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You’ve seen the headlines: U.S. Dollar Plunges! U.S. Dollar Surges!

Why should you care? More to the point, why won’t the dollar just hold still?

Actually, in one sense it does hold still. Whatever happens in the currency markets doesn’t change the number of dollars in your wallet — or your bank account. But it can certainly change what your dollars are worth in comparison to other currencies.

If you live in the U.S., the day-to-day swings in the dollar are nothing to worry about. The long-term downtrend in the dollar is another matter. Since the beginning of 2002, the U.S. Dollar Index has dropped more than 30 percent. That’s almost a third of your international purchasing power — gone!

Even worse, the Obama administration’s reckless spending — with the willing complicity of Bernanke’s Federal Reserve — threatens to send the dollar even lower in the coming years.

What can you do about it? Once again, ETFs come to the rescue!

ETFs Make Currency Trading Easy …

Investing in foreign currencies used to be difficult. Your choices were limited to trading risky futures, lining up at the currency exchange window at major airports, or bringing home some funny-looking bills and coins from your international vacation.

Now, thanks to ETFs, you can load up on euros, yen, pesos and pounds just as easily as you buy a stock. You can even go short in some of these currencies with inverse ETFs. So there’s no reason to keep all your eggs in the dollar basket any longer.

Of course, the fact that you can do something doesn’t mean you should do it. Always have a clear goal in mind before you trade any ETF, and make sure you understand the risks. And even if a trade makes sense for you, get started slowly.

For instance, suppose you just want to diversify your portfolio so you can have some protection from a falling dollar. If you don’t want to make a big bet on the dollar against any single currency, take a look at an ETF like the PowerShares DB U.S. Dollar Index Bearish Fund (UDN).

 

UDN gives you exposure to all the major world currencies.

UDN is designed to replicate a short position in an index that tracks the U.S. dollar against the euro, Japanese yen, British pound, Canadian dollar, Swedish krona and Swiss franc. In other words, UDN goes up as the U.S. dollar goes down against this basket of other major currencies.

Or you can take the opposite position with the PowerShares DB U.S. Dollar Index Bullish Fund (UUP). This one goes UP as the currencies mentioned above fall when measured against the greenback.

Maybe you have a strong feeling about the British pound. How can you turn your forecast into a profit opportunity? One simple way is buying CurrencyShares British Pound Sterling Trust (FXB), an ETF that holds a position in the United Kingdom’s currency.

Have a yen for the yen? CurrencyShares Japanese Yen (FXY) gives you a chance to profit when the yen is outpacing the dollar.

You can buy the British pound with FXB.

Lately, though, the opposite has been more often the case — the yen is one of only a few currencies weaker than the dollar in recent weeks. That ought to tell you something about Japan’s economy! So is there a way to profit if the yen drops?

You bet there is!

The ProShares UltraShort Yen (YCS) is a bearish yen fund. It’s also 2X leveraged so your gains are amplified if your bet is correct. For instance, if the yen drops 10 percent, this ETF’s shares stand to rise 20 percent. However, if you’re wrong, your losses can add up quickly. Therefore, timing your trades correctly is very critical.

I Want to Highlight One Other
Currency ETF Because It’s So Unique …

The PowerShares DB G10 Currency Harvest Fund (DBV) tracks an index that shifts exposure based on the yield of the ten top world currencies — the G10.

With DBV, you’ll have the equivalent of a long position in the three highest-yielding G10 currencies and a short position in the three lowest-yielding G10 currencies.

If you know anything about hedge funds, you probably recognize this as the so-called “carry trade.” Put simply, it’s borrowing at low interest rates and using the loan to buy higher yielding assets elsewhere. It was an easy way to make big bucks for years. But those managers had their heads handed to them in 2008.

Now it’s beginning to look like the carry trade may start to work again. If it does, DBV is an easy way for you to get access to the same strategy millionaire hedge fund investors are using.

There you have it: Six ETFs to help you get in on the world’s currency markets. However, more than two dozen other currency ETFs and ETNs are now available. Unfortunately I don’t have room here to give you the whole list, but they aren’t hard to find. Look around and you’ll see many ways to get out of the greenback — or bet on its recovery.

Best wishes,

Ron

 

This investment news is brought to you by Money and Markets. Money and Markets is a free daily investment newsletter from Martin D. Weiss and Weiss Research analysts offering the latest investing news and financial insights for the stock market, including tips and advice on investing in gold, energy and oil. Dr. Weiss is a leader in the fields of investing, interest rates, financial safety and economic forecasting. To view archives or subscribe, visit http://www.moneyandmarkets.com.

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There’s an individual who comments on The Simple Dollar (and a few other personal finance blogs) who identifies him- or herself as “Minimum Wage.” This person is singularly focused on the issues of low wage earners, and while his/her comments can be frustrating, sometimes Minimum Wage is really effective at pointing out how some advice simply isn’t appropriate for people in that situation. What good is portfolio advice to a minimum wage earner? What good does it do to talk about how to buy a $200K+ house when you’re making $7 an hour? Not much.

I know where Minimum Wage is coming from. I grew up in a household with a far below average income, and while we may have done all right for ourselves, I grew up around people who existed in true poverty. Thankfully, I was able to take advantage of the great opportunities that life offered me – and the great foundation that my parents gave me as a person – and was able to find a better, financially healthy life where I could raise my children without a regular sense of necessity underlying day to day life.

But what can a person do if they’re in Minimum Wage’s situation? Here are the ten things I would do if I found myself only able to earn minimum wage.

1. Go rural.
It is far, far easier to make a living on minimum wage in a rural situation. There are many small towns where you can find a room to rent for $100 a month and a small apartment to rent for $200 a month. Yes, these really exist – I see them fairly regularly when I get out in the more rural areas of Iowa. Even better, these areas often have lots of jobs for minimum wage workers – I see lots of help wanted signs around these towns and notices inside of town halls and gas stations looking for workers.

2. Don’t drive.
A car is a giant money suck. There’s no ifs, ands, or buts about it, if you’re working minimum wage, your car is killing you. Ditch the car – get whatever cash you can from it. Then choose a place to live where you can get to work by foot or by bicycle. In a small town, it’s pretty easy to reach any other place in the town (and many places in the nearby countryside) on foot or by bicycle, and it’s something that people often do to cut corners.

3. Find the free stuff.
In towns of any size, there are resources available for the impoverished, from free dinners at churches to food giveaways to soup kitchens. The library provides free entertainment in the forms of books, music, and internet access. There are parks, recreational activities, and countless other things even in the smallest of rural towns. Look around for the free stuff and use it – it’s there for everyone to utilize. When you must spend money, be as frugal as possible. Ramen is very cheap, filling, and full of carbs, for example.

4. Don’t be proud.
Pride often keeps people from walking into a soup kitchen. Don’t let it. That kind of pride is an obstacle ground into you by a life in a consumerist society. People who are there to help you want to help you stand on your own two feet – give them that opportunity. Look for every opportunity to help you with your situation, from consulting to WIC to Medicaid to welfare (regardless of my political feelings on it, it’s definitely a resource someone in that position should use). If you don’t know where to start, start off by asking a pastor or a clergyman for help.

5. Minimize your required commitments.
Repaying debts? Call the debtors and explain your situation and ask for an abatement. This won’t get rid of your debt, but it can minimize your requirements for the time being. If you have children that you simply can’t support, look for opportunities to help you with that burden – your family is a great place to start, for example. Don’t saddle yourself with burdens heavier than you can carry or you’ll do nothing but collapse. You don’t become strong by carrying 500 pounds of weight on your back – you become strong by learning how to carry ten pounds, then adding more as you go along.

6. Take every side opportunity you can.
There are all sorts of little opportunities to make more money if you pay attention. Doing things like helping someone shingle a roof for $10 an hour cash is an opportunity you can’t let pass by. Free meals? Take them. Twenty bucks for helping an old man clean out his garage? Do it. Ask around for odd jobs and other small-scale moneymaking opportunities – perhaps even get started on your own “handyman” business.

7. Minimize your possessions.
There are a lot of reasons for doing this. The biggest one is that the more stuff you have, the more money you’ve wasted. Also, fewer possessions mean that you need less room to live. For a while, all of my worldly possessions (clothes included) fit in a single Rubbermaid tub – and that made it extremely easy to actually live in someone’s living room for a while.

8. Make a steely commitment to succeed.
Even after you’ve done all of this, it still takes some serious commitment to make all of this work. You can get yourself in a position where you’re not spending more than you make, but it takes commitment to stay there. Remind yourself every day that you’re not going to waste money and that you’re going to spend less than you earn this week – and this month – and this year. That’s the one way you can get ahead.

9. Save automatically.
So what do you do when you are making more than you’re spending? Take that extra money and put it into a savings account. But just doing that every once in a while won’t cut it. Keep most of your money in a checking account, then go to the library and use the internet access there to set up an online savings account with a big bank, like ING or HSBC. Set up an automatic savings plan there to withdraw $10 a week from your main checking – or maybe even more. Then walk away and forget about it. What will happen? After a year, you’ll have $530 or so in the account. If you’ve put in more weekly, you’ll have even more.

10. Educate yourself.
While you’re putting yourself in a better financial place, spend your spare time educating yourself. Take classes at the nearest community college and work towards some kind of degree. If you need to, transfer to a state university – if you’ve been working on minimum wage for a long time and are actually making strong progress towards a degree, they will help you big time with paying for it. The key is getting started – see what your local community college has to offer.

One final tip: don’t give up the dream.
If you’re working a minimum wage job, either you’re very young, very lazy, or very unlucky. All of these can be overcome, but they take time and commitment and a lot of hard work. It’s very easy to give up the dream of a better life when you’re doing this. Don’t. You can succeed and you will succeed if you spend every day taking steps in the right direction. Surround yourself with people who are also fighting to go in the right direction. Don’t be resentful of people in a better situation than you – instead, use them as inspiration and realize that if you keep on the path, you’ll get there too.

Thanks to thesimpledollar.com

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A guest post by Mark J. Smith. Want to be a guest writer on Financial Dominance ? Contact Marcel

People may fail to properly plan for their retirement needs because they focus exclusively on money. Retirement goals aren’t just financial. Knowing the lifestyle you want during retirement is the beginning of a successful wealth management plan. Do you want to tour in an RV, live in a beach house, or move closer to your children and grandchildren during retirement? By starting at the beginning—writing down and sharing your retirement goals with your financial team—you will ensure a completely customized retirement savings plan.

With a retirement goal set you are now ready to determine funding and should consider the following factors:

• In the past thirty years the average life expectancy increased from 73 years old to nearly 80. (Center for Disease Control) We need to plan for seven more years of life than our grandparents did.
• The U.S. inflation has increased 2.57% in the last seven years. (Inflationdata.com) When you retire the cost of living will be higher and each subsequent year of your retirement will require more money to maintain the same lifestyle.
• You can’t depend on Social Security to sustain you during retirement–even for necessities. We recommend that your Social Security checks be used for things you want in retirement, not things you need.
• Delaying retirement savings could hurt you more than you think. If a 25- year-old saves $4,000 per year for 10 years and has an eight percent annual account interest rate, at age 65 her retirement account will total $640,120. Waiting until she is 35 years old and saving the same amount annually with the same interest rate for 30 years, her account will total $408,534 when she is 65. Waiting 10 years to start saving for retirement causes a loss of over $200,000 in this case, even though she saved for 20 extra years! This hypothetical illustration is not intended to reflect actual performance.
• Mortgage vs. savings – Because of the compounding nature of a liquid investment portfolio as compared to the equity in your home, you may ultimately net more money by increasing your savings first than you would if you chose to pay off your home and save afterward. We typically recommend that your net worth consist of approximately 25% in home equity and 75% in retirement savings. Of course, each person’s situation is different.
• Retirement cash flow is a major concern. Make a list of things you will need in retirement—housing, food, insurance, transportation and healthcare. Then make an additional list of things you want to have in retirement—a second home, entertainment or providing charitable donations. Fund at least some of the things you want, in addition to all of the things you need.

Other factors may contribute to a retirement age, including what investments you have made, the stability of your investments, and the sequence of your investment returns. Please contact a financial advisor if you have questions about your retirement planning.

Mark J. Smith CFP®, CPA/PFS, CIMA®, was named one of the top 10 financial advisors in the U.S. by Registered Rep magazine; named the top-ranked independent advisor in Colorado and number 22 in the U.S. by Barron’s; and the Winner’s Circle, an independent advocacy organization, named him one of the top financial planners in the country. Visit www.mj-smith.com for more information on Mark J. Smith and his Colorado-based firm. Securities offered through Raymond James Financial Services Inc. Member FINRA/SIPC.

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Our first article in 2008 is a guest post by Alex T. Roshuk. Want to be a guest writer on Financial Dominance ? Contact Marcel

Probate is the process of having your will accepted by a Probate or Surrogate Court so that the estate will be administered and all the claims and distributions on the estate will be settled. Without a Will this process is called the administration of an estate. In the first case the Will names the Executor or Executors who administer the property, in the second case the Administrator is set by statute, agreement of the heirs and the approval of the Court. This article deals with some of the problems with probate and, to a lesser extent, administration of estates and some suggestions on how to remove your assets from your estate to avoid these problems in certain cases.

The process of probate can be complex, long, and protracted. Needless to say, it can consume a sizeable percentage of the estate assets. While it’s important to consider drafting and executing a “Last Will and Testament“, before undertaking such an important step in one’s life, one should be made aware of other options that may conserve at least some of one’s assets in a more efficient manner.

Drafting and executing a Will is generally a fairly straightforward process but you need to make sure that the formalities in your jurisdiction are adhered to in the strictest manner possible. Why? Because protracted probate proceedings may occur whenever there is a deviation from these procedures or when individuals who have something to gain if a particular Will is not accepted for probate (i.e. the intestate heirs or distributees who may be receiving substantially less when a Will is written). Such errors may be used to drag the probate procedure on causing a lot of grief to your intended heirs and may result in your assets going to people you did not intend to give them to. Also remember that a Will is a valuable document like a check, you should never have old Wills circulating that have not been destroyed and make sure that they are properly tied (with a ribbon and seal). Never allow your lawyer to keep a “copy” of the Will unless this is mentioned in the Will itself and never sign more than one copy of any signature page when executing a Will (this may later lead to fraudulent Wills being created that are basically impossible to detect).

Problems with Probate
Probate lawyers may attempt to exacerbate animosity between distributees and testate heirs and sometimes the court may appoint “law guardians” to protect the interests of minors or parties under a disability (such as someone who has been institutionalized or in a coma). Such legal representatives are usually entitled to compensation from the estate corpus, i.e. your hard earned money going to pay lawyers you have never even met. Someone who feels slighted after your death because you have not given them their “due share” of your property may feel it necessary to fight for it in probate. They may accuse your heirs of over reaching, undue influence, duress or they may suggest that you were incapacitated when you planned or executed your Will or that your lawyer took advantage of you and convinced you to sign a Will that would benefit beneficiaries who were friendly with the lawyer. The originality of jilted heirs is boundless and some unscrupulous probate lawyers may take advantage of the situation as a means to secure their sizable fees.

What you can do
It may be possible to take some or even all of your assets out of your estate. The main vehicles for such an estate plan including holding property in “joint tenancy with right of survivorship” (JTRS) or making bonds, stocks or bank accounts POD (payable on death) to a beneficiary. JTRS means that the property is automatically transferred at the time of death of one of the “joint tenants” to the other remaining owners of the real property. Naming a beneficiary is also the common procedure with life insurance proceeds, retirement accounts and annuities. One only needs to make sure that the financial institution has listed a beneficiary or beneficiaries (it is also possible to name contingent beneficiaries this way). These funds will then be available to the beneficiaries as soon as a certified death certificate can be produced and delivered to the financial institution along with whatever other proof the institution needs in order to release the funds; such accounts do not enter into the estate of the decedent but pass directly at the time of death.

Unfortunately this is the way our legal system has been created and the rationale for Surrogate or Probate Court is that the court “system” is there to protect the interests of the departed. However unscrupulous individuals may attempt to use your death as an opportunity to benefit thereby and thus deprive you of your true intention to past your assets onto those whom have designated in a Last Will and Testament. Before deciding to put all your assets into a Will make sure you have considered all the options and spoken to an estate planner who has your – and your chosen heirs – best interests at heart. Remember there may be valid tax or liability reasons to place some of your property in an estate, but using the vehicles mentioned here may make it easier for your intended heirs to get some of your hard earned assets quickly and with a minimum of legal costs at a time when they will certainly need help.

By Alex T. Roshuk, Esq. (Remember, legal information is not legal advice, please seek legal representation before making any important decisions about your estate needs).

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The following guest post was submitted by glblguy from Gather Little by Little – A Christian Personal Finance Blog (RSS)

My boys mowed the yard the other night, and when they finished the whole front yard looked like a dust storm had gone through. What grass I have is crabgrass, the rest is mostly dirt with a few weeds and lots of completely yellow and dead grass. In the spring, it was a lucious green and completely full and thick.

Looking at our yard, my wife commented,”Why do we care about our yard so much? I am just tired of worrying about it.”

That got me thinking about how much time and money I put into my yard each spring and fall. In the spring I aireate, thatch, re-seed, fertilize and water. By May it’s beautiful, then the summer heat and drought kicks in. Within a few weeks the yard is yellowing, within a few more there is more dirt than dead grass. In just a few more large clumps of crabgrass are beginning to dominate.

Then comes September. I aireate, thatch, re-seed, fertilize and water (hmmmm, this is sounding familiar). By December the grass is dormant. Dormant is a fancy word for grass that looks dead but isn’t really.

A quick calculation of the cost each spring and fall:

• Grass Seed: $50.00
• Fertilizer: $50.00
• Aireate: $50.00
• Watering: $80.00 (for 3 months)

Total: $230.00 or $460.00 per year

Let’s assume for a few minutes that I live in my home for 20 years. Over the course of 20 years that works out to be $9,200.00. Placed into my 401k at a conservative 10% return for 20 years, it would be $10,865.00. This doesn’t even factor my time in which would inflate the numbers even further.

With that kind of money, I think my wife is right. I am tired of worrying about it, watching it grow then die just to grow and die again. Not to mention, $10,865.00 is a lot of money and frankly money I could use.

I think I’ll just leave the yard alone this fall and see how it does in the spring. I’ll keep you posted!

How much do you spend on your yard annually? Do you bother with it? Any suggestions for accomplishing the same thing more frugally? I’d love to hear your thoughts on the subject.

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The following guest post was submitted by Jaimie from I’ve Paid For This Twice Already… (RSS)

There are several recurring expenses that people have the option of paying by the month or paying in one lump sum every year. There is usually a fee associated with the monthly payment option, so it would seem on the surface that paying once a year would make the most financial sense. Although as a general rule this is true, it may not always be the case. The answer depends on many factors including what the total amount per year due is, what the fee is (calculated for the entire year) and also, what purposes that money would be serving over the course of the year if not paid in a lump sum.

To illustrate some real life scenarios for this I am going to take two such recurring payments in my own life – my life insurance premium and my auto insurance premium, and why, for us, it makes more sense to pay one of them on a yearly basis and one on a monthly basis, even though they both have the same yearly fee for monthly payments. And then illustrate a completely different scenario (the no fee for monthly payment type) with my son’s preschool tuition. It’s all about scope and scale and what other factors come into play.

First, my life insurance payment, the straightforward example. I pay $300/year for term life coverage for my spouse and I (number slightly rounded for simplicity) and if we choose to pay by the month instead we incur a $3.50 fee every month, so $42/year in fees. So if you look at that from an interest perspective, that is like charging 14% interest (42/300 x 100 = 14%) for the privilege of paying by the month. So if you can budget for it, pay the $300 once a year! Save yourself $42. There is no way you can safely and comfortably beat 14% year after year in any kind of short term investment. (Unless you owe high interest credit card debt. More on that below.)

Now, for my auto insurance payment. I have the option of paying $1000 at once annually (number slightly rounded again for simplicity) or about $84 per month, plus again a $3.50 fee per month for the latter option ($42/year, as before). Since my total due per year is $1000, you could, if looking at the fee in terms of “interest” charged on your total premium, treat this as if you are paying 4.2% in interest for the convenience of paying in monthly installments. Now…. what are you doing with the money if not paying it all at once to your insurance company? Assuming you have the money up front to pay, choosing to pay monthly instead and investing that money in a high yield online savings account at we’ll say 5% interest, you’d earn about $22 in interest (and it is taxable, so really, depending on your tax bracket, more like $15) because you have to pay a 12th of it out to the auto insurance company every month. So clearly, pay it all at once! But…. let’s deconstruct this issue a bit further before we move on. Because right now, that’s not what we are doing.

We are pretty significantly in debt. Instead of paying our auto insurance in one lump sum, but instead paying it month to month because this method frees up more money faster for us for debt reduction. Because our credit card debt has been at 9.9% interest, every dollar we put towards debt reduction is in effect giving us an instant 9.9% return. It is not the clear cut case of saving the money in a savings account and paying it out little by little, because the money we put towards debt reduction is then not available for our auto insurance premium at all. But allowing us to pay a smaller amount monthly vs one big lump payment allows us to put more money faster towards the credit card debt. So for now, it makes more sense for us to in effect pay a 4.2% interest rate on the auto insurance to pay down another 9.9% interest rate. It is all about the numbers.

Another case in which it may make sense to pay monthly vs yearly is when the total amount due yearly is very high and/or the fee is very small (or nonexistent). If there is no fee involved in stretching out the payments (like my son’s preschool tuition bill) there is no real reason to pay in advance at once. I sit his tuition money in our ING savings account at 4.5% interest and make the required payment every two months and earn interest on the balance since his school does not charge a fee for this payment structure. And in my above insurance scenarios, if you pay a $42/year fee for monthly vs yearly payments, there will be a tipping point where the amount you could sit in an interest-bearing savings account would earn more interest (minus taxes) than the fee assesed for paying monthly. This number may be rather high and it might not happen often in a practical sense, but it can happen. My insurance company for example, that monthly $3.50 service charge is the standard charge no matter what the total amount is, and many states have much higher insurance premiums than my state does. Insuring 2 cars in a no-fault state with high rates…. you may be looking at many thousands of dollars a year in payments and it may end up making financial sense to pay monthly, or at least, be a wash as far as interest paid vs interest earned.

So a simple on the face of it problem may actually be more complicated than you’d think. But in general, make sure you’re aware of what consequences your payment choices for your recurring bills hold, and choose wisely. We’d all like to save some money in the process.

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