Category: MoneyCrashers

Posted on

Fractional Ownership for Vacation Homes, Planes & Boats

oceanfront-townhouses-918x516Have you ever dreamed of owning a vacation home in Pebble Beach, California or a mountain château in Aspen, Colorado? Rather than fighting security lines at the airport, perhaps your dream is to drive up to your plane and go wherever you want, whenever you want.
 
Pleasures once thought to be enjoyed only by the very rich – vacation homes, aircraft, and yachts – are possible for more people today. While the expense of ownership always exceeds the cost of renting a luxury residence for a limited period, the benefits of having one’s place—familiarity and convenience—can outweigh financial considerations. The best thing about owning an asset is that it is always there when you want to use it.

Timesharing Is Not Property Ownership

Many confuse collectively owned or fractional share ownership with timesharing. The two are vastly different.
 
In 1974, the Caribbean International Corporation (CIC) offered the first timeshare program in the continental United States. Rather than owning the property itself, interested parties could buy the right to use a one- or two-bedroom condominium in the U.S. Virgin Islands for one week each year. The term of the timeshare agreement was 25 years. Each unit offered 50 one-week shares, with the remaining two weeks each year used for maintenance and repairs.

While critics complained that property sold as timeshares was frequently overpriced, this new financing method proved popular with customers who sought to return to the same site each year. Unfortunately, when sales abuse became common, many countries established regulations over the sale and management of timeshare properties. In the United States, individual states enacted a 10-day cancellation period for any reason applying to new contracts in the event of “buyer’s remorse.”
 
Although the FBI issued a special report in 2012 about timeshare scams, the concept remains popular with consumers. According to the American Resort Development Association, there are currently more than 5,300 resorts in nearly 100 countries owned by more than 9 million timeshare owners today.
 
Read more . . .

Posted on

How to Live Off the Grid

off-grid-log-cabin-918x516Open frontiers, freedom to live one’s life without restrictions, and the romance of living in harmony with nature have long been part of the American psyche. Authors and filmmakers have captured the desire to live independently and rely solely on one’s abilities for centuries.For example:
 

Henry David Thoreau

Thoreau, a 19th century poet, writer, and naturalist, explained the fascination with a simple life in his 1854 book “Walden“: “I went to the woods because I wished to live deliberately, to front only the essential facts of life, and see if I could not learn what it had to teach, and not, when I came to die, discover that I had not lived.”

Ayn Rand

The Russian-born American author, writing “Atlas Shrugged” a century later, detailed the success of a community of industrialists and inventors who rejected the strictures of society to build Galt’s Gulch, a hidden community in the wilds of Colorado with little law and where everyone worked.

Ned Buntline and Prentiss Ingraham

The pair, best known of the dime novel authors, wrote fictional stories that focused on the frontier with fictional accounts of strong, self-reliant Western heroes from Daniel Boone to Wyatt Earp, finding huge audiences between 1860 to 1920.

Lee Child

The pseudonym of author Jim Grant is best known for his more than 20 novels featuring his nomadic Jack Reacher character. Reacher, a retired military policeman, travels the United States by walking or traveling by bus. He stays in cheap motels using made-up aliases, has no possessions other than the clothes on his back, and eschews such modern conveniences as credit cards, cell phones, and computers.
 
The idea of escaping societal obligations has appealed to certain Americans since our country’s formation. Many historians characterize the Plymouth Colony, established in 1620, as the nation’s first commune, its founders leaving England’s restrictive laws to create a community in the wilderness on a new continent an ocean away. The colony initially depended on upon collectivism, and each individual’s sense of personal responsibility to sustain the colony.
 
Much more recently, Peter Thiel, co-founder of PayPal, has proposed a new nation-state composed of banded-together platforms floating in the ocean 200 miles from San Francisco. Known as Libertarian Island, the community would have “no welfare, loose building codes, no minimum wage, and few restrictions on weapons.”

The Meaning of “Living Off the Grid”

The term “living off the grid” appeared in the mid-1990s and is credited to environmentalist Nick Rosen, founder of Off-Grid.net. Some define off-grid as being independent of electrical utilities and having a smaller carbon footprint (“going green”). Some claim it to be a self-imposed exile from the modern world and its conveniences (“dropping out”), while others define it as being anonymous (“being untraceable”). Andrew McKay, a journalist with Survival Mastery, calls it “living without any dependence on the government, society, and its products.”
 
Read more . . .

Posted on

Understanding the Dark Net

dark-web-user-918x516British Prime Minister David Cameron announced a new police/intelligence agency on December 10, 2014, to monitor the “Dark Web,” as reported by The Independent. According to Cameron, “The dark net is the next side of the problem, where pedophiles and perverts are sharing images, not using the normal parts of the Internet we all use.”
 
Independent web consultant Mark Stockley concurs, claiming in Naked Security that the dark web “attracts people who want to engage in things like robbery, sex trafficking, arms trafficking, terrorism and distributing child pornography.” In the International Business Times, writers Charles Paladin and Jeff Stone claim electronic goods, contract killers, guns, passports, fake IDs, and hackers for hire are readily available on the dark web, in addition to illegal drugs and child pornography.
 
For most of the general public, the 2013 arrest of Ross Ulbright – known online as the “Dread Pirate Roberts” and the founder of a dark website, Silk Road – was the first evidence of a hidden, anonymous web. Silk Road was one of many websites outside the search capability of ordinary web browsers such as FireFox, Safari, and Internet Explorer. While the majority of products sold on Silk Road were illegal drugs, the success of the site led to other dark websites such as Sheep Marketplace and Black Market Reloaded with minimal restrictions on the products and services for sale.
 
As a consequence of the lack of regulation, David J. Hickton, United States Attorney for the Western District of Pennsylvania, called the dark web the “Wild West of the Internet” in a Rolling Stone interview. IBM’s Managed Security Services Threat Research group calls the hidden web a marketplace for drugs, weapons, stolen data and “anything else a criminal entrepreneur might need or want to sell,” and advises its customers that the dark web “is not a neighborhood you visit for any legitimate reason.”

Web Strata

While the terms “Internet” and “World Wide Web” are often used interchangeably, they are not the same. The former refers to a massive network of networks, linking millions of computers globally where any computer can communicate with another as long as each is connected to the Internet. The World Wide Web is an information sharing model built on top of the Internet that uses the HTTP protocol, browsers such as Chrome or Firefox, and webpages to share information. The web is a large part of the Internet, but not its only component – for example, email and instant messaging are not part of the web, but are part of the Internet.
 
To read more . . .

Posted on

6 Reasons to Invest in Exchange Traded Funds (ETFs) Over Index Mutual Funds

exchange-traded-funds-etf-918x516What does the American Dream mean to you? For many, it means having financial security, and having the ability to provide an education to children, take care of parents, retire comfortably, or remain independent while growing old.
 
But achieving financial security is not easy. A 2015 Pew Research Poll suggests that more than half of Americans are not financially prepared for the unexpected, or otherwise spend more than they make each month. 8 of 10 Americans worry about their lack of savings. At the same time, most Americans recognize that regularly saving and investing a portion of their income is the foundation of financial security. While savings accounts are a critical component in an investment plan with their low risk and high liquidity, most investors need the higher potential returns of equity ownership.

The Evolution of Equity Investment Vehicles

Portfolios of Individual Stocks

After World War II, Merrill, Lynch, Pierce, Fenner & Beane (the predecessor to Merrill, Lynch, Pierce, Fenner & Smith, Inc.) initiated a campaign to “bring Wall Street to Main Street” that included pamphlets and seminars teaching the public how to invest in the common stocks of America’s corporations. By 1947, the company was responsible for 10% of the transactions on the New York Stock Exchange; three years later, it had become the largest brokerage firm in the world. Wall Street firms encouraged investors to own stocks of individual companies, promoting investment clubs and Monthly Investment Plans. The public eagerly responded to the new investment, driving annual volume on the NYSE from 377.6 million shares in 1945 to over a billion shares by 1961, according to NYSE Market Data.
 
Despite the success, many potential investors had limited capital or lacked the time or expertise to successfully analyze or monitor the stock market. These deficiencies led to a demand for professionally managed portfolios that could be shared by hundreds of investors for reduced costs, investment risk, and volatility: the mutual fund.

Professionally-Managed Portfolios – Mutual Funds

In 1928, the Wellington Fund—the first mutual fund to include stocks and bonds—appeared. Within a year, there were 19 open-end funds and about 700 closed-end funds, the majority of which were wiped out in the Wall Street Crash of 1929. When America’s economy boomed in the 1950s, interest in pooled, professional management of stock portfolios – mutual funds – resurfaced. A mutual fund is often defined as a basket of stocks, bonds, or other assets. It’s managed by an investment company for investors who don’t otherwise have the resources to buy or manage a collection of individual securities themselves.
 
Demand for the new investment vehicle exploded. Gene Smith, writing for The New York Times on October 6, 1958, claimed, “The butcher, the baker, the candlestick maker, the cop on the beat, the housewife — all have one thing in common today: they’re pouring more and more dollars into mutual funds.”

According to the Investment Company Fact Book, the net purchases by households of mutual fund shares exceeded the purchase of corporate stock shares for the first time in 1954. And by the end of 2014, households held almost $12.5 trillion of mutual funds of different types (equity, bond, and balanced).

Index Tracking Mutual Funds

However, even as investment in mutual funds increased, some began to question whether the performance justified the high fees of management. Read more . . .