It’s now past 5PM on April 30th. According to the Tax Foundation, that means that the average American has now made enough money in 2007 to cover their total tax burden (federal, state and local) for the year. For the record, Tax Freedom Day came two days later this year than last year. For a historical look at the date of Tax Freedom Day, see the following graph from the Tax Foundation.
Question: When is 50% not equal to 50%?
Answer: When you’re talking about investment gains and losses.
This is a relatively simple mathematical truism, but I find it interesting just the same… Did you know that if you experience a 50% investment loss you’ll need a 100% gain just to break even? It’s sad, but true… And the order in which these gains and losses occur doesn’t matter. Indeed, consider the following:
If you start with $100 and lose 50%, you’re down to just $50. Now, if you gain 50%, you’re only back up to $75. Similarly, if you start out by gaining 50%, you’d have $150. But if you then lost 50%, you’d fall back to $75. See? It’s the same either way.
In fact, this is a generally true phenomenon that holds for larger or smaller percentages, as well. Consider a 10% loss on that initial $100 investment - you’d be down to $90. If that was followed by a 10% gain, you’d be back up to $99. Start with a 10% gain and you’re up to $110. Follow that with a 10% loss and your back below where you started at $99.
I’m really not sure what my point is here… I’ve always just found this interesting to think about, and it’s a good thing to keep in mind when roughing out investment returns in your head.
Today is your fifth and final chance to win a USB flash drive courtesy of H&R Block! As a reminder, this is a 256 MB USB flash drive that comes preloaded with TaxCut Premium Federal + State. Even if you don’t need the tax software, it’s still a useful little drive.
For this giveaway, simply leave a comment at the end of this post sometime between now and 8PM EDT this evening. I’ll then randomly choose a winner and will notify that individual by e-mail.
Also, if like what you read here, you might want to subscribe to the FiveCentNickel RSS feed, which delivers the full-text of everything that I write straight to your desktop as soon as I publish it. You can subscribe by copying and pasting the RSS feed address into your newsreader of choice, or by using one of the handy subscription buttons that can be found down the page over in the left sidebar.
You can also subscribe via e-mail using the this form:
The Fine Print:
- All entries must be accompanied by a valid e-mail address.
- You can’t win more than one of these drives.
- U.S. mailing addresses only (but don’t post it — I’ll contact the winner and ask).
- While I promise to send the prizes, I can’t guarantee their safe arrival.
Oh, and in case you’re wondering, the winner of the last drive was Andrew.
Here are some of my favorite FiveCentNickel (subscribe) posts from a year ago:
» Save Money, Don’t Drive Like a Maniac
» How Much Does a Million Dollars Weigh? (Revisited)
» On the (In)accuracy of Fuel Efficiency Estimates
» The Cost of Not Answering the Phone
And this is what was happening over at Raising4Boys (subscribe) over the same period:
» Little Brothers, Tampons, and Lollipops
» Newborn Vaccine Breakthrough
» No Child Left Behind?
After sneaking the paperwork in just under the wire, I finally received confirmation that my optional 457(b) retirement account is up and running and ready to receive my contributions. Enrollment actually involved two steps - first, I had to get a signed salary reduction agreement to my employer before the end of the month. Next, I had to enroll with my vendor of choice (TIAA-CREF). [more]
Time for another USB flash drive giveaway! This is the fourth of five such contests that I’m running between now and Tax Freedom Day (April 30th). As a reminder, this is a 256 MB USB flash drive that comes preloaded with TaxCut Premium Federal + State. Even if you don’t need the tax software, it’s still a useful little drive.
For this giveaway, simply leave a comment at the end of this post sometime between now and 8PM EDT this evening. I’ll then randomly choose a winner and will notify that individual by e-mail. I’ll also publicly announce the winner when I post the next giveaway. Again, I’ll be doing this one more time between now and April 30th, so be sure to check back regularly for your chance to win.
If don’t want to miss out, you might want to subscribe to the FiveCentNickel RSS feed, which delivers the full-text of everything that I write straight to your desktop. You can subscribe by copying and pasting the RSS feed address into your newsreader of choice, or by using one of the handy subscription buttons that can be found down the page over in the left sidebar.
The Fine Print:
- All entries must be accompanied by a valid e-mail address.
- You can’t win more than one of these drives.
- U.S. mailing addresses only (but don’t post it — I’ll contact the winner and ask).
- While I promise to send the prizes, I can’t guarantee their safe arrival.
Oh, and in case you’re wondering, the winner of the last drive was Bonnie.
Here’s a quick look at some of the articles that caught my eye over the past week. [more]
In case you didn’t know, Vanguard has traditionally levied a $10 annual account fee on IRAs (traditional, Roth, or SEP) and ESAs with a balance of less than $5,000, index fund accounts with a balance of less than $10,000, and all non-retirement accounts with a balance of less than $2,500. Going forward, they’ve decided to levy a $20 fee for each Vanguard fund in which you have a balance of less than $10,000. The good news here is that you avoid these fees entirely by signing up for electronic delivery of shareholder materials (statements, confirmations, and so on). Of course, you could consolidate funds to get over the minimums, or maintain $100,000 or more in total Vanguard investments. But if that’s not your cup of tea, simply signing up for electronic delivery is your best bet. In our case, we actually signed up for this long ago to stem the flow of paperwork into our mailbox.
[Source: Vanguard.com]
The other night I ran across an interesting tidbit in the most recent issue of MacWorld… It seems that a recent study revealed that the amount of electricity required to run the world’s computer servers has doubled since 2000. As of 2005, it cost businesses worldwide $7.2 billion run their servers (just considering the energy costs). Moreover, based on current usage patterns and market forecasts, computer servers could burn up to to 76% power by 2010.
Obviously, this sort of energy consumption isn’t just expensive… It’s also bad from an environmental perspective. Interestingly, companies ranging from niche players such as Dreamhost to behemoths like Yahoo! are going carbon neutral. As an aside, Yahoo! did the math and discovered that going carbon neutral is, in their case, the equivalent to “shutting off the electricity in all San Francisco homes for a month. Or, pulling nearly 25,000 cars off the road for a year.” Wow. That’s a lot of energy!
