Tuesday, October 24, 2006

Money Mag/CNN's Rules to Grow Rich By...

An interesting tool to flip through for some general lifetime financial tips. Some are worthwhile tips while others are not exactly brain surgery....

1. For return on investment, the best home renovation is to upgrade an old bathroom. Kitchens come in second.

The return on investment on a mid-range bath modernization is 102% of its cost. Kitchens can add about 90% of their costs to the home's value.

So in summary, for every $1 you spend on your bathroom expect to get $1.02 back. Thank you very little. I'll put that $1 in the bank and get $1.05 back this year without having to sell my house.

3. Spend no more than 2 1/2 times your income on a home. For a down payment, it's best to come up with at least 20%.

Many buyers in recent years have stretched the limits of affordability, and have bypassed the traditional 20% down model.

This should be law. If you make $200k/yr you have no business buying a million dollar house.

5. Never hire a roofer, driveway paver or chimney sweep who is going door to door.

Huh? Do people still go door-to-door? If you need financial advice like this you have bigger problems in life than worrying about how you are going to retire rich.

11. If you don't understand how an investment works, don't buy it.

This is particularly true of insurance products which tend to be aggressively pushed locally. Buy 1 S&P Index Fund and 1 Bond fund and forget it.

22. Resist the urge to buy the latest computer or other gadget as soon as it comes out. Wait three months and the price will be lower.

Better yet wait a year or two and the price will plummet. You will be able to get a fully loaded laptop this xmas for $399. 37" Flat screens will be $999. 4GB MP3 players are under $80. Wait and spend the extra $$$ on that new bathroom :)

25. When you shop for electronics, don't pay for an extended warranty. One exception: It's a laptop and the warranty is from the manufacturer.

I'd even exclude laptops. If you spend $400 on a great laptop from HP it's not worth it to give BestBuy $150 for a warranty. If the laptop fails in 3 yrs go buy a new one when the price point is $199.

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