Fixed for Four is No More? What? You mean that the Georgia education system has found another way to make education more expensive? After coming across GaYoung's post regarding "Fixed for Four" tuition, I am in shock that tuition would continue to creep up as it has done during the past few years. I entered Georgia State in 2005, when tuition was $1819/semester. Now, as I graduate this May 2009, the tuition has increased to $2167/semester. To comment from GaYoung stated, I totally agree that the increase in tuition was not worth the additional facilities we see. For example, GSU improved our existing library, which was OK. However, the old library was fine. It supplied research material, facilities, and technology.
From the article "Regents suspend fixed tuition program," the board has said that tuition will increase for students who take over 12 credit hours (excluding GA Tech and UGA). In the old system, students were able to take more than 12 hours without an additional charge; however, with the new changes, students will be charged. This means for Georgia State students, they are looking at approximately $203/credit hour since our school is a research university. So if we were to assume that students were to only take 12 hours (in order to avoid the additional charge), you're looking at students remaining in school longer. This is turns means paying tuition longer. Which alternative outweighs the other?
Stephen F. Austin students will also feel an increase in tuition. Because the school built new facilities, the students can expect an $75 increase a semester for the average 15 credit hours. Compared to $203/credit hour, they have it good. I do understand that bills have to be paid and education does not come free. However, these decisions are being made by people who don't attend the school and aren't directly affected my their decisions. How do they know whether building a new library or recreational center is worth my extra $1000? For Georgia State students, not only did out tuition increase, but during this past year, we had a hefty increase of student fees for a football team that is still nonexistent. A lot of students can't afford high tuition and high student fees! And the numbers from above were for IN-STATE TUITION, without room and board! For Georgia residents who qualify for HOPE, tuition is not a big factor. But they have to remember that HOPE is continuing on its path of decreasing the credit hours they will supply for. It use to be 130 credit hours, but as I entered school, it dropped to 127.
So as I exit GSU and receive all these surveys asking me "What do you plan to do after graduation, work or further education," it seems to me that trying to afford school and utilize it at the same time is work. So, I always check "work," since I've already have 4 year experience!
Sources:
1. http://glee1102.blogspot.com/2009/04/fixed-for-four-is-no-more.html
2. http://www.ajc.com/metro/content/metro/stories/2009/04/14/georgia_college_tuition.html
3. http://www.onlineathens.com/stories/041609/uga_429685988.shtml
4. http://www.dailysentinel.com/news/content/news/stories/2009/04/21/sfa_regents_II.html
Tuesday, April 21, 2009
Tuesday, April 14, 2009
Dividends: How Beneficial Are They?
If you've ever taken a finance or risk management class, you've probably heard someone say that the purpose of the execs is to maximize shareholders' wealth AND minimize the cost of risk. Well focusing on the first part, maximizing shareholders' wealth could definitely include activities such as dividend payments. Dividend payments are small payments (although some are not so small) given to shareholders from additional funds the company has acquired. For most shareholders, a dividend payment is good and makes them feel secure in the well being of the company. In fact, Michael Brush agrees and states that firms who pay dividends are usually in a stable market. In addition, those firms tend to pay out dividends during good and bad times; who wouldn't want to be a part of that.
But how important are dividends? Is it worth still holding on to stock? Yes, dividends could be very advantageous, especially for those who participate in dividend investing. In one article, it listed 7 benefits from participating in dividend investing (holding on to dividend stocks). They are:
1. In a troubled market, dividends provide investment stability - I agree and this coincides with Michael Brush's belief.
2. Unlike earnings, dividends can't be manipulated or faked - This is true because with dividends, you either get them or you don't. Just holding regular stock, even if the price of the stock is increasing, the company could still be in financial trouble and the stock market hasn't reflected it yet.
3. Dividends provide continuous feedback - Again, another point that reiterates the aforementioned benefits. Shareholders receiving dividends, especially on a continuous basis, know the position of that firm.
4. Reinvested dividends provided a significant portion of the historical equity returns.
5. Good dividend companies grow their dividends - As a shareholder, you don't just want the same amount of dividends. Instead, you want the dividend amount to increase, showing true progress of the company.
6. Spending dividends in retirement, does not harm your principle investment
7. A dividend portfolio is relatively low maintenance.
When firms' board of directors declare a $.45 or $.55 dividend payment, I am sure that most people see this as a small payout compared to the cost of the stock. Well, those dividend payments mean more than you think. Just take a look at a person who receives dividends. Assuming dividends are a reflection of the company's progress, the stock price will rise. So not only does the shareholder receive a dividend payment, but they will earn on their stock. My position on dividends is a positive one and I value them as well. Dividends are worth the price (i.e. stock price) to you pay in order to become a shareholder. Hoping that execs are looking out for your best interest, those dividends will pay off in the long run.
Sources:
1. http://articles.moneycentral.msn.com/learn-how-to-invest/whats-a-pe-and-9-other-dumb-questions.aspx
2. http://dividendsvalue.com/1289/seven-important-reasons-for-dividend-investing/
3. http://articles.moneycentral.msn.com/learn-how-to-invest/stocks-that-pay-you-to-own-them.aspx
But how important are dividends? Is it worth still holding on to stock? Yes, dividends could be very advantageous, especially for those who participate in dividend investing. In one article, it listed 7 benefits from participating in dividend investing (holding on to dividend stocks). They are:
1. In a troubled market, dividends provide investment stability - I agree and this coincides with Michael Brush's belief.
2. Unlike earnings, dividends can't be manipulated or faked - This is true because with dividends, you either get them or you don't. Just holding regular stock, even if the price of the stock is increasing, the company could still be in financial trouble and the stock market hasn't reflected it yet.
3. Dividends provide continuous feedback - Again, another point that reiterates the aforementioned benefits. Shareholders receiving dividends, especially on a continuous basis, know the position of that firm.
4. Reinvested dividends provided a significant portion of the historical equity returns.
5. Good dividend companies grow their dividends - As a shareholder, you don't just want the same amount of dividends. Instead, you want the dividend amount to increase, showing true progress of the company.
6. Spending dividends in retirement, does not harm your principle investment
7. A dividend portfolio is relatively low maintenance.
When firms' board of directors declare a $.45 or $.55 dividend payment, I am sure that most people see this as a small payout compared to the cost of the stock. Well, those dividend payments mean more than you think. Just take a look at a person who receives dividends. Assuming dividends are a reflection of the company's progress, the stock price will rise. So not only does the shareholder receive a dividend payment, but they will earn on their stock. My position on dividends is a positive one and I value them as well. Dividends are worth the price (i.e. stock price) to you pay in order to become a shareholder. Hoping that execs are looking out for your best interest, those dividends will pay off in the long run.
Sources:
1. http://articles.moneycentral.msn.com/learn-how-to-invest/whats-a-pe-and-9-other-dumb-questions.aspx
2. http://dividendsvalue.com/1289/seven-important-reasons-for-dividend-investing/
3. http://articles.moneycentral.msn.com/learn-how-to-invest/stocks-that-pay-you-to-own-them.aspx
Response: Bernanke Easing Mortgage Rates for Consumer Rebound
A topic that has been major lately is the housing market. In Jessica Lewis's posting, she mentions an article where Bernanke (a guy who's no longer a stranger to my blogs) discusses decreasing mortgage rates. Both Bernanke and Jessica believe that decreasing mortgage rates will help homeowners by returning money into their pockets, thereby improving the economy. I agree with both parties; by lowering the mortgage rates, people are now able to afford their monthly payments with a little bit to spare. In addition, the housing market has been in a little bind lately, so plenty of people are seizing he opportunity of getting a home. However, people shouldn't be waiting so long because who knows how mortgage rates will move.
For example, although mortgage rates have been at record lows, they have become stagnant lately. During the week ending on April 5, rates remained basically the same with only a .01% decrease. Pennsylvania had a .8% decrease and Georgia remained the state with the lowest mortgage rates at 4.96%. Yes, these rates seem favorable, so it is only right for people to take advantage of these circumstances right now. Waiting for mortgage rates to go down even further could place you in an awkward position. Carl Walls, Florida Citizens Bank president, says "Don't wait for mortgage rates to keep dropping. Get the best you can and don't look back." I agree. In another article I read, it was noticed that the mortgage applications are increasing. This means that more people are getting bank loans to purchase a home than refinance.
Right now is a great time to use the opportunity of home buying. We have people in high places (i.e. Bernanke), financial professionals (i.e. Carl Walls), and even citizens (i.e. Jessica Lewis) who all agree that the mortgage rate decreases are creating the perfect time for home buying. I also agree with and support them all.
Sources:
1. http://jlewis45rmiblog.blogspot.com/2009/04/bernanke-easing-mortgage-rates-for.html
2. http://www.bizjournals.com/pittsburgh/stories/2009/04/06/daily20.html
3. http://www.reuters.com/article/economicNews/idUSNYS00498520090408
4. http://www.ocala.com/article/20090413/ARTICLES/904131006/0/news02
For example, although mortgage rates have been at record lows, they have become stagnant lately. During the week ending on April 5, rates remained basically the same with only a .01% decrease. Pennsylvania had a .8% decrease and Georgia remained the state with the lowest mortgage rates at 4.96%. Yes, these rates seem favorable, so it is only right for people to take advantage of these circumstances right now. Waiting for mortgage rates to go down even further could place you in an awkward position. Carl Walls, Florida Citizens Bank president, says "Don't wait for mortgage rates to keep dropping. Get the best you can and don't look back." I agree. In another article I read, it was noticed that the mortgage applications are increasing. This means that more people are getting bank loans to purchase a home than refinance.
Right now is a great time to use the opportunity of home buying. We have people in high places (i.e. Bernanke), financial professionals (i.e. Carl Walls), and even citizens (i.e. Jessica Lewis) who all agree that the mortgage rate decreases are creating the perfect time for home buying. I also agree with and support them all.
Sources:
1. http://jlewis45rmiblog.blogspot.com/2009/04/bernanke-easing-mortgage-rates-for.html
2. http://www.bizjournals.com/pittsburgh/stories/2009/04/06/daily20.html
3. http://www.reuters.com/article/economicNews/idUSNYS00498520090408
4. http://www.ocala.com/article/20090413/ARTICLES/904131006/0/news02
Monday, April 6, 2009
Response: Limit Credit Card Rates
I just got done reading GaYoung's post about the Senate's plan of action to limit credit card rates. I couldn't agree more with GaYoung nor the Senate. Credit card rates are inching up every time we look at it and it's about time that a legislative body steps in for the people. Christopher Dodd, Chairman of the Senate Banking Committee, states that the Senate's move was to protect consumers from the lenders. Lenders are increasing rates even on those people who are paying their bills on time.
There used to be a time where on time payments meant something; however, this hasn't been the case recently. Chase MasterCard holder, Mark Alexander, could be considered a perfect example of the perfect borrower. He rarely has a balance on his card and has always paid his bills on time during the past 10 years. Then why is that his interest rate increased by 40%? What does this mean for me, a student who just made her first purchase on her credit card and making a payment before they even sent the bill? What is there for me to look for when lenders are trying to raise the rates more than normal?
That's why the Senate has stepped in and began to find ways of improving the situation. They have made it where lenders can no longer increase the rate of those card holders who pay bills on time and meet all other criteria. The Senate has also made it where banks can no longer imposed penalty rates for payments late by one or two days. Borrowers still have the normal 30 day grace period.
This is what we need. Card holders need some leeway to still be able to use credit cards without having additional money sucked out of us. If I am portraying credit card companies as gougers who steal money from innocent card holders, that's not what I want to display. Because the truth is that there are bad card holders out there. There are many people who default on their obligations. But for those of us who continue to do as the lenders have asked, it's only fair that we get treated with some respect.
Sources:
1. http://glee1102.blogspot.com/2009/03/limiting-credit-card-rates.html
2. Gelles, Jeff. "Changes to credit card rules on the way." Philadelphia Business Today. 5 April 2009. 6 April 2009 <http://www.philly.com/philly/business/homepage/20090405_Changes_to_credit_card_rules_on_the_way.html?text=med&c=y>.
3. Bloomberg. "Senate panel approves bill limiting credit card rates." Gulfnews.com. 1 April 2009. 6 April 2009 <http://www.gulfnews.com/business/Banking_and_Finance/10300419.html>.
4. Associated Press. "Credit card interest rates rise marginally." Businessweek. 6 April 2009. 6 April 2009 <http://www.businessweek.com/ap/financialnews/D97D4B880.htm>.
There used to be a time where on time payments meant something; however, this hasn't been the case recently. Chase MasterCard holder, Mark Alexander, could be considered a perfect example of the perfect borrower. He rarely has a balance on his card and has always paid his bills on time during the past 10 years. Then why is that his interest rate increased by 40%? What does this mean for me, a student who just made her first purchase on her credit card and making a payment before they even sent the bill? What is there for me to look for when lenders are trying to raise the rates more than normal?
That's why the Senate has stepped in and began to find ways of improving the situation. They have made it where lenders can no longer increase the rate of those card holders who pay bills on time and meet all other criteria. The Senate has also made it where banks can no longer imposed penalty rates for payments late by one or two days. Borrowers still have the normal 30 day grace period.
This is what we need. Card holders need some leeway to still be able to use credit cards without having additional money sucked out of us. If I am portraying credit card companies as gougers who steal money from innocent card holders, that's not what I want to display. Because the truth is that there are bad card holders out there. There are many people who default on their obligations. But for those of us who continue to do as the lenders have asked, it's only fair that we get treated with some respect.
Sources:
1. http://glee1102.blogspot.com/2009/03/limiting-credit-card-rates.html
2. Gelles, Jeff. "Changes to credit card rules on the way." Philadelphia Business Today. 5 April 2009. 6 April 2009 <http://www.philly.com/philly/business/homepage/20090405_Changes_to_credit_card_rules_on_the_way.html?text=med&c=y>.
3. Bloomberg. "Senate panel approves bill limiting credit card rates." Gulfnews.com. 1 April 2009. 6 April 2009 <http://www.gulfnews.com/business/Banking_and_Finance/10300419.html>.
4. Associated Press. "Credit card interest rates rise marginally." Businessweek. 6 April 2009. 6 April 2009 <http://www.businessweek.com/ap/financialnews/D97D4B880.htm>.
Stocks vs. Mutual Funds
During these times, many Americans are afraid of the stock market. Will it go up today? Or will it go down? Since we've entered into this recession, many financial institutions have fallen, including Wachovia, Merrill Lynch, and Washington Mutual. If our money isn't safe in the banks, how about taking our money to the stock market? That's where this question arises, "Should I invest in sole stocks or mutual funds?"
Some believe that a definite answer does not exist. Instead, the answer is different for each person and is dependent on that person's answers to these four questions: 1.How much money do you have? 2. How much time do you have? 3. How much skill do you have? 4. How much desire do you have? Michael Brush, a writer for MSN money, believes this notion, especially in the line of question number 2. He states that if an investor goes with stocks, they will have to research each and every company they purchase stock in, which can be time consuming. "Well, why don't I just purchase stock in one company to prevent me wasting my time doing research?" That would be okay if you weren't lacking one thing; diversity.
Brush, among other supporters, agree that in order to achieve diversity, an investor will have to purchase stock in multiple companies. Well, that's basically the definition of a mutual fund. "A mutual fund is a diverse holding of stocks that are managed on behalf of the investors that buy into the fund. A mutual fund allows an investor to take advantage of a diversified portfolio without having to invest a large sum of money." (http://www.stock-trading-explained.com/stocks-vs-mutual-funds.html). For me, if I'm going to tie my money to an aspect of the stock market, I would prefer to have a diverse portfolio; that way, a decline in one company's stock will not be the end of me. Plus, a mutual fund is monitored by an investment professional who have done research on the companies included in the mutual fund. It doesn't guarantee that I will be without risk, but it does give me a better sense of security seeming the answer to the number 3 question for me is "none."
Mutual funds show to have more advantages than individual stocks. Besides the well known fact of diversification, mutual funds offer benefits like a cushion in case of stock market volatility and the splitting of transaction fees (a typical disadvantage of participating in mutual funds). As stated before, mutual funds do not come without risk nor cost. However, a key topic taught in risk management is that diversification reduces the amount of risk faced.
During my internship, I heard many of my coworkers discuss the recent and dramatic decline in their 401Ks. As most of us know, that is a retirement fund that is heavily tied to the stock market. And yes, participants know the risks of this retirement option before the opt to get in; however, I'm sure that none of us were expecting the drop that occurred. So if I had to choose, in this time and day, whether to invest in stocks individually or a mutual fund...., my pick is definitely a mutual fund.
Sources:
1. http://en.wikipedia.org/wiki/Mutual_funds#Mutual_funds_vs._other_investments
2. http://useconomy.about.com/od/mutualfundsfaq/f/funds_vs_stocks.htm
3. http://www.stock-trading-explained.com/stocks-vs-mutual-funds.html
4. http://www.401khelpcenter.com/press_2009/pr_crain_012609.html
5. http://www.fivecentnickel.com/2006/01/12/stocks-and-bonds-vs-mutual-funds/
6. Brush, Michael. "What's a P/E? (And 9 other 'dumb' questions)." MSN Money. 5 March 2009. 31 March 2009 <http://articles.moneycentral.msn.com/learn-how-to-invest/whats-a-pe-and-9-other-dumb-questions.aspx?page=1>.
Some believe that a definite answer does not exist. Instead, the answer is different for each person and is dependent on that person's answers to these four questions: 1.How much money do you have? 2. How much time do you have? 3. How much skill do you have? 4. How much desire do you have? Michael Brush, a writer for MSN money, believes this notion, especially in the line of question number 2. He states that if an investor goes with stocks, they will have to research each and every company they purchase stock in, which can be time consuming. "Well, why don't I just purchase stock in one company to prevent me wasting my time doing research?" That would be okay if you weren't lacking one thing; diversity.
Brush, among other supporters, agree that in order to achieve diversity, an investor will have to purchase stock in multiple companies. Well, that's basically the definition of a mutual fund. "A mutual fund is a diverse holding of stocks that are managed on behalf of the investors that buy into the fund. A mutual fund allows an investor to take advantage of a diversified portfolio without having to invest a large sum of money." (http://www.stock-trading-explained.com/stocks-vs-mutual-funds.html). For me, if I'm going to tie my money to an aspect of the stock market, I would prefer to have a diverse portfolio; that way, a decline in one company's stock will not be the end of me. Plus, a mutual fund is monitored by an investment professional who have done research on the companies included in the mutual fund. It doesn't guarantee that I will be without risk, but it does give me a better sense of security seeming the answer to the number 3 question for me is "none."
Mutual funds show to have more advantages than individual stocks. Besides the well known fact of diversification, mutual funds offer benefits like a cushion in case of stock market volatility and the splitting of transaction fees (a typical disadvantage of participating in mutual funds). As stated before, mutual funds do not come without risk nor cost. However, a key topic taught in risk management is that diversification reduces the amount of risk faced.
During my internship, I heard many of my coworkers discuss the recent and dramatic decline in their 401Ks. As most of us know, that is a retirement fund that is heavily tied to the stock market. And yes, participants know the risks of this retirement option before the opt to get in; however, I'm sure that none of us were expecting the drop that occurred. So if I had to choose, in this time and day, whether to invest in stocks individually or a mutual fund...., my pick is definitely a mutual fund.
Sources:
1. http://en.wikipedia.org/wiki/Mutual_funds#Mutual_funds_vs._other_investments
2. http://useconomy.about.com/od/mutualfundsfaq/f/funds_vs_stocks.htm
3. http://www.stock-trading-explained.com/stocks-vs-mutual-funds.html
4. http://www.401khelpcenter.com/press_2009/pr_crain_012609.html
5. http://www.fivecentnickel.com/2006/01/12/stocks-and-bonds-vs-mutual-funds/
6. Brush, Michael. "What's a P/E? (And 9 other 'dumb' questions)." MSN Money. 5 March 2009. 31 March 2009 <http://articles.moneycentral.msn.com/learn-how-to-invest/whats-a-pe-and-9-other-dumb-questions.aspx?page=1>.
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