Twitter Acquires TapCommerce and I Reap the Benefits

Twitter, TWTR is up! Finally. This was one of the first of a handful of stocks that I bought about a month ago and traded 10 shares. I was waiting for the right time to sell this one almost as soon as I bought it since it's been going sideways with a downward slant for weeks, it seems! (This could just be my emotions talking.) But this past week something shifted and it has been on the rise. Yesterday it closed at $40.97 up from what I paid, $34.70. That's a 15% gain! A quick Google search lead me to believe that it could be due to reports of a deal to buy TapCommerce, a mobile advertising company. The price? A cool $100M.

My goal with the stock market is to make reduced risk and conservative trades, cap my loses, and get out while i'm up enough to make a profit. Twitter, you're on my watch list!

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Top 3 401(k) Considerations

Back to my 401(k). Sorry to go back to this, but I really want to understand what is happening with that money! I want to be sure that I am making the right decisions as far as how much i'm contributing and what my contributions are being invested in. With that in mind, today I sat down and went through the whole thing. I took the time to log on to the account that holds my investments and shows me the growth thus far. If you haven't set this up yet, I suggest you do it. I hadn't looked at it for 6 months and it has really started to add up! $$$ in the bank, now that's what I like to see!

What are you investing in?
Most 401(k) plans have a few specific funds that you can invest in. You can put 100% into one fund or spread it around into a few different funds. My 401(k) has bond funds, growth funds and value funds, as well as funds that are specifically tailored to your needs based on the year you plan to retire. This for me was the easiest way to go and was what I started out with. But recently I decided to switch it up a bit and put my money into a few of the other funds. I'm spreading it around a bit to see what happens. By keeping tabs on my YTD return percentage I can track my progress and see if I was better off letting the professionals handle it when it was in the retirement year specified fund.

401k vs. Roth 401k
Some companies, like mine will also give you the option of a regular 401(k) and a Roth 401(k). You should conduct your own research on these two terms but i'm going to break it down very simply here.
A regular 401(k) comes out of your paycheck pre-tax. This means that your taxable income is lowered and thus less taxes to pay. At the time of retirement, you will pay taxes when you withdraw the money according to your tax rate at that time.
In a Roth 401(k) you pay taxes on your contributions upfront, which means that you don't lessen your present tax burden. However, at the age of retirement you won't pay taxes on your withdrawals.
Its like a now or later sort of situation.

How much?
My company has a 4% match so i'm contributing that much. I can't see passing up free money! Since i'm trying to get out of debt, I only contribute that much but once I free up more of my monthly income I plan to increase that %.

As always, always do your research and consult with a tax professional before you make any major decisions about your retirement and finances.

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Wise Words from Einstein?

One of the most popular quotes that I have come across on my path to financial freedom is, Compounding interested is the 8th wonder of the world - Albert Einstein. Apparently, there is no evidence to prove that he actually said it, but who cares, it's true!

This is how I understand and define compounding interest. (Disclaimer: Feel free to google the definition and find all kinds of different ways of explaining it, most more technical than my layman version here. This is how it makes sense in my head). There is also a great book called The Power Curve: Smart Investing Using Dividends, Options, and the Magic of Compounding.  In it, he talks about the magic of compounding.
Compounding interest is when you have an investment that gains interest. This interest is then reinvested with the original amount and as a result, the combined amount is now gaining interest. As time goes by and this reinvesting keeps happening, your investment grows exponentially.

Lets look at my current 401k investment. I have a whooping $10,000 currently in my 401k, and i'm getting about a 7% annual return on it. What will I have in 30 years? Not enough, but I plan to fix that, as soon as I get out of debt!
I will have $76,122.
How did I get there? The formula goes like this:
Present Value x (1 + interest rate) to the n-th power (years) = Future Value OR
PV x (1 + r) n = FV

So...

$10,000 x (1+.07) to the 30th power = $76,122

Compounding interest is key to understanding your investment to time relationship. The longer you wait to invest and save the less time you allow for the 8th wonder of the world, compounding interest, to work for you! When I crunched the numbers on my own finances it was a bit hard to swallow some of the financial choices I made in my 20s, but beginning now is better than never starting at all!

Things to think about
*Compounding interest and how it helps you in your investments.
*Run the numbers on my investments. Where will I be in 10, 20, 30 years at the current rate? Where will I be if I make monthly contributions to my current investment in 10, 20, 30 years? Where will I be if I increase my monthly contributions by $100 in 10, 20, 30 years?

Have you done the math on your investments yet? Are you contributing enough to get to your investment goals?

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