Elon Musk Boldly Goes Where No Entrepreneur Could Afford to Go Before

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Elon MuskOn Saturday, Elon Musk will make history. Again. This is the man who:
  • Invented PayPal (and sold it to eBay (EBAY) for $1.5 billion).
  • Looked under the hood of the electric car that General Motors (GM) had just killed, and brought it back to life.
  • Launched the first ever private space vessel to orbit the Earth.
  • Was the inspiration behind the movie version of Iron Man's billionaire inventor Tony Stark.
On Saturday, he will lead his company, SpaceX, in another historic first, as SpaceX attempts to launch into space a Dragon resupply capsule atop one of its Falcon 9 rockets, then dock it with the International Space Station.

The project is important for several reasons. First and foremost, it's never been done before. A private party has never docked a spaceship with the ISS. As Comedy Central's Stephen Colbert put it recently: "four entities have launched rockets into space: the U.S., China, the Soviet Union [Russia], and Elon Musk."

Second, because if SpaceX succeeds in this effort, it will begin to make good on the $1.6 billion contract it won from NASA four years ago, to run about a dozen resupply missions to the ISS -- relieving NASA of the obligation of having to pay the Russians to lift supplies up to the station, and ensuring SpaceX's survival in the process.

What's It Mean to You?

To taxpayers, though, the most important thing about Saturday's flight is the potential that a successful SpaceX mission holds for lowering the cost of space flight, and getting us more missions per taxpayer dollar.

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By SpaceX's estimation, once the company scales up its operations, it should be able to lift cargo into space at a rough cost of about $1,300 per pound lifted. For reference, that's about 50% cheaper than the cheapest state-subsidized space launch today -- and multiples cheaper than the current average cost to launch a rocket into space, which runs anywhere from $4,500 up to $10,000 per pound of cargo delivered. And ultimately, Musk says that getting the price down to $500 per pound or even less is "very achievable."

That's just one more reason that when Falcon 9 is waiting on the launchpad Saturday, we should all be counting down along with it.

Motley Fool contributor Rich Smith holds no position in any company mentioned. Motley Fool newsletter services have recommended buying shares of General Motors and eBay.

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Source: http://www.dailyfinance.com/2012/05/18/elon-musk-boldly-goes-where-no-entrepreneur-could-afford-to-go-b/

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Canadian Personal Finance – Happy Hour – First Edition

I thought that most personal finance blogs have their weekly roundups or weekend links. I wanted to have the Happy Hour – popular in the US and I am bringing them to the Canadian blogosphere. Here are 10 of my favorite posts this week: Facebook founder Mark Zuckerberg rang the opening bell on Wall St. [...]

Source: http://www.canadianpersonalfinance.com/canadian-personal-finance-happy-hour-first-edition.html

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Jobless Claims Show Little Change

Jobless claims in the week ending May 19 dipped slightly to 370,000, a decrease of 2,000 from the previous week’s revised figure of 372,000, the Labor Department announced. The four-week moving average, a less volatile number that flattens out week-to-week fluctuations in the data, was also 370,000, a decrease of 5,500 from the previous week.  Initial claims for unemployment benefits have remained flat over the past month, but have remained in the 375,000 range, the benchmark analysts consider to signal strong enough hiring to lower the unemployment rate. The number of Americans filing for continuing unemployment claims during the week ending May 12 was 3,260,000, a decrease of 29,000 from the preceding week. The four-week moving average was 3,271,500, a decrease of 17,250 from the prior week. The total number of people claiming benefits in all programs for the week ending May 5 was 6,168,620, a decrease of 105,004 from the previous week. States reported 2,630,507 persons claiming emergency unemployment benefits for the week ending May 5, a decrease of 35,500 from the prior week. There were 3,411,860 claimants in the comparable week in 2011. The largest increases in initial jobless claims for the week ending May 12 were in Alabama, Florida, Mississippi, North Carolina, and Tennessee. The largest decreases were in California, Illinois, Missouri, New York, and Texas.

Source: http://www.millionairecorner.com/article/jobless-claims-show-little-change

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Can You Protect Your Portfolio From Drawdowns?

If your portfolio loses 1% today and gains 1% tomorrow, are you back to even? Not quite, but you’re awfully close. You actually need a gain of 1.01% to get back to where you started. While that difference seems trivial, it gets magnified when the ups and down of your portfolio get larger. A loss [...]

Source: http://canadiancouchpotato.com/2012/05/09/can-you-protect-your-portfolio-from-drawdowns/?utm_source=rss&utm_medium=rss&utm_campaign=can-you-protect-your-portfolio-from-drawdowns

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Why I work, save, blog and don’t pay off the mortgage

Sometimes I feel a little jealous of the “pay off the mortgage” people – First Gen American, the Grumpies, Canadian Dream, Move to Portugal… I used to be one of those people.  Instead I have an emergency account on steroids because back when I was pregnant with my youngest – and in debt – and sort [...]

Source: http://singlemomrichmom.com/why-i-work-save-blog-and-dont-pay-off-the-mortgage/

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Obama's Retirement Rescue

Obama Retirement Rescue The government has recently been taking steps to alleviate the heartache accompanying retirement plans.  Their goal has been to put retirees' best interests at the heart of the matter, and figure out what the best plan might be to ensure a secure retirement.

Their decision has been to focus on annuities and change up some of the rules as a way to strengthen retirement plans.  To keep you abreast of what's been going on, we have compiled some important information concerning annuities and these new rules.

Annuities: The Definition

An annuity is a financial product that provides you with an income throughout your retirement.  You make payments into the account, and once you've reached a certain age, you begin receiving checks.  The frequency of these checks depends on how you would like to receive them.  You can choose a lump sum in the beginning, a monthly payment, or an annual payment.  

Partial Annuities: The Definition

As illustrated above, once you retire, you are entitled to receiving your money in a lump sum, monthly payment, or annual payment.  With a partial annuity, you can split this up.  You can take part of the accumulated funds in a lump, and then take the rest either monthly or annually.

Partial Annuities: The Proposal

When given a choice, many retirees have decided to take the lump sum.  The main issue they have with this choice, however, is that they often run out of money

To help put a stop to this problem, the current administration has proposed that partial annuities get pushed harder as an option for retirees.  This would provide a great option for retirees, as they would receive both a nice amount of cash soon after retirement, but would also receive a monthly or annual payment.  

Also, employers often either don't offer partial annuities or do not inform employees when they do offer them.  Another part of the government's proposal would fix this as well by simplifying the calculations involved with partial annuities.  With simplified calculations, employers would have an easier time realizing the benefits of these annuities, and would pass this information on to their employees.

Longevity Annuities:  The Definition

A longevity annuity is one that pays quite a bit of time after retirement has happened.  The rules of this type of annuity declare that payouts begin to accrue once a retiree is 70 years old.  However, they are not given access to the funds until they're around 85 or so.  If the longevity annuity is offered through a 401k or IRA, a portion is funded by the employee's retirement funds.

Longevity Annuities:  The Proposal

Due to the late payout, not too many retirees utilize longevity annuities.  To make them more attractive, the government has proposed that they be simplified by lessening the age at which a retiree would have access to his or her money.  In addition, the value of such an annuity would not be included in any calculations.

401k Fees:  The Proposal

Employers often provide a variety of options when it comes to retirement plans.  To assist them with choosing the best plan, the government has created a set of rules wherein each 401k provider must list all plan administration and money management fees.  All plan providers must begin doing this no later than July 1st, 2012.  

In addition, the administration is proposing that each 401k provider design an easy-to-understand disclosure of fees.  This requirement was meant to start right away, but it has been delayed for an unspecified amount of time.

Source: http://firstsecurityfinancialshow.com/blog/bid/132199/Obama-s-Retirement-Rescue

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App Makes Money Between Friends Issues Less Painful, More Social

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VenmoWe've all had awkward moments like these: settling up the group dinner check when a cashless friend promises to pay you back; attempting the frustrating financial acrobatics of going four-ways on a wedding gift; twisting through the diplomatic contortions of how to phrase an email to a friend who owes you money.

There has to be a better way.

Venmo, a social network that provides a seamless exchange of money through mobile devices, promotes itself as the 21st century solution.

What? There's No App For That?

Andrew Kortina and Iqram Magdon-Ismail, former University of Pennsylvania roommates, built Venmo to take the inconvenience, awkwardness and frustration out of dealing with money among friends.

The idea for the app was born out of an almost-missed train. Back in 2009, Magdon-Ismail was coming up from Philly to visit Kortina in New York City, but in his rush to make the train, he forgot his wallet at home. Kortina loaned him money for the weekend, but they both wished they'd been able to exchange money by phone somehow.

"He ended up writing me a check," Kortina said. "We thought, 'There must be something wrong if there's no app.'"

But there wasn't an app, and among millennials perpetually attached to their phones, there was certainly a demand. Financial soothsayers are already predicting the demise of cash, credit cards and checks as mobile technology more effectively steps in to expedite the process of squaring up.

The way the pair saw it, events like dining out with a bunch of friends usually ended with a choice between bad and worse: Annoy a waiter with a dozen credit cards, or offer to pay someone back at some undisclosed future date. What the pair wanted was a simple, fun system for exchanging money for anything from dinner or rent to concert tickets and birthday drinks.

So with mobile payment platforms like Square growing rapidly, an app like Venmo was a logical evolution. It launched in an invite-only beta phase in February 2010, and already handles $10 million in transactions a month. The venture has acquired enough momentum to get angel funding from Accel, RRE, Greycroft, and Lerer Ventures (run by Ken Lerer, one of the founders of The Huffington Post, which like DailyFinance, is owned by AOL).

What's More Important Than Money

Venmo creates micro-social networks among the people you exchange money with: friends, roommates, family, co-workers. On Twitter, you may not know your followers; on Facebook you might see only a fraction of your "friends;" but on Venmo, you deal only with that relatively intimate circle of people you actually spend time with in real life.

To transcend the "you-owe-me-this" gruffness, Venmo behaves not just as a payment service but as a way of capturing and sharing all of the fun activities friends do together. For example, users have to annotate each monetary exchange with a squib on what it was for -- a feature intended to direct attention to the fun time you spent together, as opposed to the mere transfer of funds that followed.

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Users of Venmo love sharing these payment notes with friends, leaving comments, and browsing through payment histories to relive time spent with friends. Every payment tells a story of shared memories: birthday brunches, after-work drinks with colleagues and ballgames.

"You wouldn't think that payments are social and things that people necessarily want to share," Kortina said. "But what we discovered is that the payments are actually a proxy -- [Venmo] lets you collect these fun things for your friends and lets you share that experience with your friends."

In essence, Venmo collects your experiences like a scrapbook of your social life. Though how much the payment is for won't be shared, the notes can appear to your network.

The app's also clutch for spur-of-the-moment spending situations. Say, if someone's getting married and a bunch of friends are out for the bachelor party, a friend who couldn't make it into town can send along $20 through Venmo and buy a round.

Getting Your Money Without The Awkwardness

We all have that friend who -- despite the best intentions -- continually leaves money we've spotted him at the bar unrepaid. It's not a big deal, initially -- $15 here, $30 there. But it can add up, and it feels awkward to bug a friend to fork over the moola.

But with Venmo, along with a loan of money, you're also creating a note between the parties about exactly what's owed, and the social context in which the loan was made.


"So when you are paying someone back, the experience is more focused on what you [were] doing rather than the amount of money," Kortina said.

The app also sends automated reminders to the borrower, which takes the onus of being a nag off the app user and puts it on the software -- all in aid of easing future social interactions among friends.

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Source: http://www.dailyfinance.com/2012/05/08/venmo-makes-mobile-payments-friendlier-among-friends/

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11 Smart Places to Invest Your Money Now

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Smart Places to Invest Your Money NowThe financial markets and the economy are entering new territory, creating new risks and opportunities for investors.

America's slow recovery is gaining momentum, unemployment is declining and there are even signs that inflation will start to pick up. And while it will be years before before consumers and the federal government fully repair their broken balance sheets, housing prices recover and the majority of the unemployed get back to work, for the first time since 2007, the financial landscape is no longer defined primarily in terms of the crisis. The economy is moving forward.

As all economic transitions do, this moment of change is creating new possibilities in the financial markets. As the landscape shifts again, it's important that investors understand where these opportunities are and where they can put their money. Here are 11 areas experts think you should consider right now:

1. Commodities

As the global economic recovery accelerates, fears of deflation have been replaced with concerns about inflation. The prices of commodities and raw materials such as gold, oil and agricultural products have been rising for some time, but businesses have largely been unable to pass those higher costs along to consumers. That may change. While few experts believe inflation is likely to be a major problem, it can't be ignored.

"We are not big inflation bears right now, but that is not the point," says Seth Masters, chief investment officer for blend and defined contribution strategies at asset manager AllianceBernstein. "Even if there's only a 10% or 20% chance that inflation becomes serious, that is a big problem for investors. It will be bad for stocks and very bad for bonds, so it makes sense to have some protection against inflation, even if that is not the central case," he warns.

Real assets such as commodities can provide protection in an inflationary environment, says Kristi Mitchem, a senior managing director at asset manager State Street Global Advisers.

Rather than looking for the next hot commodity, invest in a broad range of commodities by tapping a mutual fund or an exchange-traded fund. "Investors should be well-diversified in commodities," says Mitchem.

Allocation toward real assets will vary depending upon the age and risk tolerance of the investor, but Mitchem says something in the 10% to 15% range is probably suitable for a broad range of people.

2. REITs

Certain kinds of real estate investment trusts can provide a hedge against inflation as well, according to Masters. REITs that comprise 15-year leases may provide no protection at all. "But a hotel REIT that is based on room rates that can be adjusted as the market demands may be very sensitive to inflation, although that is not always the case," Masters says.

3. Inflation-Protected Bonds

Inflation eats away at the value of traditional fixed-income securities, because the dollars you earn in interest aren't worth as much as they were when you made the investment. Over the years, financial institutions have created a number of products that shield credit from the ravages of inflation. TIPS, or Treasury Inflation-Protected Securities, are one way to go about this. TIPS offer a fixed interest rate, but the amount of principal fluctuates, as does the actual amount of interest the investor collects. At maturity, TIPS should be worth at least as much as they were when they were purchased.

Investors can also purchase I-bonds, a form of savings bond in which the interest rate, not the principal, fluctuates over time. Step-up bonds, in which the interest rate rises every year, can be found in the corporate and government agency credit markets.

4. Australian Dollars

The U.S. Treasury market was a huge beneficiary of the global flight to quality during the financial crisis. Soaring demand drove down interest rates and funded the stimulus that helped bring America out of recession. But now, the Treasury market is saturated with supply -- just look at the record $1.65 trillion 2011 deficit it's funding -- and demand as falling as the global economy recovers.

There are alternatives to U.S. Treasurys, though. "One way to hedge it is with the Australian dollar," says Steve Persky, managing partner of Dalton Investments, a $1.1 billion hedge fund based in Los Angeles. Australia came through the financial crisis without falling victim to the credit pressures faced by the U.S. and much of Europe. Its debt-to-GDP ratio was an estimated 22% last year, compared to 59% for the U.S. Furthermore, its proximity to China and the other Asian growth markets is expected to help the country boost its GDP by 4.25% this year.

5. Municipal Bonds

Given the level of alarm about the municipal bond market, investors might wonder if putting money into this sector is akin to buying subprime mortgages in 2007. Yet most issuers in the municipal bond market will repay their obligations without any problem.

Muni bonds yields -- say, 4% for 10 year bonds -- are attractive, especially considering their tax-free status. The question is how to protect yourself from weaker issuers. John Taft, the CEO of RBC U.S. Wealth Management (RBC), says he prefers general obligation bonds and revenue-backed bonds that are linked to essential services such as water and sewer service, not special projects. Some experts suggest that larger issuers with higher ratings tend to be safer, but Taft believes that independent research by an investor or analyst before buying is key.

6. Large-Cap Stocks

In the midst of the financial crisis, investors fled the equity markets and credit prices soared. As the first signs of the recovery took hold, investors began moving back into stocks. The Standard & Poor's 500 is now at 1,330 -- up nearly 100% from early 2009.

Yet there's still opportunity in stocks, even if a market correction occurs. "Large-cap stocks are relatively undervalued," Taft says. The S&P 500 index of large companies is up 24% over the last 52 weeks, while the S&P SmallCap 600 index is up 35% over the same period of time.

7. Dividend Stocks

Research shows that dividend-paying stocks tend to beat the long market. According to that theory, it's always a good time to invest in them. Wharton finance professor Jeremy Siegel researched the S&P 500 from 1957 through 2009 and found that the top 100 dividend stocks had an annualized return of 12.5% over the entire period, while the 100 companies with the lowest dividend yields returned 8.8%.

"Dividends are issued by quality companies that have a history of cash on their balance sheets -- and they are often large-cap companies, which are currently undervalued," Taft says.

8. Health Care and Consumer Staples

Investors who cycle out of the broad market in springtime and shift into defensive stocks such as health care and consumer staples tend to beat the market, according to Sam Stovall, chief investment officer of S&P Equity Research Services.

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The S&P 500 has returned about 6.1% a year since 1995. But if this simple rotation -- undertaken in April and lasting for six months -- is employed, investors' returns are boosted to 9.7%, according to Stovall. He says the results are even more pronounced among smaller companies. The spring defensive rotation boosts the return to 12.5%, compared to 9.7% for the broad market of smaller companies.

What accounts for this seeming mystery? Stovall says the broader market tends to perform better during the end of the year and late winter, thanks to the availability of bonus money, tax returns and other forms of liquidity. The rotation provides a defense against a traditional seasonal downturn for equities.

9. Stocks with Low Debt-to-Equity Ratios

If inflation picks up -- as many experts believe it will -- "investors may want to take a look at companies with low debt-to-equity ratios," Stovall says. As the cost of debt capital rises, companies with cleaner balance sheets will have less exposure. The debt-to-equity ratio for the broad market is 51%, but several industries have much lower ratios, including tech, with a ratio of 28%. "Tech companies tend to become self-funding because their median profit margins are high, at 15.4% compared to 9.2% for the broad market," Stovall says.

Other sectors with low debt to equity ratios include energy, with a ratio of 39%, and industrials, with a ratio of 46%.

10. Oversold Stocks

For the technically minded investor, some standards measures suggest when stocks are under- or oversold. The relative strength indicator (RSI), for example, tracks stocks' performance over the last 14 days and ranks them on a scale of 0 to 100. Scores below 30 suggest that a company may be oversold.

Stovall said that as of Feb. 15, investors might want to consider these stocks with RSI's under 30: Celgene (CELG), CVS Caremark (CVS), Dreamworks Animation (DWA), Family Dollar Stores (FDO) -- now the target of a $7.6 billion takeover bid by investor Nelson Peltz -- and Peoples United Financial (PBCT).

11. Cash

Finally, most experts say its wise to keep a certain amount of your assets in cash. "There is nothing wrong with keeping 10% or 15% in cash," Taft says. "Warren Buffett always said to wait for the home-run pitch. That is how you make money."

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Source: http://www.dailyfinance.com/2011/02/17/11-smart-places-to-invest-your-money-now/

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