Paul’s Thoughts on Car Shopping Extras

For a decent amount of people, buying a car can be tons of fun from the test drives to the smell of the new car experience. But the one part that most dread is the hassle of the car salesman’s pitch on the expensive extras that most people really don’t need.

Fabric protection is one of the classic features that salesmen try to push to families with little kids. It’s supposedly a “must-have,” as the salesperson will look to the mom and dad shaking his head trying to convince the family it’s worth it. If you are buying fabric protection because you have kids, you are likely buying the wrong vehicle — kids will mess up almost every car you buy (go to the beach or do anything adventurous outdoors, or simply buy some McDonald’s drive-thru and you’ll see what I mean).

Another popular extra is rust-proofing, which is actually a decent idea if you are planning to drive along the beach. However, salt and sand from the roads in the winter will not be much of an issue unless you plan to hold the vehicle for a long time.

Lastly, car warranties are mostly a waste of money, unless you are buying a car that tends to have mechanical issues. Do your homework and check out some of the latest car buyers’ guides to see how the reliability ratings are for the vehicles you are interested in. Most people don’t hold on to their cars long enough to get their bang for the buck.

Instead, use the money you would have spent on these items to invest into income-producing dividend-paying stocks!

Paul Rubillo is the founder and CEO of Dividend.com.

Be sure to visit our complete recommended list of the Best Dividend Stocks, as well as a detailed explanation of our ratings system here.

The Foundations of a Good Financial Plan

Everyone hears the common direction of investors needing a plan to be able to build the foundation for their objectives. Let’s take a look at the basics of what any financial plan should entail.

First of all, you must have ultimate goals in order to put together a financial map to follow. Understand your risk profile and where you are in life, in relation to what the top-line goals are. For example, if you are afraid to take much risk, you will likely be less exposed to stocks.

The key thing to remember about a financial plan is to be flexible — your life changes, and so should your plan. There is no reason to roll the dice if you’re about to cross the finish line with a great record to show for it. People’s greed can often get in the way of using smart financial sense.

As families come into play, you’ll eventually need to consider the estate situation, identifying the beneficiaries for specific holdings, as well as make sure you have enough insurance to protect your loved ones. Make it a habit to perform an annual evaluation of where you are financially, as well as the situation regarding the economy and how that could affect your investment holdings.

You can also work with a financial planner that is cognizant of these factors. When working with a planner, holding information back is never a smart thing. Don’t ever let pride get in the way of you or your family’s financial well-being.

Paul Rubillo is the founder and CEO of Dividend.com.

Be sure to visit our complete recommended list of the Best Dividend Stocks, as well as a detailed explanation of our ratings system here.

Picking the Right Nursing Home is More Than Just About Cost

With the population increasingly getting older, more and more people are faced with difficult decisions regarding older family members that can no longer be cared for in a normal home situation.

Before you even start worrying about the costs of nursing homes, ensure that the financial estate of your loved one has been squared away first. It’s a good idea to address this issue sooner (before anything goes wrong) than later. Sit down with an estate tax attorney, discuss your options, and get a plan in place.

The most important aspect of choosing a nursing home is the quality of care your loved one will receive. Again, this research is better done sooner rather than later.

Half of nursing home stays come after a hospital stay, so being prepared is clearly smart move. Each state has a so-called “long-term-care ombudsman” who advocates for nursing home residents and, generally, oversees paid staff as well as volunteers certified to handle complaints. To find out more information, you can visit www.ltcombudsman.org. You’ll also want to research nursing home health inspections, staffing, fire safety, and quality measures at www.medicare.gov/NHcompare.

Life is more than money, so remember to think long and hard about what is truly important to you and your family when it comes to caring for a loved one in their later years.

Paul Rubillo is the founder and CEO of Dividend.com.

Be sure to visit our complete recommended list of the Best Dividend Stocks, as well as a detailed explanation of our ratings system here.

Car Accident Checklist to Avoid Financial Pains Later

It’s an unfortunate thing to think about, but more often not, people are not in any stable state of mind immediately following a car accident.

Everyone should keep a list of what to do if you are unfortunately involved in any sort of car accident. Here are the key things you will need to get to avoid any complications with your insurance company.

- Keep your auto insurance information in the glove compartment, including a pre-printed form or plain piece of paper allowing you to provide the particulars of any accident.

- It is important to limit your discussion of the accident and not to admit any fault or liability. You should talk about the accident with the police and your insurance agent only.

- Wait for the police to come and be sure you have the name of the officer(s) and that they have your version of what happened.

- Exchange names, addresses, driver’s license and insurance information with the driver of the other car.

- Call your agent or insurance company’s 800-number immediately, even at the scene with the police if possible. Sometimes the police officer can give your insurance company more accurate information rather than information you may not be recording properly because you are upset by the accident.

- Take pictures of all vehicles involved (today’s version of cell phones are equipped with built-in cameras fortunately).

- Review your policy to make sure you’re getting everything you’ve paid for. If you don’t understand any part of your policy or claim, call your insurance company for a thorough explanation. You may be entitled to a loaner car if your car is undriveable.

- Insurance companies often try to give you estimates of losses that are lower than your actual losses. Don’t accept their estimates without getting some estimates of your own.

Keep this list of things to do handy and make sure all the drivers in your family understand them clearly. Auto accidents take a tremendous toll on everyone emotionally and of course financially. Limit the mistakes you may make so that you won’t get hit too hard in the pocket afterwords.

Paul Rubillo is the founder and CEO of Dividend.com.

Be sure to visit our complete recommended list of the Best Dividend Stocks, as well as a detailed explanation of our ratings system here.

Paul’s Thoughts on Saving for College with 529 Plans

Fidelity Investments published an interesting today on estimating how much money parents should invest each month as part of a child’s college savings plan.

The study focuses on 529 plans, and it is not surprising that Fidelity would want to delve deeper into this area, since they sell them as a product. Not that there’s anything wrong with that — far too many parents are ill-prepared for the eventual college tuition bill, and 529 plans are a great idea for many families.

Let’s take a look at the lowest household income category in the report, which was $55K. In that case, the study estimated parents would need to set aside $160 per month from the first year a child was born (or 3.5% of annual salary) to be able to pay for a public education. This estimate includes a 5.4% annual rise in the cost of college.

Each state has its own version of 529 plans, so parents should explore the options available in their locale. There are some solid advantages to 529 plans, including paying no taxes on the account’s earnings. The child also has no control of the money, and if he or she decides not to go to college, you can use the money for someone else (proceeds of a 529 plan can be used only for education, though you can transfer the account to another member of the family if the original recipient doesn’t use it). While you can also get a full refund for withdrawal of the money, you must pay taxes plus a 10% penalty on your investment earnings. Other relatives can also contribute to the plan (hello grandma and grandpa!).

These are just some of the pros of 529 plans. The downside to the plans is that the investment options are limited, and you give up control on where the money will be invested. Check your state’s plan guidelines to see if and how they guarantee your money, and also investigate performance, benefits, and costs.

If you have the money, you can also save more for college in another account, such as a Coverdell ESA or and Roth IRA, which can be used college savings as well. Roth IRAs have certain tax advantages, and you can avoid early withdrawal penalties if you use the funds to pay for your child’s tuition, but they aren’t truly intended for use as college savings plans. Still, Roth IRAs can be a good way to hedge your bet against underperformance in a 529 plan, as long as you invest in high-quality dividend-paying stocks.

Clearly, saving for a child’s college tuition is a smart investment — the key is knowing when and where to invest your money.

Paul Rubillo is the founder and CEO of Dividend.com.

Be sure to visit our complete recommended list of the Best Dividend Stocks, as well as a detailed explanation of our ratings system here.

Market Wrap-Up for Aug.24 (FCX, MEE, BUCY, FDX, BA, STT, more)

The National Association of Realtors said Tuesday that sales of existing homes in July dropped a record 27.2% from last year. This was much worse than the 12% drop that many economists had expected, and represents a 15-year low in existing home sales.

The announcement also comes with the usual amount of spin, as Lawrence Yun, NAR (National Association of Realtors) chief economist, was quoted as saying “Even with sales pausing for a few months, annual sales are expected to reach 5 million in 2010 because of healthy activity in the first half of the year.” This reminds of the Monty Python scene where two knights were fighting and one of them chops the other’s arm off, and then asked him to put down his sword and surrender, but the wounded knight refused citing a “mere flesh wound.” That was a hilarious skit, but the spin from Lawrence Yun is certainly not amusing in my book.

Investors need to look at real estate as a place to raise their family first and foremost, and then as a place where their money could be parked with hopes that your principal investment can be recovered upon a sale when you decide to move. To make things clear, I do not consider real estate a viable investment!

We made some changes to our “Recommended” Best Dividend Stocks List earlier today, so be sure to check out the link below if you did not read the e-mail alert we sent out earlier today to our subscribers. We are continuing to monitor the other names on our list and will make further moves if we see fit.

As for today’s action, commodity plays pulled back after the recent excitement regarding more deals in the space. Companies like Freeport McMoran (FCX), Massey Energy (MEE), and Bucyrus International (BUCY) all pushed lower. Also finishing in the red were well-known names such as Boeing (BA), FedEx (FDX), and State Street (STT) just to name a few. Volume poked up on the selling with 4.43 Billion shares trading on the NYSE and 2.07 Billion shares traded on the NASDAQ.

Be sure to visit our complete recommended list of the Best Dividend Stocks, as well as a detailed explanation of our ratings system here.

Market Wrap-Up for Aug.23 (POT, CMI, DE, WMT, HPQ, more)

Those are the words of Dean Baker, co-director of the Center for Economic and Policy Research. He was cited as the source for a report out today that estimates it will take 20 years to recoup the $6 trillion of housing wealth that has been lost since 2005.

During the 1970s real home prices increased 1.1 percent a year after inflation, which more or less proves the old adage of considering real estate more as shelter for your family, instead of it being a nest egg for your retirement. Multi-family homes are a different story and can be better options from an income standpoint, but that comes with the unenviable job of being a landlord.

This all goes back to our long-help belief that dividend-paying stocks should play a significant role for one’s retirement savings. That said, we are cautiously watching the current market situation closely. We will certainly alert subscribers to any changes we make to our recommendations.

As for today’s action, we saw Potash Corp (POT) climb a bit more on news the company is trying to pull in higher takeover offers. Hewlett Packard (HPQ) moved down on news it was entering into a bidding war with Dell for 3Par (PAR). Weakness developed after the early opening pop and we began to steadily drift once the last hour came. Some of the names lagging on the day included Cummins (CMI), Deere (DE), and Blackrock (BLK). Bucking today’s downtrend was Wal-Mart Stores (WMT), which finished higher.

Be sure to check out our Best Dividend Stocks List for our current recommendations. See you tomorrow!

Be sure to visit our complete recommended list of the Best Dividend Stocks, as well as a detailed explanation of our ratings system here.

Unclaimed property: Can you cash in?
One man’s odyssey through New Jersey’s unclaimed property bureaucracy unearthed more than $5,000 his family was owed. Can you duplicate his success?

Family Dollar Upped to a “Buy” at UBS (FDO)

Discount retailer Family Dollar Stores, Inc. (FDO) on Thursday caught a rare intraday upgrade from analysts at UBS.

The firm boosted its rating on FDO to “Buy” from “Neutral,” while sharply raising its price target from $38 to $50. That new target represents a potential 17% upside to the stock’s Thursday closing price of $42.93.

Family Dollar shares were mostly flat in premarket trading Friday.

The Bottom Line
Shares of FDO have a 1.44% dividend yield, based on last night’s closing stock price of $42.93. The stock has technical support in the $38-$42 price area. The shares are trading near all-time highs and have little in the way of overhead resistance.

Family Dollar Stores, Inc. (FDO) is not recommended at this time, holding a Dividend.com DARS™ Rating of 3.4 out of 5 stars.

Be sure to visit our complete recommended list of the Best Dividend Stocks, as well as a detailed explanation of our ratings system here.

Knight Capital exec leaves, sort of…

Just over two years ago, in May, 2008, Knight Capital Group, Inc. (KCG) acquired Libertas Holdings, LLC, described in this 8-K as “a leading boutique institutional fixed income brokerage firm.” In addition to acquiring a firm, Knight brought in Libertas’ founder and CEO, Gary Katcher, as a new member of its management team. At the time, Katcher said, “Joining Knight presents a perfect fit and the next logical step for Libertas. Our shared strong client focus, combined with the deep resources of Knight Capital Group, will allow us to grow all aspects of our fixed income business much faster than if we had opted to remain independent.” But now the fit doesn’t seem to be so “perfect” after all. Then again, it’s fairly common for the CEO of the acquired firm to exit after a reasonable period of time. In the 10-Q that Knight filed August 9, there was a “Separation from Employment” letter, dated July 30, 2010, that it sent to Katcher, whose employment ended the next day. It’s costing the company a lot of money to part ways with Katcher. First, Knight will pay a lump sum payment of $450,000 on or about August 31, 2010, as well as a lump sum payment of $4.55 million on February 1, 2011. Then, on February 1, Katcher will get a lump sum cash payment equal to the fair market value on that day for 114,426 unvested shares of Knight Capital Group’s common stock. And assuming Katcher makes a timely COBRA election, the company will pay his family’s insurance premiums for a year. And then comes this interesting paragraph: (iv) “The Company will directly or through one or more affiliated entities, invest up to $12,500,000 in a hedge fund that you create, subject to terms and conditions to be agreed by you and Knight, which will include (x) concurrently with Knight’s investment, your investment of at least $10,000,000 and the investment by one or more other investors of the difference between $12,500,000 and the amount invested by you; (y) the hedge fund is created within two (2) years of the Separation Date; and (z) Knight being provided with investment terms at least as favorable as all other similarly situated investors investing similar or lesser amounts….” So long as Katcher doesn’t act as a broker-dealer or engage in the origination and securitization of mortgages, he won’t be in violation of the non-compete clause in his Separation Agreement. It seems odd – sort of like a couple that splits up but lives in different sides of a duplex and tries to share ownership of a dog. Under this arrangement, they’ll be in each other’s lives for a while longer. Image source:Donald Kilgore via flickr ———— See more of what’s in the filings: Check out FootnotedPro, where we highlight unusual opportunities and potential problems well in advance of the market. For more information or to inquire about a trial subscription, email us at pro@footnoted.com.

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