Archives For October 2006

We’re down to the LAST TWO DAYS of the Bogleheads’ October Project, a month-long, chapter-by-chapter review of the The Bogleheads’ Guide to Investing by 22 different bloggers. Today Andi over at Udandi & the Craft of Money reviews Chapter 22 – Passing it on When You Pass on.

Don’t forget to join us tomorrow as we wrap this thing up.

All the sudden one of my posts from over a year ago is getting a lot of attention!

Over the weekend I noticed that a post I did on the Forbes Flat Tax Plan was receiving some new comments. Most of the comments are from people suggesting something called The Fair Tax Book by Neal Boortz.

I have not yet read the book. Have any of you? (If somebody from the Boortz Camp is reading this, if you send me a book I’ll read it and post about it.)

From what I can tell, it is a consumption tax rather than an income tax. I’m not sure what consumption is taxed, but it seems to me that those with lower incomes, who spend most of what they make, would be paying a bigger percentage of their income in taxes than someone who has greater income but doesn’t have to spend it all on consumption. If this is true, it doesn’t seem “fair” to me. I think that’s why I’m a fan of a modified flat tax.

I don’t like Steve Forbes’ Flat Tax plan because he doesn’t tax dividends or capital gains, which heavily favors the wealthy. I say make it a flat tax but tax ALL income.

Blog of the Week – No. 57

October 29, 2006

The 57th Blog of the Week is GettingFinancesDone, a blog whose purpose is to be a stress-free guide to financial control. GFD hasn’t been around long but has had the fortune of being featured on Lifehacker a couple of times, which gave it instant creditability. Lifehacker or not, GFD is a good personal finance blog. SSpeer, the blog’s author, doesn’t have time to update the blog often (once a month or so) but when he does update it, it is usually a thoughtful entry. It makes for some good Sunday reading.

It’s the weekend and believe it or not, personal finance isn’t on my mind. I have been listening to one of my favorite CDs, Pat Metheny’s Secret Story from 1992, which I think is one of the most beautiful albums in the world. It’s kind of funny because the first time I heard it, I HATED it! But for some reason I kept listening to it and all the sudden I started liking it. Anyway, listening to this CD reminded me of a question that I would like to ask you that IS NOT related to personal finance:

Has a song or piece of music ever given you goosebumps when you listen to it? If so, do you remember what song it was?

I get goosebumps a lot. It usually happens with guitar solos or some sort of orchestration. I guess that is just my body’s way of telling me that I’m listening to a good piece of music.

I don’t know much about music or music theory. I just know that I love listening to music. And, when I listen to music I usually hear all the little details that most people don’t hear. It’s funny because I’ll be driving along with my family and we’ll be listening to something and I’ll hear something and I’ll rewind it and tell my wife that I like a particular part and she’ll just look at me like I’m crazy!

One of these days I’ll make a list of all my favorite songs and share them with you. Most of you won’t care about it, but maybe a few of you will. In the meantime, if you want to try out a mixture of world music, jazz, and classical all in one album, check out Pat Metheny’s Secret Story. Be sure and listen to it AT LEAST 5 times before you decide whether or not you like it.

My Favorite Book Opening

October 28, 2006

Is there an opening paragraph or two of a particular book that stands out to you? Of all the books I have read, there is one opening passage to one particular book that stood out to me the most. I don’t know why, but for some reason, the opening to M. Scott Peck’s The Road Less Traveled really stood out to me the first time I read it: Continue Reading…

I’m going to try to start doing something new on Fridays. Each Friday I want to post a reader question, offer my response, and then open it up to you guys to weigh in with your thoughts. For those who are interested in asking a question, you can email your question to me using the email address located in the upper lefthand corner. Please be sure and put “Friday Question” in the subject line. I can’t promise that I will post your question but if I do, I promise not to use your name in the post.

That said, here’s today’s Friday Question:


My name is E. and I have been reading your blog for a few months. I’m starting to get a grip on my personal finaces and I was wondering if I could ask you a few questions. I am reading the reviews of the Boglehead’s guide to investing. It sounds like a good book. I think that I will borrow it from the library. I might not know enough to really understand it. I think the book might be way over my head and I really want to learn about finances.

My main question is (please do not laugh). If I wanted to buy an ETF where would I go? Is there an etf store? How much money do I bring to buy an etf? I don’t want to appear like an idiot.

My response:


You don’t look like an idiot. I think it is great that you took the initiative to ask the question.

First off, you have to decide if an ETF is even right for you. Because ETFs trade like a stock, there are commissions each time you buy or sell one. So, if you are investing a small amount of money on a regular basis, then you would probably be better off investing in a no-load index fund.

Now to answer your question:

As I said before, an ETF trades like a stock. In order to buy an ETF, you need two things:

1. A brokerage account with a firm like Scottrade, TDAmeritrade, or even a full-service broker like MerrillLynch.

2. The name and ticker symbol of the ETF you want to purchase. You can find this information on the YahooFinance ETF website, which contains a WEALTH of information.

As far as how much money you need in order to purchase and ETF, it depends. You will need enough to purchase the ETF and pay for the commission. If you have an account with Sharebuilder, you can buy fractional shares. Here’s an example of what a fractional share is:

Say you have $100 to invest and you want to buy an ETF that is trading at $78 per share. Sharebuilder charges $4 to do the trade, so you have $96 to put toward your purchase, which would buy you 1.2307 shares ($96 &#247 $78 = 1.2307) of the ETF. In other words, you only have enough to buy ONE full share and about 1/4 of another share.

Now it is time for readers of AFM to weigh in. What are your thoughts?

We’re winding it down, folks. After today, there are only two days left in the Bogleheads’ October Project. Today’s Chapter 21 – Protect Your Assets by Being Well Insured review is up at Financial Freedumb. I thank FinancialFreedumb for participating in the Bogleheads’ October Project, a month-long, chapter-by-chapter review of the The Bogleheads’ Guide to Investing by 22 different bloggers.