Sowing Wealth

Tax Benefits of Investing Now in a Formerly Strong Mutual Fund

I was listening to the Audible Dec. 29th edition of Forbes today and heard something so interesting I had to blog about it. If you were to invest in a formerly strong mutual fund today at its currently beaten down price, you could enjoy years of tax-free gains.

Here's how I understand it. For true clarity seek the advice of a CFP. Mutual funds have to distribute tax hits to investors as they come up, i.e., when the fund cashes in a gain on a holding there's a tax consequence and investors must bear that. This is equally true whether you are a new investor or an old one. This is why it sometimes hurts to newly invest in a fund that's doing well.

Now, this year has been brutal to just about every bullish mutual fund. Therefore, most of them have losses to offset gains and these losses could be carried forward for years to come. This means that by investing in a fund with a great track record that hit the skids this year you could at least avoid tax hits in subsequent years as the fund manager gets things back on track.

This is good food for thought for the long-term investor and if you're a reader and follower of Sowing Wealth, that's what you should be.

amazon.com Makes a Rare Mistake

I don't know that I can ever recall a time when amazon.com made a mistake. They just seem so together, don't they? Well, nobody's perfect. In the latest issue of Maximum PC magazine amazon.com has a four-page ad featuring lots of pc gear you might want for the holidays. The item that caught my eye was the last one in the ad - a 16gb memory stick for just $19.99 after rebate. Is that a smoking deal or what? I recall paying about that for a 1gb stick a few years ago.

Anyway, I was prepared to promote this purchase via this blog except for one little hitch. It's not available as advertised. At first I had trouble finding it on the site. When I put in the name of the item in their search box it didn't come up. If I put in the item #, it comes up but not at the pre-rebate price of $39.99. Instead it's $42.83 and it's from ANTOnline with no rebate. Huh?

Dig a little deeper and you find amazon.com is one of the merchants that's offering it used or new beginning at $39.99. This is really weird. If you're an amazon regular you know that they always feature products they carry and the other merchants after them. In this case although their price is better they feature Ant first. Very strange. Worse, when you do uncover the amazon listing for the product you see that the rebate is only $10 and the product won't ship for 1-2 months.

Now let me get this straight, amazon decides to promote this product in a national magazine ad, doesn't have it in stock and promises the wrong price. When you look for it you find it for more with no rebate from another merchant. I love amazon, I truly do, but I gotta call it like I see it - they blew it on this one. I tried calling their customer service line to see if I could indeed get it as advertised, but the person on the other end didn't know what I was talking about and I got disconnected while he was researching it. I didn't have the energy to call back.

If you think a 16gb stick for $29.99 is worth waiting 1-2 months for, then it is available now for a purchase made by 11/30/08 here.

PG&E Lowering Their Prices!

I heard on the radio last week that gas and electric prices are coming down in certain parts of the country due to falling commodity prices. That made me wonder if I might enjoy some lower prices on my future bills. I went to www.pge.com and couldn't see any notice about lowered prices. I decided to call and ask.

I spoke to a very kind representative who looked in to it and, sure enough, prices were coming down 12% this month! That's a nice reduction. And this is on top of a 2% reduction last month. If you have maintained your current energy consumption at home, then you should see a lower bill the next time you're invoiced.

Why not make it better than that though? Why not actually look for ways to use less electricity? Here are a couple of tips on how to do just that. The first one is to unplug all devices that are not being currently used. Amazingly it turns out that even if your phone charger is not charging your phone, it's drawing small amounts of electricity just by being plugged in. I didn't know this until very recently. Makes me want to go around the house unplugging everything, which isn't really too convenient. However, if you plug devices in to a power strip and simply flip the switch on that, then you should be able to more easily stop drawing power from that outlet.

The second tip is to replace old appliances. I recently replaced a 12-year old water heater because it had started to leak. What I didn't know until I replaced it is that it was an electricity hog. My home is all electric unfortunately. Anyway, the old water heater had been drawing inordinate amounts of electricity to provide my family with hot water. I wondered for years why my electric bills were so high. I never suspected it was the water heater. I wish I had. It turns out the new one will pay for itself in just one year.

If you think your bill is much too high for your consumption pattern, then it's likely that you have a device on your network that's using inordinate amounts of electricity. The only way to know for sure is to actually look at your meter and watch what happens as you unplug and replug item after item. The culprit could have a short inside, which causes it to suck lots of power while still apparently working. Or it's just grossly inefficient.

Last thing I'll say about PG&E is that they have a Balanced Payment Plan, which averages your bills from a certain period, then uses that average amount as your price going forward. They check your usage every four months to see if your average has readjusted a lot whereupon they would start a new monthly amount. As we go in to the winter season when most people start using lots more power to heat their homes, this plan could ease the spike in bills. I do this and it's nice to be able to budget a certain amount monthly for my power bill.

I hope this information has been useful to you today. Let others know about this occasional blog.

Starbucks on Sale

Guess what? Starbucks has put all of their products on sale for 20% off. Only hitch is you have to agree to purchase at least $100 worth up front to get the deal. What gives?

Costco is selling a bundle of (5) $20 Starbucks gift cards for just $80. That makes each card $16.00 each. I think this is a great way for latte junkies to save a little off their daily fix. It's also a good stocking stuffer and a good gift for business clients. I purchased a bundle as client gifts for Christmas.

I bet you can take a $20 card to Starbucks and split it in to two $10 cards, which would then give you a smaller denomination if you want to give them out freely as stocking stuffers to friends in the office or at church.

I don't know how long this promotion will last - maybe until Starbucks recovers - but I wouldn't bet on it lasting forever. Get 'em while they're hot.

Here's yet another reason to join Costco if you're not a member yet. Lastly, I'm not sure, but it's possible that if you're an Executive member you might end up paying $78.40 for this bundle since you get a 2% rebate on all your purchases. Even better!