Friday, January 27, 2017

Is Kickfurther A Scam or a Legitimate Investing Option?

I had a comment left on a post suggesting that I needed to re-evaluate Kickfurther and the posts I've written about it.  Since it has been a while since I looked at the platform as a whole, I'm going to take some time and do so.

What Is Kickfurther?

Kickfurther is a platform that allows ordinary investors to assist businesses who need money to buy inventory.  The Kickfurther concept is that rather than lending money to the businesses, investors pre-purchase the inventory, and then return it to the business to sell on consignment.  As the inventory sells, the business repays the investors, with a profit margin.

For example, Wanda sells widgets.  She buys them from the widget factory for $10 and sells them for $20.  Generally speaking she sells 500 widgets a month.  She comes to Kickfurther and asks investors to finance 1,000 widgets for six months, so she asks for $10,000 and promises to pay back $11,000 by the end of six months. 

Wanda knows it will take a month from the day she places the order until the widgets arrive at her store,so the offer is written so no payments are due for two months.  Then, every month, Wanda is supposed to pay for the widgets she sold that month.  How much she is required to pay per widget is determined ahead of time, and that is expressed at the Percent Sold for Return--so that if Wanda's contract said she had to give KF $15 for every widget the PSR would be 73%.  If Wanda only had to pay $11 per widget the PSR would be 100%.  Obviously a lower PSR is better for investors.

If production is delayed, or people decide they don't want widgets anymore, and at the end of six months, Wanda hasn't sold enough widgets to repay the investors, the investors are allowed to vote on whether to allow Wanda to continue, or whether to cancel the offer.  If the offer is cancelled Wanda can either pay off the offer or return the unsold widgets to Kickfurther which will then try to sell them.If investors vote to continue, then Wanda continues to sell the widgets but no additional compensation, in other words, no extra interest or late fees, is due to the investors. 

What Problems With Kickfurther Have Arisen?

The bottom line is that in more than a few instances, Kickfurther investors have not been paid.  This list tells you the current statistics.  Right now, if you do the math, the "average" Kickfurther investor who invested in a random sample of offers is in the hole.  Investors who lose money are not a happy lot.

The question is who is to blame for the failed offers.  The reality is that investing has risks and anyone who thought these deals were sure things isn't very bright.  However, I'm not convinced that the risk I signed up for is the risk that ended up getting me.

In reading the information on Kickfurther's website, I learned that KF owned the merchandise and that the businesses were selling it on consignment.  I assumed (and you know what they say about assuming) that KF had proper contracts and safeguards in place, so that the only real risk we had was the risk that those widgets wouldn't sell.  My personal appreciation of the risk was that we'd probably get at least some of our money back on all offers, that most would complete and that KF would end up with odd and ends of junk no one wanted to buy on some offers.

I was wrong.

First of all, it seems KF has no enforcement teeth.  They say their contracts have improved and that they are now filing UCC-1 statements on the inventory, but there have been many cases in which the companies have just disappeared so to speak.  They either never paid anything or quit paying and did not return the inventory.  In some cases lawsuits have been filed, but my guess is that they will be fruitless since one of the main things needed for a successful suit is a financially viable defendant.

There just does not seem to have been much due diligence on the companies. Kickfurther has recently begun pulling credit reports but that is a new innovation.  They have done offers for companies that it turns out don't really exist.  There are companies that admit to selling inventory and using the money for things other than repaying investors.  Right now I have 17 offers that have gone bad.  Of those only 2 have turned unsold inventory over to Kickfurther.

In short, as it as played out so far (almost two years), while KF bills itself as buying inventory that is sold on consignment, in reality, as I preceive it, though not billed as such, and specifically denied by Kickfurther, it is basically making unsecured loans to small business, which is a risky business.  Established companies that do it successfully charge higher rates and have tighter controls.

I added the text in red at the request of Kickfurther. I receivd an email that said
it's been brought to our attention that one of your articles is incorrectly labelling Kickfurther as an small business loan which is not part of our model.  I've been requested to ask that you update the article to accurately represent the Kickfurther model. ...please alter the text so that the copy accurately reflects the Kickfurther model.
At least one of the Kickfurther Merchants of the Week I interviewed referred to their arrangment as a "loan".  Kickfuther has had no way to guarantee that the invested money was spent on the backed inventory and no mechanism for tracking sales and making sure the sales matched the payments.  While the paperwork may have said "consignment sale agreement", you know what they say about ducks, don't you?

If it walks like a duck, and quacks like a duck, is it a consignment sales agreement?

Can Kickfurther Be Fixed?

Honestly, I don't know.  I don't know the realities of the business community.  However, some major problems I see:

No automatic payments on sales

I don't know the technological viability of the idea, though I tend to think it could be done.  Simply put, when one of our consigned items sells, Kickfurther needs to get notification and when the check for it hits the bank, KF needs to grab it.  Expecting a company that is having trouble paying the bills to pay us first obviously isn't working.

The overwhelming majority of companies, even companies which have paid as promised, have paid in a linear fashion.  In other words, if they had five payments due, they paid 1/5 in each payment.  I find it hard to believe that none of those companies sold more than what was necessary to remain in good standing with investors.

Clunky cancellation/collection procedures

Since payment is due only when a product has been sold, being late with the first payment, or having payment be less than the scheduled amount isn't necessarily a cause for alarm.  However, I have several offers that are quite late, without any explanation from the company.  In order to cancel the offer and make the balance due in 30 days, over half the dollar-weighted investors have to vote for cancellation.  My guess is that in most cases by the time that is done, the inventory is long gone and the money spent on the electric bill or some other pressing business need.  Any decent debt collector will tell you that the sooner you get onto a problem borrower, the greater your chance of success. 

I have one offer where the business owner admitted to selling some of the inventory and using the money to pay himself a salary.  Eventually, about six months ago, and after payments were eight months late,  the offer was cancelled.  KF just asked the backers to vote on a settlement agreement with this company, but they've given us no information on which to base a decision, despite requests on a private message board and email requests.  At this point I have no idea whether the offer we have is any good.

Some backers are pushing for a lawsuit, and if we have a viable defendant that may be the way to go.  However, the almount owed is under $20,000.  I doubt the contact calls for penalties, interest, attorneys fees etc.  Based on things the owner has said, my opinion as someone who knows something about lawsuits (but I'm not a lawyer and I don't give legal advice) is that we don't have a slam dunk case against him, which means to win the case we'll need to litigate, not just file suit and get a default judgment. Assuming we win, we'll then have a judgment, and collecting on those isn't necessarily easy, particularly when the defendant has few assets and could see bankruptcy as an alternative.

On the other hand, if businesses see that KF isn't willing to legally enforce its contracts, more will try not to follow them. 

Return is not commensurate with the risk

At this point, the average Kickfurther investor has lost money.  I'm in that number.  I'm not too far in the hole, but I'm there.  Clearly the reward isn't worth the risk.  Yes, if you managed to avoid the defaulting offers, you'd have a good return, but unless there are people out there who are more expert than I am, avoiding the bad offers is more a matter of luck than knowledge.  

Prosper used to let lenders bid on loans.  Unfortunately what happened is that the amatures doing the bidding bid the price down to the point that the defaults took the profits.  Early Kickfurther offers were often over 10% for 6 months.  When investors snapped them up in seconds, the returns dropped.  Now that investors aren't as quick to grab offers, returns are climbing.  However, I don't think they are up to the point they should be.

Kickfurther needs to develop some sort of rating and/or underwriting procedures and they need to price offers at a rate compatible with the risk. 

Too rich for my blood

Kickfurther recently switched to a "pack" system, where you buy the smallest possible portion of the consigned inventory, rather than contributing a certain dollar amount.  Going back to our widgets, If Wanda had only one type of widget then a "pack" would cost $10 and would consist of one widget.  If Wanda was buying 10 different types of widgets, then a pack would cost $100 and would have one of each type.  Recently there have been packs that cost several hundred dollars, and one that was over $1,000.  While there are certainly some KF investors playing with that much money, I don't think most of us are.  Given the luck I've had with KF so far, there is no way I'm putting subtantial money into any offer.

Update:

I started writing this post last night.  Tonight Kickfurther's CEO posted an update on reddit that stated that starting February 1, all offers would be backed by purchase orders and that Kickfurther would have tighter controls on the inventory and the money.  Further, he was hoping to raise enough money to pay out the failed offers.  You can see his message here.   I wish him the best, and I hope this new model works.  

Conclusion:

I've said before that Kickfurther is a place for money you can afford to lose.  I haven't seen anything that makes me change that opinion.  I think Kickfurther has potential but right now, on average, investors are not making money.  

I also think they are doing a horrible job with PR right now.  The CEO's post about improvments to the platform was a good thing, but then he asked for positive reviews at Trust Pilot (where I had previously written a cool review).  When folks went there, they found that Kickfurther's business development person had given Kickfurther a five star review.

I've given Kickfurther a lot of free and reasonably positive publicty.  Even before my red text addition above, I think it was clear to any reasonably intelligent reader that Kickfurther did not consider itself to be a lender.  Was it really necessary to tick me off by requesting that I change my post?

If you'd like to give Kickfurther a try, if you use this link, you'll get $5.00 toward your first offer.  If you have a business that is looking for a new way to finance inventory, use this link to see if KF will work for you. 
Disease Called Debt

Book of the Month: Step By Step Investing




Summary

Step by Step Investing is a  short book that encourages readers to get their finances in order, determine their goals and then to invest.  

For a book that is ostensibly about investing in stocks, little of the book is dedicated to teaching readers how to pick the best stocks.  Rather, Hogue encourages people to put the majority of their investment dollars in ETFs.  

However, Hogue does devote some time to explaining what some of the major statistics such as PE ratio, bid-ask spread, beta, and sales volume mean to the average investor.  

This is one of three Step By Step Investing books. 

Readability

While I read far faster than the average person, I finished Step by Step Investing in an hour while walking on a treadmill.  I doubt Hogue would encourage most of his readers to do that because each chapter ends with action steps--things you should do to prepare yourself to invest in the stock market, and things to do after you have invested.  Obviously, I did not do them  while on the treadmill, however, most are things that my husband and I have done over the years.  Some examples are:
  • Read through each investing rule [the rules are discussed in the chapter] and think about how it applies to your plan and your needs;
  •  Decide how much of your portfolio you will invest in stocks, bonds and real estate
  • Commit to only checking your portfolio value at set intervals.  
Nevertheless, the book was interesting and easy to read.

Is Step by Step Investing Worth the Money?

If you know nothing about investing in general and investing in the stock market in particular, Hogue's book is a good introduction.  Joseph Houge is blogger and the writing style is similar to that you see on blogs.  Hogue does not claim to have any secrets that will gain you an overnight fortune, which to me bolsters his credibility.  

If you are an experienced investor you may learn something new.  I liked Hogue's explanation of the difference between a mutual fund and an ETF and why he preferred ETFs.  I know that ETFs are the "in" thing now, I've just never been able to figure out why they were preferable to mutual funds.  Hogue's explanation made sense.

What this book will not do is tell you how to conduct an in-depth review of a company to determine whether buying stock in it at its current price is a good idea.  

The book is available as a Kindle download for $2.99, which I think is a reasonable price for the size and quality of the book.  I understand that self-publishing print books is expensive, but for the $6.99 Hogue charges for the paperback, I would expect a more in-depth, longer book.  

Rating of Step by Step Investing

You can check my book blog to get a better idea of what my ratings means.  I'm giving Step by Step Investing a B.  It was interesting and readable, however, it was shorter and contained less information than I would expect in a book. 

Source of Step by Step Investing

This month I am a Kindle Unlimited member and Step by Step Investing is one of the books available to members under their pay one price monthly membership.

Take Action:

Since the books I will be reviewing on this site all deal with personal finance in one way or another, I am going to include a "take action" section in each review.  That action will be at least one thing I will do as a result of reading the reviewed book.  A month later I will report, via another post, exactly what I did and what results (if any) I had.  

My take action as a result of this book will be to compare some Vanguard ETFs that are similar to our Vanguard Mutual Funds and see what the differences in performance are, and decide whether we want to switch at least some of our money from mutual funds to ETFs.  

The book links in this post are Amazon Associate links.  If you click them and purchase from Amazon, I get a small commission.

Disease Called Debt

Tuesday, January 24, 2017

5 Risk Free Investments


Face it; money is important.  When we get a few dollars ahead the last thing we want to happen is to lose our hard-earned cash to anything.  What we need are some risk-free investments.  Luckily, I have a list:
  1.  
  2.  
  3.  
  4.  
  5.  
Pretty impressive, right?  Ok, the title was clickbait but the list is real.  Every risk-free investment is part of that list.  In short, there is no such thing.  Every investment has risk, the trick to investing is to understand the risks of each investment and to be able to determine if the risks are worth the rewards.  Let's take a look at the risks and rewards of some popular investments.

I'm Putting My Money in a Safe!

Whether you are talking about a safe, a safety deposit box, a treasure chest in the backyard, or the space under your mattress,  there are people who like to keep their money close at hand, outside the view of the banking system and government.  Some of these people are hiding ill-gotten gains, but others are ordinary people who earned their money the honest way and paid income taxes on it.  

The risks of this investment include misplacing your money or, if you die, no one knowing where it is. If the wrong person gets wind that there is cash on the premises, robbery becomes a risk. Also, the money doesn't grow--while $10,000 would have purchased a nice car when I graduated from college, today's $10,000 car is definitely used.  

On the other hand, some families use versions of this investment to save for fun goals.  Putting cash saved by economizing in a visible place where the family can see it (and hopefully where others don't) can motivate the troops if you are saving for a special trip or a new toy.  

Bank Accounts Are Insured, I'm Putting My Money in the Bank!

Bank accounts are insured up to $250,000 per depositor per bank.  You can't lose money unless the federal government goes out of business, right?  Wrong.  It is true that if you put $1,000 in the bank, that $1,000 plus interest will be there when you go to withdraw it.  However, you will have to pay taxes on the interest, and inflation will erode the purchasing power of your principal.  As a long-term investment, bank accounts run a substantial risk of not growing fast enough to cover your needs.  

The certainty of bank accounts is their strength.  If your goals include spending a sum of money in the next 2-3 years, that money should be in the bank. It may not grow between now and then, but you are protected from the volatility of other investments.  If your child starts college a year from now, you don't have time to recover from market loses between now and then.  The risk of not having the money when the tuition bill comes due two years from now is greater than the rewards of a sensible stock market investment.

How About Bonds?

When you buy a bond, you are lending someone money.  If you lend money to the US government, you chance of being paid as promised is very high.  If you lend money to a company in financial trouble, your chance of being repaid is somewhat less.  

Bonds can be coupon bonds or zero coupon.  Holders of coupon bonds are entitled to payment of a certain amount of interest yearly, and repayment of the principal amount when the bond expires.  Zero coupon bonds do not pay interest yearly, it accrues and is paid when the principal is repaid.  

Bonds carry three risks:  Interest rate risk, inflation risk and credit risk. 

Credit risk is the risk that the issuer may not be able to repay the loan. The way to mitigate that risk is to invest small amounts of money in many bonds rather than large amounts of money in a few.  An easy way to do that if funds are limited is to invest in bond mutual funds or ETFs.  

Inflation risk is the risk that your money won't buy what it did when you invested it.  A way to mitigate that risk is to buy bonds with a variety of maturity dates so that you regularly have money available to re-invest.  Also buying shorter term bonds helps with inflation risk because when inflation goes up so do interest rates.  Investing in short term bonds allows you frequent access to your money, so that you can re-invest.

Interest rate risk.  As noted above, when inflation rises, so do interest rates.  If you purchase a bond today that pays 2% interest, as long as the issuer is financially viable, you will receive your 2% and, in the end, your principal will be returned.  However, if inflation rises or something else happens so that similar bonds are paying 3%, if you need to sell your bond, you will get less than face value for it.  Why should I buy your 2% bond when I can buy a 3% bond?  You have to make it worth my while by lowering the price.  In the same way though, if I have a 3% bond and interest rates drop, I can sell it for more than face value.  The shorter the term of the bond, the lower the interest rate risk, and the lower the interest, all  other things being equal.  

Surely You Don't Recommend the Stock Market?

Stocks are not the first thing that comes to most people's mind when "safe" investments are discussed. We all see the news about the stock market going up and down.  We have heard of people who have made a mint, and of people who have lost their shirts.  

Over the long haul, stocks are the only investment that consistently outpaces inflation and taxes.  If you are saving for retirement and not using stocks or stock mutual funds, you run a very real risk of not having enough money.  On the other hand, if you need money for something next year, if you invest the money in stocks, you run a very real risk of not having enough money due to a routine short-term drop in the market.  In short, stocks are a long term investment, not a place for money you will need soon.

There have been volumes written about how to invest in the stock market and I won't repeat them here except to recommend picking a good low-cost index fund, investing your money and leaving it alone. 

I Read on the Internet About a Great New Investment...

You and thousands of other people.  Some things to keep in mind when evaluating any investment opportunity:

Risk vs. Reward

In general, the higher the potential reward for an investment, the higher the risk.  Lottery tickets have a very low chance of paying off, (and a very high chance of losing all your money) but if your powerball ticket hits, your reward is tremendous.  You aren't going to lose money in a bank account, but you won't get much interest either.  

Supply and Demand

If the supply of something exceeds the demand for it, those who own it will have to lower the price to increase demand.  If the demand for something exceeds the supply, the price of it will go up.  Put another way, if you offered me a goose for $20 right now, I wouldn't take it.  I don't want one and I don't think I could sell it for more than $20 immediately and I don't want a goose!  However, if you proved to me and to others that you had a goose that truly would lay a golden egg, we'd get in a bidding war for it and I'm sure I'd end up paying you more than $20 for that delightful bird. 

Normalization

In general things tend to normalize over time.  What that means is that if you find a "hot" investment, it probably won't be "hot" for long.  If you take a risk and buy XYZ stock when no one else wants it, you'll make a pretty profit when "everyone" discovers that the company is great and starts bidding up the price.  However, those who start buying it later in the rally won't make nearly as much; eventually the price of the stock comes into line with the realistic profits of the company.  

A good example of normalization and its cousin "supply and demand" is Kickfurther, about which I've written extensively on this blog.  During the summer of 2015 Kickfurther was blowing and going. Offers of 10% for six months were not uncommon and some companies offered even more.  It was great and those of us who were investing were getting rich fast.

Then those businesses noticed that offers that went live at 4:00 p.m. were fully subscribed by 4:00:20.  They did what any sensible business would do, they lowered the potential reward.  It was ok with them if it took a full minute for the offer to fill.  Slowly the average offered interest dropped.  Then the defaults started to hit and investors started to question the viability of the platform.  At the very least, they calculated the return necessary to make a profit given the default rate.  Offers began to languish unfilled.  Interest rates began to rise.  

If an investment sounds too good to be true, it probably is.  

So, the best risk-free investment?  There isn't one. However there are a variety of investment products available, each with its own risks and possible rewards.  Pick the right ones for you. 


Disease Called Debt

Friday, January 20, 2017

Stock of the Month: Hanesbrands, Inc.

This is the first of hopefully many monthly posts about the stock I chose to buy that month.  I want to make it clear from the onset that I am not a professional investment advisor, that what is right for me may not be right for you and that this account, for me, is in between an investment and a toy.

I firmly believe that for most people the best long-term way to invest is in a diversified portfolio of low cost index mutual funds or ETFs.  That is where the majority of my investment money goes. 

However, being a bit of an investment nerd, I want to try to beat the system and pick my own stocks. This portfolio is a very small portion of my investable assets.  To put it another way, instead of buying shoes I don't need, I'm buying stocks I don't need; if they all tank tomorrow, life will go on as before.

What Stock Did  I Buy This Month?

This month I bought two shares of Hanesbrands, Inc.

What Does Hanesbrands, Inc. Do?

Haneswear, Inc. makes underwear and active wear. Their brands include Hanes, Bali, Playtex, Champion and L'Eggs.  

Why Did I Pick Hanesbrands, Inc.?

This month I decided to start my search for a stock at Morningstar.  My library subscribes to the full version of Morningstar and I can access it from my home computer.  I searched for five star stocks and then reviewed the list for companies with which I was familiar.  There were two:  Bed Bath and Beyond and Hanesbrands.  My Loyal3 portfolio already has Target and Kohls so I didn't want another retailer.  I decided to investigate Hanesbands further.

I then checked A Frugal Family's Journey's list of stock analysis post  in 2016 to see if anyone had written about Hanesbrands recently, and I found that Dividend Diatribes had and that JT was at least interested in the stock.  

I went back to Morningstar and read their analyst report written in October, 2016 which valued the stock at $39.00.  Since I bought at $21.93, Morningstar believes I got a bargain.  Gurufocus  has a calculator which only gave a value of $17.63 but I didn't find that until after I bought the stock. Zachary Sturdy wrote about Hanesbrands for Seeking Alpha and he valued it at $28.49 per share.

I decided that when I thought underwear, I thought Hanes and I'm sure a lot of other people do too.  At the price I paid, if dividends do not go up this year, I'll earn 2% .  The expectation is that Hanesbrands will raise the dividend.

Where Did I Get the Money?

The money I invested in the Hanesbrand, Inc. stock is money paid as dividends in my Motif portfolio.  

From Whom Did I Buy the Stock?

I purchased my Hanesbrand stock via Robinhood.  I paid no commission and will pay no commission when I sell.  

Did you buy any stock this month?
*Part of Financially Savvy Saturdays on brokeGIRLrich, and Racing Towards Retirement*

Tuesday, January 17, 2017

2016 Investing Results

One thing most of us like to do periodically is to take a look at our investments and see how they are doing.  This is my end-of-year check-up.

My 401(k)

My firm gives me 5% of my pay; I save 6%.  I have a diversified portfolio of mutual funds and this year I earned dividends equivalent to about 20% of my pay and, according to the fund company, my total return was 3.71%, which is dissapointing.  However, a lot of it is invested in bonds--we are getting older and aren't as comfortable with a total stock portfolio as what we once were.

My Husband's 401(k)

His company gives him 3%, he deposits 5%.  He invests in a small/mid-cap fund and a money market fund and this year he earned about a month pay in interest/dividends.  

Vanguard

This is where the bulk of our non-401(k) money is.  We both have Roth IRAs, regular IRAs and we have a joint non-IRA account.  While we have been moving money to Vanguard funds, we still have a substantial portion invested in a large number of mutual funds purchased for us by the finanical advisor we used a couple of years ago.  He and his company invested three different accounts in the same mutual funds and in order to get rid of them we have to pay $20 per account.  As long as they perform at or close to their benchmark we are going to leave them alone. There are a couple that we like and re-invest dividends received; most are simply ok. That financial advisor was not one of our better financial decisions. 

We have invested in the following Vanguard funds:
  • Vanguard Total International Bond Index Fund
  • Vanguard Total Stock Market Index Fund
  • Vanguard 500 Index Fund
  • Vanguard REIT Index Fund
  • Vanguard Total Bond Market Index Fund
During 2016 we collected dividends equal to 3.2% of the final value of the portfolio.  Vanguard says our annual return for the last year was 8.8%.  

Lending Club

At the beginning of the year, my account value was $19,278.08.  As of December 31, it was worth $20,529.82, a difference of $1250.74 which means a return of about 6.5% of the original balance.  However, if I use Lending Club's adjusted number, which takes into account notes that are currently late, and compare it to the adjusted number at the beginning of the year, the rate of return is only about 5%.  We have not added any money to this account this year.

Prosper

We added $850 to this account this year, with the last contribution being in July.  The account started at $16581.46 on January 1.  On December 31 it was valued at 18,561.40 .  If you take the difference in the balance at the end of July, compare it to the balance at the end of December, and annualize the difference you get a return of 4.45%, which is a far cry from the 12.76% shown on my dashboard.     

Motif

Motif allows investors to buy a basket of up to thirty stocks for one $9.95 fee.  Sometimes they run specials waiving or reducing that fee.  Most of my motifs were a "Motif of the Week" and purchased without paying a commission.  I will have to pay a commission when I sell.  Overall, I invested $7000.00.  I've been withdrawing my dividends and reinvesting them via Loyal3 and Robinhood. 

Here are my motifs:
  • Things I Like:  This was self-designed. On April 15, I invested $1000.00.  As of December 31, it is worth $1014.63, and, as of this moment, is trailing the S&P 500.
  • Buyback Leaders:  Stocks in companies that are buying back their stock.  Purchased $1000 worth $1410.46.   It is up 42.1% since I bought it, compared to 10.2% for the S&P.
  • Cyber Security:  Anti-hacking stocks.  I bought $1,000 worth and it is now worth $810.77.  Since the S&P is up 9.7% and this is down 16%, it hasn't been a good choice.
  • High Yield Dividends:  My $1,000 purchase is now worth $1137.94.  It is up 15% whereas the S&P is up 11.3%.
  • Online Gaming World:  Stocks of companies involved in Multi-Player On Line Role Playing Games.  I bought $500 worth and it is now worth $631.85.  Motif says it is up 40%, which doesn't match my math, and the S&P is up 9.7%.

  • Online Video:  Bought $250 worth, and it is now worth $179.06.  While the S&P has gained 6%, this has gained 10.2%.  I think some shares were liquidated and the cash sent to me.
  • Growing Dividends:  I invested $2,000 in this motif, and it is now worth $2287.19. It is just about equal to the S&P.  
During this year, I earned $170.76 in dividends.  

Loyal3

As noted below I've been reducing my exposure at Kickfurther and transferring that money to Loyal3 where my portfolio consists of the following stocks:
  • AMC:  3.2046 shares.  Invested $90; 12/31 value $109.05
  • Alibaba:  .5812 Shares.  Invested $50; 12/31 value $51.04
  • Apple:  1.0035 Shares.  Invested $115.  12/31 value:  $116.23
  • Disney:  1.6904 Shares.  Invested $165.  12/31 value:  $176.17
  • Hershey:  .8119 Shares.  Invested $75.00. 12/31 value: $83.97
  • Intel:  3.2986 Shares.  Invested $105.00.  12/31 value:  $119.64
  • Kohls:  3.3451 Shares.  Invested $145.00.  12/31 value $165.18
  • Target:  2.1570 Shares.  Invested $155.00.  12/31 value:  $155.80
  • Time-Warner: 1.1146 Shares.  Invested $90.  12/31 value:  $110.68
  • Unilever:  3.1645 Shares.  Invested $140.00.  12/31 Value:  $128.0
  • VF Corp. 3.2684 Shares.  Invested $190.00 12/31 Value:  $174.37
We started the year with this portfolio valued at $152.07.  It is now worth $1394. 39 which is $70.93 more than we invested.  During the year we collected $18.36 in dividends, which is 1.3% of the final portfolio value.  Since most of the purchases were toward the end of the year, I'm happy with the results. 

Robinhood

I own two shares of AT&T, one share of Lending Club and two shares of Visa.  This account is very new and my goal is to purchase at least one share of something every month. 

Kickfurther

This is still a toy, and I do not recommend anyone put serious money into it.  At this point, I'm ahead, but not by much.  I have earned $393.43 on offers that have finished.  I have lost $319.02 on offers that have been cancelled for non-payment.  I feel relatively confident that I will get some of that $319.02 back, I'm just not counting on it being a lot. 

I've cut my Kickfurther exposure quite a bit in the last few months, partly because of concerns about the viability of Kickfurther itself and partly because the returns were not what I had hoped.  I will probably keep some money on the platform, at least partly because it gives me something to write about.

*Part of Financially Savvy Saturdays on brokeGIRLrich, and Racing Towards Retirement*

Friday, January 13, 2017

2017 Financial Goals

The beginning of the year is a common time to set goals, so I thought I'd share mine.

Pay High School Tuition From Checkbook, Not Savings

My youngest will be in eighth grade in September and in this area, for Catholic school kids, that means high school (long story as to why, but yes, eighth grade is the first year of high school, not the last year of elementary/middle school).  It also means that her tuition will double.  On the positive side, this should be the last summer of paying for camp and I just made the last payment on her sister's college education, so the shock to the checkbook isn't quite as bad as it seems. Still, the tuition is due June 1, so we need to get saving.  This is the time of year when our checking account is at its lowest, however, we have no big bills due until April so this is time to save.

Continue 401(k) Contributions at Current Level

We thought about bumping this up a little, but our health insurance deductible increased and while we don't tend to be a sickly family, I'd like to have a little buffer there.  Also, I know I'm looking at more dental bills this year and since we didn't max out our IRAs last year, we have plenty of place to put retirement money outside the 401(k)s.  

Work On Monetizing This Blog

My blogging goals post last week talked about how I'm going to do that.  

Buy at Least One Share of Stock Per Month

Between the dividends earned on my current portfolios with Motif and Loyal3 and a few dollars we won't miss once it's gone, I'm sure we can invest in at least one share of stock in some company every month, and since we'll buy through Robin Hood or Loyal3, sales commissions aren't an issue.  I think I'll write a "Stock of the Month" post about what we chose and why, which will require me to think about it beyond "sounds good".  

Continue My Freelance Writing Jobs and Selectively Try to Find More

I have two regular freelance customers.  I found Classloom via Upwork and generally write three to four articles a month for them.  The Mulberry Silk Co. was a Kickfurther Merchant of the Week, and I write for them about once a month.  I spent a lot of time last summer doing a lot of jobs on Upwork that didn't pay well and were not very interesting.  I may go back there and look for more work but I'm going to be much more selective about the jobs I take.  

Add $4,000 To Our IRAs.

We managed that last year and hopefully can do so again.  One big difference will be that I'm not expecting any major overtime this year, whereas last year I earned over $2,000 in the course of a two week trial and preparing for it. 

Cut Spending On Food

When we've taken a close look at where our money is going, we see too much going to food of one sort or another. I'm going to focus on what is easiest to control, namely, me.  I'm going take my lunch at least three times a week.  I'm going work on meal-planning and see if that cuts our grocery bills.  My cook can follow a recipe but he doesn't juggle multiple dishes well and neither he nor my daughter like food that has too much "stuff" in it.  

Home Renovations

This is a carry-over from last year.  The IRS is not done with my father's final tax return.  Once they are, I'll get the final money from his estate and my plan is to spend it on my house.  I have carpet that is over twenty years old, and my den still has the original 1970's paneling.  It's time to renovate.  

Tuesday, January 10, 2017

Starting Your Own Business


When you mention "start a business" an image that comes to mind is someone with their nose to the grindstone working long hours to hopefully, one day, get rich. 

But what about if you do not need to earn a living?  What if you've saved your money and are now retired, whether at the conventional age or long before it?  Why would you start a business?  

A business is nothing more than an entity that is paid for providing a good or a service.  This blog is a VERY small business.  In return for content like this you provide eyeballs for the ads on this blog, and in return Adsense pays me.  I also get paid for sponsored posts like this one.   Still, for me, this blog is something I write because I enjoy it, not because I plan to get rich from it (not that I'd mind someone paying me really big bucks for space on this blog).  

Many people enjoy doing things or making things that other people need or want, and a small business that does not need to make a lot of money may be just the retirement hobby for you.  The trick is to keep your expenses commensurate with your effort and goals.

If you enjoy crafting and like to sell your wares at two or three church/school craft fairs a year, with the goal of earning enough money to support  your crafting hobby, you don't want to spend a lot of money up front on a system that allows you to take credit cards; however most people today expect to be able to pay with a credit or debit card.  In fact, 66% of face-to-face transactions today are made via debit or credit card, and customers, on average, spend 20% more when paying with a debit or credit card.  Even the Girl Scouts take credit cards for cookies!

Merchant Account Solutions provides free equipment to its customers and charges fees depending on volume.  They claim to have the lowest fees and if I had small part time business whose customers wanted to use credit cards, I'd find the free equipment offer pretty attractive.  At least I'd  know I wouldn't end up in the hole if I decided being in business wasn't for me.

Every Merchant Account Solutions customer has a dedicated account representative.  Most hobby-type businesses don't work office hours and Merchant Account Services understands this and offers 24/7 support.

Different business settings call for different types of card reading terminals, and Merchant Account Solutions offers a variety of them, because the best credit card swiper for one business might not be the best for another.
SmartSwipe
If you are selling at craft fairs on the weekend, or stopping by customer's homes to walk their dogs, you need a wireless credit card reader.

Someone who is running a web-based store needs a more robust e-commerce solution. 

Merchant Account Solutions even offers Quickbooks integration so that your credit and debit card transactions are automatically entered into Quickbooks.  

While someone who walks two or three dogs a week may not need that feature, if the business expands and your hire your grandchildren to walk even more dogs, entering all those transactions by hand could get very tedious.  

Have you every considered selling a good you enjoy making or a service you enjoy doing? What would you love to get paid to do?

Monday, January 9, 2017

Kickfurther Merchant of the Week: IKO, LLC

My Kickfurther Merchant of the Week is IKO, LLC and I'm interviewing Mike Wong, the founder.

Q:  Can you give me a short conception and birth story of IKOS?

A:  IKOS, which is slang for "Icosahedron on a sphere", was born out of a high school program which gives students hands on experience in the field of their choosing.  In this case, I was the Engineering mentor who promised to show 3 students how to take an idea and make it a real / physical product.  I showed them a design, that was pioneered by one of my mentors, Peter Roberts.  The goal was to spread the idea that spheres are more efficient structures than our current square buildings and storage devices.  We decided to create a "toy" called IKOS to spread this concept through fun and play.

Q: I had to look up "Icosahedron" to see what that meant.  According to Wikipedia, it is a polyhedron with 20 faces, and since it has been a long time since I took geometry, I decided to look up "polyhedron", to confirm that it was a solid in three dimensions with flat polygonal faces, straight edges and sharp corners or vertices.  Are you saying that twenty of your pieces, snapped together make a sphere?

A:  Yes, 20 IKO pieces will form a complete sphere. 

Q: Your website says that you and your two co-founders got together when you want back to your high school to help with their CAPS program.  Can you tell us a little about CAPS?  Do you still work with it?


A:  CAPS, Center for Advance Professional Studies, gives any junior or senior the opportunity to learn about future careers through hands-on experience.  They partner students up with mentors and companies in the community to work on real world projects or learn about aspects of various businesses.  My old physics professor, Charlie Matthews, asked me to come back and be a mentor in the engineering department.

Three students, Mina, Paige, and Gates wanted to work with me on this project.  I walked them through the whole process of setting up an LLC, prototyping, 3D modeling, crowdfunding, filing patents, and then launching IKOS.  All 3 of the co-founders are listed on the patent applications and own a piece of the company.

Q:  That's really neat.  One thing I've heard people say about science people is that they have great ideas but don't know (or they don't  think about) how to protect themselves legally or about marketing.  It sounds like you gave those young people the whole package.

You tout that IKOS is made in the USA.  Where?  How many people do you employ?


A:  IKOS is injection molded in Utah, out of recycled HDPE, #2 plastic. Silicone Plastics is our injection molding partner and they are based in Milville, Utah.  I told the students that the only way we'd bring a new product to market was if it was made in the USA and out of a sustainable or recycled material. 

The main fulfillment and warehouse center is my garage and living room.  We don't have room for employees; technically, I'm the only one.  All three students are in college, but two have chosen to stay very involved through email and I keep them in the loop on what's going on, and solicit their advice and help whenever I can.

We have partnered with the refugee agency in Salt Lake City. These are families who don't have access to transportation, or their English skills are not great. I bring them raw product to package at their own house at their leisure.  We pay them as private contractors and they can make around $20 an hour. I'm really proud that we can provide work that pays well for people.

Q:  I think that's great.  It sounds like a win for you and a win for them, which is what I think any good business deal should be.  What do you see as the advantages to manufacturing in the US versus in China, Mexico or the other places "everyone" is using these days?

A:  The main advantage I see to manufacturing in the USA is that we are providing jobs that benefit people in our community.  We are also keeping our environmental footprint smaller by not having to ship overseas.  By producing in the USA, we have more control over our material stream, and ultimately doing what's best for the planet.



Q:  How hard it is to snap the pieces of IKOS together?  In other words, what is the lowest recommended age for this toy?

A:  We've tested IKOS with a lot of kindergarten classes (ages 5 - 6) and we've found that half of the kids have the dexterity to construct with IKOS.  We recommend ages 6+

Q:  Do you have any plans to make similar systems in different shapes?

A:  Yes, but we are taking it slow until we raise some more funds for the tooling and marketing.  I'm learning more about what it takes to bring another product line to market.

Q:  Tell us about some of the interesting things you've seen made from IKOS.  What's the biggest and how many sets did it take?




A:  Light fixtures, such as chandeliers.  Jewelry holders.  A lot of cool sculptures.  It's been funny, middle school and high school kids make some really interesting creations, but they are hesitant to share on their personal social media sites because they fear they won't get enough "likes" from their peers. Social media can be a double edged sword when it comes to sharing.  

Q:  Does it hurt if you step on an IKOS piece if you aren't wearing shoes?  If I step on one, or one two or three that have been snapped together, am I going to break them?

A:  It depends on which direction they are facing regarding stepping on them.  They are made out of HDPE #2 plastic so they are very durable.  

Q:  How did you hear about Kickfurther, and why did you decide to use them?

A:  My friend has a company called Panda Poles.  He had a great experience and I wanted to test out crowd financing.  I wanted to get a feel for the community and give back to people who were willing to support us.

Q:  Oh, I interviewed Tanner about a year ago.  He successfully finished his first Kickfurther offer, and recently started another.  What has been your impression so far?

A:  Great, a smooth process and very thankful for the support.



Q:  Would you recommend Kickfurther to other businesses?  Why or why not?

A:  Yes.  There are other ways to get financing at a lower interest rate, but typically you are making payments to a larger corporation vs real people who want you to succeed. 

Q:  I don't suppose any bank offered to blog about you.  Have you tried Kickfurther from the investor side?  Why or why not?  Would you recommend it to friends or family?  Why or why not?

A:  I have not tried it from the investor side.  By the time I heard about it,  all my money was tied up in IKOS.  Yes I'd recommend it to friends and family.

Q:  Anything else you'd like to tell us?

A:  Yes, I have two sons, a 3 year old and 11 month old.  I'm half awake, so please pardon spelling, grammar....

Q:  Hopefully I cleaned all that up for you.  I guess in a couple of years you'll find out if IKOS pieces hurt when you step on them barefoot in the dark.

Do you  have a giveaway for us?

A:  Sure.  I'm going to give three of your readers one of our Creator sets, which are valued at $19.99 each.  

 

Thanks.  I enjoyed visiting with you and learning about IKOS.  You can follow them on facebook and Instagram. and learn more about the company on their website.   You can purchase them via Amazon and if you use my link, I get a small commission.

For those who don't know, Kickfurther is a crowdfunding platform where ordinary people can back businesses.  I'm an investor in IKO.  My money and that of other investors will help them manufacture these toys.  When the toys sell, IKO repays us, with a profit.  If IKO is unable to sell the toys Kickfurther can repossess them, but that hopefully won't happen; these look like great fun.  If you would like to back interesting new products and hopefully earn a profit, use this link and you get $5.00 toward your first investment.  If you have a business that sells tangible inventory, Kickfurther may be a source of financing for you.  Use this link and I get referral credit.

Now, on to the giveaway!


a Rafflecopter giveaway

Friday, January 6, 2017

2017 Blogging Goals

Tis the season to set goals.  In my personal life, losing weight is my goal and I'm taking some concrete steps (or steps on a treadmill) to accomplish that goal.  My blogging goal is to increase readership and earnings and I'm going to take some concrete steps to accomplish that goal.

Create a Blogging Calendar for the Year:

More than a few of my posts were cranked out on Friday evening with no thought about how they related to the overall structure of my blog.  I'm going to sit down this month and plan a blogging calendar for the year with planned topics for at least a few weeks each month.  I can always move topics around but I'd like to do a little more SEO and that doesn't work well on the fly.

Create One or Two Blog Series

On that blogging calendar I'm going to try to come up with some sort of recurring topic or multi-post series of posts.

Publish at Least One Kickfurther Merchant of the Week Post Per Month

I've reduced the amount of money I have invested in Kickfurther so trying to come up with weekly posts is tough.  However, if I pursue the vendors I can usually get one per month who is interested.  Especially if I offer giveaways, these posts do well. 

Guest Post at Least Once 

I'm looking for the right blog on which to guest post, and trying to think of topics to offer.  I'd be interested if someone would like to trade guest posts.

Approach at Least One Potential Client Per Month About Sponsored Posts, Affiliate Linking or Advertising

The worst they can tell me is no--and maybe I can start making a few dollars from this blog.

Comment On At Least Three Blogs Per Week

I do get traffic from blogs on which I comment and I do usually comment on other blogs; I just need to do so consistently.

Write At Least One Substantive, Multi-Paragraph Comment Per Week; Preferably on a New-to-Me Blog

A lot of my comments are short, sometimes just friendly, sometimes more substantive.  I'm going to keep my eye out for at least one blog post per week to which I can add a substantive comment, and do so.

Revise at Least Ten Posts Per Month on My Book Blog

I have had a (mostly) book blog for over ten years. Most of my posts have old Amazon Affiliate links.  Amazon has changed the format of their affiliate links and the old ones don't work anymore. 

 Also a couple of years ago Amazon and my state had a disagreement about whether Amazon had to collect sales taxes for my state; therefore Amazon, in an effort not to have a business presence in my state, discontinued affiliate agreements with all residents of my state.  Therefore there was no money for me in putting in the new links.

Well, starting January 1, Amazon will start collecting sales tax from residents of my state and will allow us to be affiliates again.  I'm not sure whether I'll be able to re-activate my old account or whether I will need to get a new one.  In either case, I'm going to start with my newest posts and work my way back, fixing the affiliate links.

Do you think my goals will help me with my overarching goal, which of course is to gain more readers and earn more money from my blogs?

brokeGIRLrich