Personal Finance - Joshua Kennon

Mail Bag: Should I Take Out Student Loans to Invest?

May 16, 2012 By Joshua Kennon 3 Comments

Federal Stafford Student Loan Debt Promissory Note

One of the single most common questions I receive from friends, family, and readers who are enrolled in college is, "Should I take out student loans and invest the excess above and beyond the cost of college?" No doubt spurred by the historically low rates - the interest expense on a typical government student loan is lower at the moment than the dividend yield on high quality blue chip stocks - the topic brings up a host of financial considerations. The General Answer to, "Should I Take Out … [Read more...]

Filed Under: Student Loans

Earning Money on Your Money

May 16, 2012 By Joshua Kennon Leave a Comment

One old definition of "being rich" is when your money earns money. This afternoon, I was writing a piece and reviewing the dividend yields on some of the common stock holdings owned by my household personally, outside of the business, when I began quantifying that in the back of my mind. How much would it take to demonstrably meet that threshold? It would make an interesting post. The best place to start is where most of you, and I, live: The United States. We know the median … [Read more...]

Filed Under: Making Money

It’s Time to Bring Back the Glass-Steagall Act

May 12, 2012 By Joshua Kennon 1 Comment

In the aftermath of the 1929 stock market crash and economic meltdown, Congress passed the Glass-Steagall Act. The purpose of the legislation was to ban the consolidation of securities firms and banks as a way to protect the public in the event of a financial crisis. By isolating deposit-taking institutions from those responsible for underwriting securities and buying or selling investments with their own capital, the banking system had a better chance of remaining sound even if Wall Street … [Read more...]

Filed Under: Banking, Economics

The Berkshire Hathaway Shareholder Discounts 101

May 7, 2012 By Joshua Kennon 4 Comments

Nebraska Furniture Mart Berkshire Hathaway Shareholder Discount

The Berkshire Hathaway shareholder discounts at Nebraska Furniture Mart end in a few hours, with the discount at Borsheim's cutting off tomorrow. The furniture buyer with whom I am working has spent the past week finalizing my spreadsheet, locking me into the enormous savings that are available. Taking advantage of the stockholder pricing is one of my favorite saving money techniques. Since I was in college, I have used it at every turn to my advantage. My watches, my fountain pens, my … [Read more...]

Filed Under: Saving Money

As Taxmageddon Approaches, How Should Investors Prepare for 43.4% Taxes on Dividends?

April 30, 2012 By Joshua Kennon 3 Comments

Taxmageddon Massive Tax Rate Increases and Tax Increases in 2013

Last night, I published my monthly updates for the Investing for Beginners site at About.com, a division of The New York Times. One of the articles I wrote has to do with something called Taxmageddon. As the law stands now, in eight months, Americans will face one of the largest tax hikes in history, with much of the burden falling on the lower and middle classes. Payroll taxes increase, small business depreciation tax breaks go away, the Alternative Minimum Tax patch to prevent middle … [Read more...]

Filed Under: Taxes

Change the Way You Think About Business Ownership and You Can Change Your Life

April 23, 2012 By Joshua Kennon 13 Comments

Total SA French Oil Giant Dividend Investing Making Money

Shortly after World War I, Raymond Poincaré, the Prime Minister of France, decided against partnering with Royal Dutch Shell to fund the energy needs of the French people. One of his military commanders, Colonel Ernest Mercier, worked with 90 banks and businesses to establish a new oil company called French Petroleum Company (er, technically, Française des Pétroles Compagnie since they weren't speaking English). The name might sound prosaic but keep in mind this was the era of "General … [Read more...]

Filed Under: Case Studies & Profiles, Dividends, Making Money

You Can Still Get Rich and Make Money In a Terrible Economy with a Miserable Stock Market

April 19, 2012 By Joshua Kennon Leave a Comment

Six Year Performance of Dow Jones, Standard and Poors 500, and General Electric Stock

Towards the back of the most recent General Electric annual report is an interesting graph. It shows what an investor would have experienced by putting $100 into three different investments: GE shares, the S&P 500, and the Dow Jones Industrial Average. It assumes that dividends were reinvested in each respective investment when they were distributed. How were you rewarded for six years of patient investing, assuming you added no fresh cash outside of the dividend reinvestment? Take a … [Read more...]

Filed Under: Case Studies & Profiles, Making Money

Playing Good Defense Is Just as Important When Building Wealth

April 16, 2012 By Joshua Kennon 2 Comments

On this site, we talk a lot about how to play offense in the game of building wealth - investing in assets that generate cash, increasing your skill set so you can charge a higher price for your time, starting or acquiring businesses that throw off profits - but today I want to talk about an equally important part of the equation: Defense. There Are Several Strategies to Building Wealth Some people become rich by playing great offense (making a lot of money). Other people become rich by … [Read more...]

Filed Under: Saving Money

Making Money Secret: It Is Almost Always a Mistake to Sell Your Intellectual Property

March 26, 2012 By Joshua Kennon 3 Comments

When you create something, you have one of two options. The first, is to take cash up front and sell your creation. The second is to retain ownership of your creation and, betting on yourself, license, publish, or distribute it in exchange for on-going royalties or revenue participation. Some of you know a little bit about my intellectual property activities because you are aware of one tiny part of them through the Investing for Beginners at About.com, a division of The New York … [Read more...]

Filed Under: Making Money

Borrowing Money Is the Equivalent of Renting Someone Else’s Savings

February 10, 2012 By Joshua Kennon Leave a Comment

Money Dividends, Rents, Interest in Passive Income

In economics, it helps to ask the questions, "What is really going on? What is the heart of what we are discussing?". It surprises me that things most familiar are most often taken for granted and, in many cases, not understood very well. By reframing things through that lens, decisions often become clearer. Consider the relationship between saving money and borrowing money. I've been helping some friends and family members lately go over their personal finances so the nature of saving … [Read more...]

Filed Under: Economics, Saving Money