My Family’s Money

Right now, it is pretty much non-existent. We don’t really have any surplus cash that we don’t need in the next 3-5 years so pretty much all our cash is sitting tight in an interest bearing account that yields us a (an?) 4.75% APY. It really isn’t that much, but at least it is earning us something. When I think abou it, it’s probably a good thing that I don’t have the extra $2,500 that I would want before I start investing – I simply don’t know anything about stocks or the stock market. To prove my point here are the two things I think I would probably do with $2,500 if I had it today:

1. Buy $2,500 worth of Washington Mutual (WM) and expect that in 10 years it will have rebounded to that value that it held in March, 2007 of $40. At prices right now that would turn my $2,500 into nearly $7,700 without including the return on the dividend.
2. Buy into the T. Rowe Price Africa & Middle East Fund (TRAMX), a fund that has grown over 25% in value since it was created in September. If it grows at the same pace throughout the rest of the year my money will have doubled by next January, and if it simply grows by $10 a year for the next 10 years, my money will have turned into $18,000 – and that includes taking out the ridiculous expense ratio of 1.75%. Can I get a what what?

All this market optimism is making me a little woozy. Apparently I have never heard the word sub prime, or that WaMu is under investigation by the SEC for possibly conniving with a home appraising company to inflate home values, or that they probably have billions upon billions upon billions of dollars that they can no longer spend on commercials with naked old men in them. How are they going to make a comeback without naked old men?!? They might as well declare themselves insolvent right now.

And what if Africa and the Middle East gets locked down in various regional conflicts. Israel and its neighbors don’t always seem like the safest places in the world, who knows what will go on with Iraq, the political unrest in Kenya, problems in Sudan, and the potential for regional conflict in Ethiopia, Eritrea and Somalia doesn’t really seem like a recipe for long term economic growth. Now most of TRAMX appears to be banking interests in the Arab world, but regional instability is not a good thing for businesses and bombs are really, really, really bad for banks. (Apparently TRAMX may be a good investment according to this article on MSN Money. Maybe I do have an investing gene in there somewhere.)

I need to get some stock-amacation and actually find out how those things called bonds work. Does it have something to do with ropes? Bows? After I do that maybe some no load, low expense ratio mutual funds or EFTs will look a little more attractive – or at least logical – to me. Or maybe a jargon jargon jargon jargon …