I was reading through the Yahoo Personal Finance section the other day and noticed this article from Jack Guttentag. Generally, Yahoo Finance has interesting articles, though they usually stick to common thematic elements and lists of things that you should or shouldn’t do. Ok, guys… we’ve all seen enough of those lists. Give us some more columnists like Robert Kiyosaki and Penelope Trunk. I know why the columnists write these long articles that have been rehashed time and again and I know why Yahoo Finance wants them as well. It wants to be taken as a serious publication, after all However, it seems that sometimes they tend to illustrate examples in depth, when they don’t need much illustration at all.

Let’s face it, when you buy a house, if you expect to generate a long term return that is greater than the mortgage rate (after tax savings), it makes sense from a mathematical standpoint to use the tool we know as a mortgage. Now, you’ll notice that I said mathematical because there are a whole host of other considerations that need to go into the decision making process. For instance, there’s a reason why companies prefer equity over debt. Equity does not have to be repaid on a repayment schedule, nor does it generally cause the business to go bankrupt, or in this case, the owner to foreclose. Some people would claim that this and the fact that having your money in the stock market or short term securities is more liquid, is a much greater issue than anyone would have us believe.

I agree.

Financial flexibility is one of the keystones of American business and has allowed the United States to thrive in a calculating global environment. The flexibility that one needs doesn’t really differ much from person to person. It’s the amount that you’re putting into your house as a percentage of your overall assets that really matters. If you have the financial cushion, don’t need the flexibility, and can achieve a greater return on your assets than the after savings mortgage rate, keep the money. Even if you only have the first two, keep the money and take the mortgage. Otherwise, use the mortgage and pay it down according to schedule.

On a side note, what’s with all the mortgage applications that I keep on getting in the mail. Haven’t they figured out that most people aren’t refinancing these days, let alone responding to one of these cold call letters? More on this later, maybe.

Oh, and I forgot one thing. There’s always the risk that you don’t achieve greater returns. After all, there is risk in EVERY investment…

Last night, I had the distinct pleasure of listening to Michael Savage on my ride home from work (I’m pointing to his site even though he has a garish design - I figured somebody should let him know). In any case, he was talking about France’s president-elect Nicolas Sarkozy and what this means for the world. He views this as a big win for the Right. Let’s face it, France is a socialist society where capitalist companies fear to tread. I remember hearing horror stories of the impossibility of doing business, as well as the loss of flexibility in employer/employee relations (to say the least).

The allegory to America is clear and striking. While I wouldn’t expect this to be a predictor of events in the United States, I would say that it’s a harbinger, and it’s good for American business. Especially for those people that believe in fiscal conservatism. There’s a movement back to the right where fiscal conservatism reigns supreme, a dollar is a dollar, and people earn the money put in their pocket.

Of course, France is dealing with all the usual repercussions that it has to deal with. I’m sure it will have to deal with much more. In the interim, we should take hope that a fiscal conservative will show its true colors as we get closer to our elections, that the Bush curse will not extend from 2006 to 2008, and that we can breathe a sigh of relief when the next president sits in the oval office.

Guiliani anyone?

I always love when I get user interaction. Granted, Marc Hedlund isn’t exactly a disinterested party when it comes to the subject of Wesabe. However, he didn’t really know whether my comments were going to be constructive or scathing On a side note, comments on my blog are great. One, because they’ll make me feel better about the site and two, because I’ll actually know what to talk about going forward.

Some of you may have heard of the website Wesabe. It fashions itself as the Web 2.0 entree into the personal finance category and from what I’ve seen its made some headway. It actually has a blog that deals with some personal finance issues, as well as general “unbiased” promotion for topics on the Wesabe site. So its done some good, but not nearly enough. It should be doing so much more and is nowhere near what anyone would term as a success.

What should be done?

10 Improvements:

1. Make it fun! - Think more like a social network and less like a personal finance website. Make it easy for users to friend each other and interact. Tally the people with large feeds. Promote them and make them famous.

2. Account info - Let people enter manually if they feel like it. Why not? They’re the ones entering it and they like to control their information. Promote the automated solutions, allow the manual.

3. Provide tips from the outset - When a user signs up, shower them with personal finance tips. Maybe it won’t be targeted, but it will be effective. They’ll see that the site has something to offer and won’t walk away right after sign-up.

4. Make superstars! - I touched on it with tabulating the popular RSS feeds, but go a step further. Add a category for total wealth and start tabulating that. Allow people to make it public or private, but allow them to get in on the rankings. You’ll be surprised at what people will tell you. If they’re not interested, you’ll find out. Give them the option.

5. Integrate the mobile phone - Add the option to SMS reminders, tips, etc… to the mobile phone. This will make it more useful to the user. If its too much of an invasion, the user won’t use it. Period.

6. Widgetize! - Allow people to pull their tips, account info, wealth, feeds, etc… into a widget that integrates into the popular social networks. Use MySpace for what’s it there for and let it drive traffic back to your site. The more exposure, the more traffic.

Ok, that’s six, but who’s counting

I’ll be talking more about this later, but I think there’s a TREMENDOUS opportunity for some of the financial services companies out there to drive more traffic and more usage and more stickiness to their sites. They’ve started with features like online bill payment, but they haven’t gone “Web 2.0.” The first one to do it, will see major benefits. That’s why Wesabe has so much potential. It’s the uber-aggregator, that right now stands as the fair-aggregator of its times.

I’m sure you’re looking at this headline and saying… WTF? Can we really learn something from a movie like Spider-Man 3? After all, it’s just another film that cost a boatload of money to produce, repeats previous thematic elements, plays it safe by virtue of its sequel status, and will be thrown into the trashbin of history.

All four are correct.

It also now holds the record for highest opening gross on a weekend with a $151mm domestic and a $231mm international gross, continues a streak of successes, and will prove to be the highest-grossing trilogy of all time (in absolute dollars). Oh, and there’ll be a fourth

OK. “I still don’t understand.”

The point is… that the creators, funders, and producers of this movie have built a franchise that will continue to reap profit because of the past risks that they took. They took a calculated, yet very expensive risk to produce the first Spider-Man movie and are now reaping the rewards of that plan. You should be doing the same thing in your financial lives. It’s easy to keep socking away money in your 401(k). It’s not easy to take that money and use it for some project that you think has merit. Now, I’m not espousing that you shut down your 401(k) plan, light it on fire, and ship it out to sea. There’s nothing wrong with putting money in your 401(k). There is something wrong with allocating all of your savings to relatively safe investments known as equities, fixed income, and cash. In other words, the classical diversification that “experts” talk about has a foundation that is correct, but a “building” that’s faulty.

You need to allocate money to another type of asset class, and let’s call it “personal pet projects.” Personal pet projects that have a plan, a future, and a business model. Yet their personal pet projects. Maybe it’s the purchase of some real estate, or some online machination. It doesn’t matter.

Allocate money to that asset class.

If you’re unprepared, it may be the riskiest asset class there is. If you prepare yourself, weigh the rewards versus the risk, use the example of history (Spider-Man included), you’ll find that you can earn high returns with reduced risk.

Go for it. You’ll sleep better at night

Nothing pains me more than seeing the lack of successful personal finance websites on the web. Sure, Ask The Advisor has a top 25 listing, but at the end of the day nothing has been wildly successfuly to the tune of a YouTube or a MySpace, etc… Now, that may be a result of the nature of money and the web. People tend to guard that information more closely and show more reserve, but you would still think that we’d have seen one huge success. And I mean HUGE!

If you go the periphery, there are many successful businesses predicated on the ability for people to save money. Take www.ebay.com or www.woot.com. They both offer different models, but satisfied the classical need for search and savings by bringing unique business models to the fore. www.seekingalpha.com has been successful, picking up distribution deals with www.yahoo.com and others. However, I’d like to see something successful where it’s bringing traffic and lots of it. Wesabe has taken a first step, but it needs to do much, much more.

More on that later.

Gigaom is reporting that Natalie Portman is supporting the microfinance issue through Finca International. She’s bringing the message to Myspace. For those unaware, one of the areas of microfinance is the practice of lending miniscule amounts of money (miniscule to us with higher living standards of course) to individuals and businesses in third world countries. A couple of dollars can make a huge difference to these people.

I’ll be talking about these concepts very often. Generally, people don’t understand the power that small incremental changes can make over the long term. Even though this has been beaten into people time and again, its always helpful to illustrate with an example. Take a $1,000 investment. With the magic of compounding over 20 years @ 10%, it turns into $6,727.50. With the magic of compounding over 20 years @ 11%, it turns into $8,062.31. Shocking to some, but not to many!

Now, microfinance is a difficult balancing act, because the amounts are so small, it’s difficult to achieve scale in this matter and make it a viable business concern. However, there are many, many charities that are trying to achieve results. Some are good, some are not.

Choose wisely.

Ok… i’m sure you’re at the edge of your seats trying to figure out why you should care to read this blog. While at this point, there really is no reason, we’ll see what kind of material I can publish on a consistent basis. Maybe it’ll be useful, or at the least insightful.

In truth, let’s just say that I think there’s a distinct lack of guidance that helps people generate BETTER returns. Sure, there are commentators that discuss personal finance (e.g. www.pfblog.com) or personal entrepreneurship in the broader sense (e.g. www.iwillteachyoutoberich.com), and I’ll likely do the same thing. But they don’t drill down on it from my perspective and I think there’s something to offer there, of course.

Since I know none of you like mysteries, let me explain the AI in the title. Artifical Intelligence. The only person out there that will generate a better return for your money is you - not a price comparison engine like www.shopping.com or a mortgage comparison service like www.eloan.com. Services like that will help you in humanistically determining what YOU should do.

Onward!