## Friday, May 23, 2008

### PF Stock Welcomes Cruise Critic Readers

PFStock has recently been mentioned by the critically acclaimed cruise website Cruise Critic. An editor for Cruise Critic contacted me after reading my posts about Cruise Line Shareholder Benefits. He was interested in writing a news piece about the shareholder perks that were offered by Carnival and Royal Caribbean, and to get some background information from me.

I have actually been a reader of Cruise Critic for over 10 years, so I was pleased to have the opportunity to be profiled there. Welcome to my new readers; I hope that you will stick around to read some of my personal finance posts.

PF Stock

## Thursday, May 22, 2008

### The Rule of 72

How long does it take for an investment to double? This is a question that is often asked, and there is a very simple formula that can be used to estimate the time it takes for your money to double. This formula is called "The Rule of 72". And the rule is:

Years to double = 72 / Interest Rate

Suppose that you were to deposit your money in the bank at an interest rate (APY) of 4%. Conceptually, you are giving the bank a loan on your money, and expect to be paid back your principle plus interest. In this example, you can expect your investment to double in 72/4 = 18 years. If you can find an interest rate of 6%, you would expect it to double in 72/6 = 12 years. The rule of 72 is also known as "the rule of 70". Using this rule, if you had an interest rate of 5%, the investment would double in 70/5 = 14 years.

At this point, I would typically go into a mathematical derivation (using such numerical concepts as natural logarithms) showing how this rule came into being. However, I will spare you the gory details this time.

One other thing is that I will mention is a similar "Rule of 115". This rule is used to estimate the time that it takes for an investment to triple in value. Similarly, the rule is:

Years to triple = 115 / Interest Rate

Again using the 5% interest rate example, it takes 14 years for your money to double. However, it would take 115/5 = 23 years to triple in value. It's all just simple math. Any questions?

## Monday, May 5, 2008

### PayPal Money Market Fund

I mentioned that I opened a PayPal account in my post about my first eBay experience. As a result of various transactions, I now have a small balance at PayPal. This PayPal balance does not earn any interest unless it is put into the PayPal Money Market Fund. This sweep is not automatically set up. Currently, the fund pays a little less than 3% APY. While this is not spectacular, it is better than the 0% you get for doing nothing.

I have not yet setup the PayPal Money Market Fund. Deposits are not FDIC insured, so I have hesitated. Does anybody use the PayPal Money Market fund? I am interested in getting some feedback before I decide.

DC

## Thursday, May 1, 2008

### Getting the Most from a Cruise Vacation

It may surprise you to consider taking a cruise as an economical way to go on vacation. But when compared to a land-based vacation, you can save a lot of money by taking advantage of the free amenities that a cruise ship has to offer. For example, relaxing on deck in the tropical sun is free as is the shipboard entertainment.

Also generally included in your cruise fare are onboard ship accommodations, ocean transportation, and of course, the food. In the case of dining, a common misconception is that a cruise is an all-you-can-eat buffet. Certainly, there is always a buffet available. However, I prefer to eat my meals in the dining room. On a cruise, the quality of food is about the same as dining in a fine restaurant. You can dine at a leisurely pace, and select from a varied menu. This is the one place where I can tell my wife that, if she doesn't like an entree that she orders, she can always try a different one. And I don't have to worry about paying the bill, which makes it a real bargain.

On the other hand, a cruise not the same as an all-inclusive resort. There are a few items that you will need to budget appropriately for. Generally not included in the cruise fare are alcoholic beverages, shore excursions, tips, and the casino. I once quipped that the Royal Caribbean ship Grandeur of the Seas has a design flaw; there was no easy way to get from my cabin to the dining room without going through the casino. That fact can be hazardous to your wealth.

The key to getting a good price on a cruise is flexibility. If you must travel at a specific time, your choices will be limited. It is wise to shop around and compare different cruise lines and dates. Sometimes, the difference of a week or two can result in large differences in price. Also, some cruise lines offer a "category guarantee". You may receive a discount if you allow the cruise line to assign you a stateroom at the time of sailing, rather than picking a cabin upfront. The last time we did that we paid for an outside cabin, but were upgraded to a nicely sized balcony stateroom for free.

If you are a stock holder in either Carnival (CCL) or Royal Caribbean (RCL) stock, you can take advantage of the shareholder benefit program that each line offers and receive a shipboard credit. Please see my recently updated post about Cruise Line Shareholder Benefits for more information.