In this financial turmoil caused by sub-prime mess and wisdom of Wall Street veterans everything looks bad. Declining 401K balance is heart breaking and fear starts creeping in forcing us to think "what next?".

During the housing boom these were the events that took place:

Easy Loans

Loans were made available with very low teaser rates that would be jumped to a higher rate after 3 or 5 years

Converting Loan Into Investment

When I hear about government stepping into bailing out of financial distressed companies I can't stop thinking about the financial incompetence of the policy makers that tout themselves as the guardian of taxpayers money.

Consider this - how a government where great economists advise can falter to this extent that it has to face bailing out financial institutions one after another?

I am sure economists aren't dumb and political interests must be overpowering the decision making process in the congress.

Now a days employers are offering Roth 401K in addition to the tradition 401K and more and more growing number of people are faced with the dilemma of which one to choose.

Well, first let me tell you the difference -

• Funding - Traditional 401K is funded by pre-tax dollars. Roth 401K is funded by after tax dollars.
• Tax - Traditional 401K grows tax free but the tax is levied on the amount taken out during retirement based on the current tax bracket.
  Roth 401K also grows tax free but there is NO tax at the time of taking money out during retirement.
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I am a great fan of Warren Buffet's investment style and how he has made so many investors rich through his financial intelligence and entrepreneurship.

I am also a great fan of Index fund. So when I heard about Buffet throwing a challenge to active investors if they can beat a low cost index fund in a long run (10 years) after expenses and fees I couldn't stop reading about that.

Most of us want to make progress in life, have good lifestyle, make good money and enjoy the life with family. Many times we ponder if we should start this venture or we should go with that strategy to make money and lead a better life. Our constant struggle to make progress in life makes us myopic and we lose our capacity to think beyond the short term gains.

Even though economy is doing bad and recently there was a huge drag on the stock market somehow I managed to get away with more than 30% return in last two months.

In January I bought SLB, Visa, GE & GLD.

Why I bought them?
Since economy was not in a great condition and sub prime mess still fresh I thought buying oil service company and Gold would be a nice idea as no matter what they will do good in rising inflation and uncertainty. So I bought SLB (SCHLUMBERGER) and GLD (Street Smart Gold ETF).

I am sure many people have heard personal finance experts talking on TV and radio about spending money in your daily morning latte and how by avoiding that expense you can save and become rich. Haven't you heart about that yet?

To all those who haven't heard of "Latte Effect" it is the principle of skip coffee and save money.

Here is how it works - you spend around $3 on latte and around $2 if you need something sweet like toffee almond bar or oatmeal raisin cookie to sweeten your morning and enjoy your latte. Overall you spend $5 every morning 5 days a week in a coffee shop.