Cheat Sheet Q&A:

The topic:  Picking stocks & how much to invest


The entry:  My question is a two parter...  First I'm looking to begin investing in stocks on my own to supplement my retirement accounts.  I know you've said that stocks are the best performing investments over the long run.  My first question is if you'll walk me through what you look for in companies that you're considering for investment.  My second question is how much should I invest in each company?


Bottom Line:  Forgive me if this is a touch redundant if you’ve heard me cover this before because I do take on this topic / question a few times per year but we constantly have a flow of new listeners/readers and its one subject that may not make sense to you until you’re ready to use it.  So with that in mind…  First my base investment guidelines for stocks:


I invest in companies that:


  • Are growing top-line (revenue) year over year
  • Have more cash than debt on their balance sheet
  • Pay a dividend that is higher than what you can earn without taking risk (savings rate)


In terms of how much to invest:


  • $1000 ideally though $500 per investment at a minimum


Many think that you have to invest very large sums of money at a time in order to make it worth your while.  Many also will fall in love with one or two companies and just pile money into those companies.  I don’t agree with either strategy, no matter how good the one company may be.  We aren’t trying to get rich quick.  We’re looking to achieve meaningful and sustainable wealth. 


The reason I like the $1000 level is that it’s approachable for most individual investors to be able to make regular investments and it doesn’t consume more than 1% of your initial investment through fees to buy.  If you use one of the leading online brokerage firms it should cost less than $10 to make a purchase. 


Happy investing!


If you have a topic or question you’d like me to address email me:


Audio Report:



If you're selling your home you need to be realistic:


Bottom Line:  The strong housing recovery over the past two years has certainly provided a much better day for those who are looking to sell their home.  According to the National Association of Realtors:


  • 52% of homeowners think it’s a good time to sell a home


So a majority of homeowners are confident about pricing.  That’s a good thing.  However many are actually over confident and that can come back to bite them in the backside if they’re looking to sell. 


  • 40% of home sellers are deliberately pricing above estimated market value in the hope that someone will bite at the higher price


Here’s the problem with that thought process.  There are two points of failure.


I’ve been hearing about the average fall through rate for pending homes in Florida is between 30-40%.  That’s a really high rate.  This is also the first point of failure.  Let’s say that you purposely price above market and someone actually bites on the price.  If the buyer is using all-cash, you’re good to go.  If the buyer is financing, it’s likely a no go because the property won’t appraise for the lender.   The other point of failure is even uglier. 


It’s been proven time and time again that it’s better to have interest by multiple parties than to have very few people even looking at your property because the asking price is clearly above market rates.  This is the situation that many of the 40% find themselves in.  Having a home on the market for months without serious interest only to go through a series of price cuts in the hopes that someone finally will purchase the home.  Pricing a property to sell is one of the more difficult and most important aspects of selling a home.  Get that right and avoid two of the biggest pitfalls associated with selling in today’s housing market. 


Audio Report:



More than a quarter of us want to leave our mobile service provider!  How we rank the big four:


Bottom Line:  Research firm Kantar Worldpanel wanted to figure out just how many mobile service users are likely to switch their services (since the competition to lure you away is fierce amongst the competitors right now).  They decided to survey only those who were on their first device or devices with a new service provider to get an objective view.  When they surveyed 20,000 users they found the following:


  • 26% of users wanted to change their mobile service provides!


So certainly there are many people to lure away.  Here’s the breakdown by users of the big four providers:


  • 36% of Sprint users want to change
  • 29% of AT&T users want to change
  • 21% of T-Mobile users want to change
  • 19% of Verizon users want to change


So there is clearly a difference in the level of satisfaction but when even the best means that 1 in 5 users want out, you’re likely to see every angle used to try to exact that eventuality.  After all, that service provider will need to replace the users that want to get away from them…


Audio Report:



The Netflix price hike hits this week - here's what it means to you:


Bottom Line:  So the previously reported Netflix price increase is here.  That is if you’re new to Netflix.  Here’s what the price increase means:


  • If you’re a new customer to Netflix the base monthly expense for service has now increased from $7.99 per month to $8.99 per month
  • If you’re an existing customer your price is unaffected for the next two years


That’s it.  Pretty straight forward... 

Audio Report:



The credit card security revolution is in the works:


Bottom Line:  Much has been made of the lack of credit and debit card security since the massive breaches at major retailers late last year.  And rightfully so btw… 


About a week ago Target became the first retailer/major credit card servicer to embrace the smart credit card saying that all store issued cards will be switched over early next year.  Apparently they’re only slightly ahead of the curve.  MasterCard and Visa have teamed together for a timeline on smartcard role outs in the US next year. 


MasterCard and Visa have set an October 2015 deadline to institute the encrypted credit and debit cards in the US.  While the adaptation has been common in other countries, it’s been slow in the US because of the size and related cost.  The estimate is that it will cost about $20 billion to equip us consumers and retailers with the needed cards and technology.  With over $12 billion in credit and debit card theft per year now in the US however, it makes more sense to take the plunge and make shopping a must more secure experience again. 


Audio Report: