My Blog, Your Money

Recently, the late Grace Groner who passed away in January has been in the news for leaving $7 million to her alma mater, Lake Forest College. The gift is the largest in the school’s history.
The amazing part of the story is not the size of the gift – multimillion-dollar gifts are not rare. It’s the fact that it came from the likes of Groner who lived an unassuming life in a tiny one-bedroom house. Nobody would have suspected that she had amassed a fortune and this has given rise to her nickname as the “secret millionaire” not to be confused with the TV show.
So how did she become so rich? It wasn’t from a high-earning profession – she had been a secretary for 43 years. And it wasn’t from an inheritance. It was a combination of 2 things: good old-fashioned frugality (having weathered through the Great Depression after graduating from Lake Forest) and investments. What’s noteworthy about the latter is that her they all originated from a simple $180 initial investment in 3 shares of her employer, Abbott Laboratories, in 1935. Over time, she never sold the shares and continually reinvested the dividends. This investing approach allowed her holdings to grow to a fortune over 75 years and her story has even drawn comparisons to that of Warren Buffet.
Her story is inspiring and I love how she gave her fortune away to a cause she really cared about. I hope to do the same someday (if and when I have a fortune). Groner might have been a bit extreme when it came to frugality and investing, but I hope it inspires people to reconsider their spending habits and invest a little more.

It seems like all my friends are traveling to and fro now which makes this post from My Money Blog so timely: Cheap Airfare Links & Bookmarks.

I’ve read a lot of articles recently such as this one about how the wealthy have held back on their spending since it would seem to be in poor taste given the millions of people who are struggling financially and having trouble staying in their homes and putting food on the table.  I can see why they would think that, but during tough financial times, increased spending by those who can still afford to should be encouraged as much as possible.  Just my 2 cents.

I just discovered ABC Gift Cards where you can purchase gift cards at pretty good discounts (up to 35%).  It’s the largest gift card marketplace so there’s a pretty good selection of retailers too.  It’s definitely worth a look if you’re looking to buy anything.

And if you have some gift cards laying around that you probably won’t use, you can sell or trade them too.

I just have one question: What does its name mean?

From Toyota’s massive recalls to Greece’s debt worries and subsequent rescue to Snowmaggedon burying the Mid-Atlantic states, there’s been a lot of turmoil around the world.  That’s why it’s great to have a nice long weekend (for some) with the President’s Day holiday on Monday.  Maybe you’ll watch the Winter Olympics in Vancouver.  There’s always the NBA All-Star Weekend too.  Maybe you’ll go watch Valentine’s Day on its namesake holiday with your special someone this Sunday.  If you’re solo this Valentine’s Day, you might want to opt for The Wolfman or Percy Jackson & The Olympians which also open this weekend.  This weekend also marks the start of the Lunar New Year and Asian people across the world will welcome the Year of the Tiger with celebration.  I can’t remember the last time so many events intersected in one weekend.  Whatever you do, I hope you have a good time.

Here’s another one: the January Barometer.  It states that the S&P 500’s performance for a year is tied to its performance in January.  So if the S&P has a winning January, the theory predicts that the year’s performance will be positive and vice versa.

So how accurate is it?  Well, over the past 40 years, it’s been correct 32 times or 80%.  While that’s a pretty heady percentage, it hasn’t been very accurate over the past decade with accuracy of just 60%.  In fact, the past decade has actually bogged down the theory’s accuracy and if you exclude it, the theory’s accuracy jumps to 87% over the 30 years from 1970 to 1999.

With that said, what’s the prediction this year?  January was a not a good month for the market and the S&P 500 dipped 3.82%.  That foretells a down year, but I’m going to bet that this is another year where the prediction is wrong and the market will actually repeat last year’s positive performance.  Here’s hoping I’m right.

Wow!  I just heard the amazing story of little Charlie Simpson from England.  The 7-year old wanted to raise £500 for Haiti with a sponsored bike ride around a park and actually ended up raising £156,000!  Raising such a staggering amount of money is incredible and he’s a huge inspiration to us all.  To visit his donation page, click here.

Watch a video interview (when he was up to £30,000) with Charlie below.  Here’s a more up-to-date video.

Update 2/1/2010: The total is now over £195,000!

It used to be that with every new year, I’d look forward to the January Effect where the stock market would rally.  However, in recent years, this has not been the case.  In fact, 6 of the past 10 Januaries have seen declines.  Furthermore, the average change in January from 2000 to 2009 for every index is negative with the Dow at -2.16%, Nasdaq at -0.82%, and the S&P 500 at -1.50%.

With the recent market declines, this month is not looking much better.  Whether this January ends up or down, I’m still confident that the market will continue its recovery and will reach its peak levels again.  And I’m not the only one.

The tax deadline may be in April, but it’s always good to get an early start.  If that’s you, here are some new tax items to be aware of when going through your returns.  Looking ahead, here’s a great article about 10 Astute Tax Moves in 2010.

If you frequently use a debit card, watch out for skimming scams.  Skimming thieves use hidden equipment to capture your account information and the problem is increasing as debit card use rises.  Here are 3 actions you can take to protect yourself:

1.       Don’t type in your PIN when getting gas at the pump.

2.       Only use Bank ATMs

3.       Monitor your accounts

For more information, read this article: Debit-Card ‘Skimming’ Scams.