if they have bundled packages with your other insurance. You may be able to get a discount.
  • Extended warranty. Generally, new cars come with a manufacturer’s warranty for a certain amount of time or miles. Dealerships offer an extended warranty. These warranties can be costly. Be sure to read through what is exactly covered in the extended warranty. If you do choose to purchase it, do not use your loan to pay for it. You do not want to be paying interest on your warranty. Start putting money aside to help with maintenance and repair costs.
  • Maintenance costs and fuel efficiency.  Estimate the maintenance costs, such as oil changes, and also factor in an estimate for fuel costs. These are things people tend to forget when they are looking for their first car.

Michael Camacho is president and chief executive officer of Personal Finance Center. He has more than 20 years of experience in retail banking and at financial institutions in Guam and Hawaii. If there is a topic you’d like Michael to cover, please email him at moneymattersguam@yahoo.com and read past columns at the Money Matters blog at www.moneymattersguam.wordpress.com

Preparing a financial disaster kit

This was originally published on Monday, August 22 ,2016 in the Pacific Daily News.  Click here to subscribe to the PDN.

Life’s emergency situations can happen at any moment. Advanced preparation and planning can ease the stress that comes with a disaster. A financial disaster kit can make the process of recovering less stressful. A well-crafted kit contains information necessary to assist in the recovery process and is based solely on your household’s situation.

  • Income. In case your income is disrupted by the disaster, having proof of your income will be needed if you apply for assistance. Include pay stubs or Leave Earning Statements that reflect your current pay as well as anyone else in your household that is employed. If you receive Social Security, veterans benefits, housing or food assistance, or any other government benefits, include information on how much you receive. Include paperwork showing income received from alimony and child support received as well.
  • Financial assets. Many people today do their banking online or on their smartphones. Although this can make life easier under normal life conditions, once disaster strikes we will lose many of our modern conveniences. Keep a current copy of your bank or credit union statements as well as your credit card statements. Having these documents on hand can prove that you have an account at that financial institution. Do the same for your retirement and investment accounts. Include a copy of your vehicle registration and ownership papers.
  • Financial obligations. Make copies of your monthly bills. Your utility bills such as power and water can be extra proof of where you reside. Include statements from all your financial obligations such as your credit cards and loans. The documents should have the name of the financial institution, the account number, and contact information. Make copies of your credit cards front and back. Include copies of your car, student and other loans in your kit. If you pay alimony or child support include a copy of your payment agreement.
  • Insurance policies. After a disaster this is probably one of the most important documents you should have ready and on hand. Before a disaster, be sure to review your documents and that you have adequate coverage. If you are unsure of your coverage, visit your insurance company. Keep copies of your current homeowners or renters, auto, and life insurance policies. You may want to include recent photos of your home, high valued items within your home, and your vehicles(s). These pictures can be on a CD, thumb drive, or some other portable device that will not take up much room in your kit.
  • Tax information. Some financial loans request that you have tax information for the past three years. Keep copies of your federal and/or state taxes for at least the past three years in your financial disaster kit. Include the most recent property tax information as well.
  • Estate. A finance disaster kit should cover even the worst case scenario. Keep a copy of your will or trust in your kit. Your spouse should as well. Having a trust will keep your assets from going through probate, and having a trust or a will may reduce family conflict, and reduce some the stress of dealing with a disaster and the loss of a loved one. If you become injured or incapacitated, your power of attorneys will give someone you trust the ability to work on your behalf.

Michael Camacho is president and chief executive officer of Personal Finance Center. He has more than 20 years of experience in retail banking and at financial institutions in Guam and Hawaii. If there is a topic you’d like Michael to cover, please email him at moneymattersguam@yahoo.com and read past columns at the Money Matters blog at www.moneymattersguam.wordpress.com.

As the New Year approaches, it’s time to reflect

This was originally published on Monday,December 9, 2013, in the Pacific Daily News.  Click here to subscribe to the PDN.

As the holidays are upon us and another calendar year will soon pass, it is time to start evaluating your investments and overall financial goals.

Did you meet your 2013 financial resolution goals? Are there areas you wish to improve on? Evaluating your successes and detecting areas you need to work harder on will help you set goals for 2014.

Here are a few things you may want to review:

Retirement assets. Is your risk assessment and time horizon in line with where they need to be? Whether you are about to retire or long way off, you need to make adjustments periodically.

Review your contributions; are you putting all you can into your 401(k)? If your company matches your contributions, are you at least putting that much in? There is no better way to double your money. If you are not maximizing your contributions, can you afford to put more in next year?

Switching your traditional IRA to a Roth IRA may be something you would like to consider. A Roth IRA has some benefits such as the potential to grow tax-free. Review your beneficiaries’ information, especially if there has been a major life event in the past year such as birth, death, marriage or divorce. If you are not investing for your retirement, it is never too late to start.

Income taxes. Whether we want to face it or not, April 15 is only four months away. Start getting organized now. Look for those past paystubs, receipts and other supporting documents. It is not too late to make adjustments to minimize your tax bill.

If you’ve made energy-efficient renovations to your home or added energy-efficient appliances, had uninsured medical expenses, opened a Health Savings Account or funded college expenses for your child or grandchild, visit the Internal Revenue Service website, www.irs.gov, for possible deductions or credits.

Don’t forget to keep record of charitable contributions, especially this time of the year.

If you had an increase in income this year, be prepared for the possibility of paying more; now is the time to start saving.

Visiting a tax preparer and discussing your situation can prepare you for what is ahead.

Car insurance. Check your policy to see if all your drivers are covered, especially if you are adding a new teenage driver.

Check that your vehicle information is correct. If you paid off your vehicle or your vehicle is getting on in years, talk to your agent about downsizing your policy.

If you had to process a claim this year, make sure that your paperwork has been properly filled and all payments have been made. If your income has changed, you may want to make adjustments to your policy as well. You may also consider shopping for a new policy that can save you money.

Home insurance. If you extended or made renovations to your home, you will need to update your home insurance to reflect those changes.

Reevaluate your belongings to check if your coverage properly covers the contents of your home.

If you moved or are planning to move, change your insurance to cover your new home.

Michael Camacho is president and chief executive officer of Personal Finance Center. He has more than 20 years of experience in retail banking and at financial institutions in Guam and Hawaii. If there is a topic you’d like Michael to cover, please email him at  moneymattersguam@yahoo.com and read past columns at the Money Matters blog at www.moneymattersguam.wordpress.com.

Moving’s expensive, but you can be prepared

This was originally published on Monday,October 28, 2013, in the Pacific Daily News.  Click here to subscribe to the PDN.

Question: I recently received a job offer off island and I am planning on moving. Do you have any tips on making this move a smooth financial transition?

Answer: Congratulations on your new job. Moving is never easy and always financially draining. There are many things to consider. The first step should be getting organized, especially with your financial records. Because it’s a professional move there are some expenses that you may claim come tax time. You may also want to create a calendar of dates and deadlines, a to-do list, and a binder that you can hand-carry that contains all the paperwork you will gain during the process.

There are several things you may need to consider.

• Create a budget. This may be difficult, as you may not know what to expect. You will need to start researching the cost of living of the new area. How much does an apartment/home cost to rent or buy? What is the average utility bill? You will need some cushioning in case you run into an unexpected cost.

• Negotiate. It’s OK to talk to your new employer if the company will be helping with any relocation costs. Some companies pay for these and you may be surprised how flexible some companies are willing to be if you ask.

• Banking. Check with your bank if there is a branch at your new location. You may have to open an account at a local bank in the area. Check with your current bank if there are any transition fees or penalties.

• Property insurance. If you are moving your household goods or car, you may need to consider extra insurance to cover your belongings. Having the right amount of insurance could help keep a huge disaster to a mere nuisance.

• Realtor or no realtor? This is a decision you may have to make on both ends. If you are planning to sell or rent your home, it will be very helpful and less stress to get professional help. You may also require a realtor at your new destination. A realtor can give you the ins and outs of an area. Decide how much you can afford for a realtor.

• Medical insurance. Will your insurance cover you at your new location? You may have to purchase another plan. Let your insurance company know of your move and do not cancel your coverage until you reach your destination. You may never know what happens while you are in transit.

• Your retirement plan. Talk to your current human resource manager about transferring your retirement plan. Will there be a fee or taxes to pay? Can your plan be transferred?

• Vehicle(s). Do you plan on taking your car with you? Shipping a car is dependent on how much your car weighs. If you’re currently paying on your vehicle, can you sell your car to cover the remaining balance? If your car is paid, do you want to start another loan? Is there reliable public transportation at your new destination?

Michael Camacho is president and chief executive officer of Personal Finance Center. He has more than 20 years of experience in retail banking and at financial institutions in Guam and Hawaii. If there is a topic you’d like Michael to cover, please email him at moneymattersguam@yahoo.com and read past columns at the Money Matters blog at www.moneymattersguam.wordpress.com