Regarding Artemis' savings, a friend sent a link to the Coverdell Educational IRA section of the IRS website. These are handy, and make sense for a lot of people. They don't fit my strategy for Artemis because the contents of the IRA are intended for educational purposes, and most colleges will require any student with an Educational IRA to use 100% on college expenses. Also, I want to invest individual stocks, which is difficult to do with such a small amount of money. Using my brokerage account, I can group Artemis' trades with mine to save on trading costs. Educational IRAs certainly are a good investment option - just don't expect them to fully fund a college education!

Now, for the investments. Artemis started out with shares of Apple Computer, purchased for about $24 per share. She made a nice profit there, selling off most of her shares at around $35.

I wanted to diversify her portfolio, so with the proceeds I purchased eBay, Google, and Amazon (and retained some Apple).

I chose these companies - Apple, Google, eBay, and Amazon - based on their dominance in their industry. Apple right now is controlling online music sales and music player sales. Google is the search engine, and their profit model is scalable. EBay is a bit expensive but oh so dominant in the auction marketplace. And Amazon rules online shopping, combining with even big potential competitors like Border's and Target. I spend lots of money at these sites (not Google, but I use it all the time, which helps them generate revenue), and I find they are all a joy to use. Also, I'm pretty likely to be one of the first to notice any problems with their service, which might be a signal to sell. Other than that, I don't know much about their financials. I am not too worried about doing detailed financial analysis - I can tell from my own experience what the good companies are. If I had just followed that advice back in 1997 I wouldn't even be working now!

I think these are all good long-term investments, but I will sell shares if I think the money can be better invested elsewhere. I am on the lookout for new companies for when new money comes in, and right now have my eye on XM Radio, TiVo, Netflix, and Ann Taylor. But, no major purchases for the time being.

If you have any comments or questions, please email me.

I came across this link yesterday: Fortunate Son from some segment of the Democratic party. This video, I think, illustrates a lot of the problems with the current Democrat campaign. First, it takes way too long to make what should be a simple point. The Swift Vet ads are half as long, make twice as many allegations, and have much more straightforward sourcing for the allegations. Second, even if the ad is effective, the message is simply not that damaging: OMFG, Bush was privileged? Is this news to anyone? Finally, it's a plain waste of effort trying to impugn Bush's record from 30 years ago when we all have seen how he leads for the last 4 years. With Kerry, Vietnam coverage makes sense because he made it the center of his campaign. For Bush, it's really a waste of effort.

OK, on to today's topic.

Today I'm going to describe how we are handling Artemis' money. Hopefully she'll read this in 20 years and think "Gosh golly willikers, my daddy was somewhat clever" - we'll see.

First of all, Artemis has collected a fair amount of cash in her first year plus of life. From many generous grandparents and other family members and friends, she's received almost $2k. She also won a Mac, which we sold for about 1k. So, she starts off with a nice chunk of change - I'm not talking about $200 bucks in savings bonds here.

So, how should I deploy these funds to her best advantage? She is just over 1 year old, so her minimum time requirement is 15 years. More likely, she won't need the money until she's out of college, more than 20 years from now. Thus, a savings account is out of the question - that would be fiscally negligent. A time horizon of 20 years, with no known need for the money even at that point, calls for an aggressive investment strategy. Thus, either mutual funds or individual stocks.

I could open an account in her name, but that would be messy. First of all, she would have control, which is not optimal for a child. Second, when she goes to college, they would require her to use it even if she would otherwise qualify for financial aid (which is a possibility if I retire or otherwise have a low income).

Additionally, any account I could open for her, either joint or individual, would not be tax-advantaged (Educational IRAs only allow $500 per year, and she'll have more than that). With a time horizon of 20 years, if we can remove any tax implications from her investments, we can really boost her returns.

To that end, I resolved to use either my IRA or my 401K to shelter her investments. My IRA doesn't work because I only have mutual funds available (for now). Luckily I have a portion of my 401K in a brokerage account. Of course I can't just deposit her money into my 401K, so instead I offset the 401K and her cash - in essence, take her cash and set aside a portion of the 401K.

The danger with that is record-keeping - I can't just say she has 5% or whatever of my 401K because I make contributions every couple weeks, and it would quickly become impossible to figure out how much was hers. So, instead I allocated specific shares of stock. Essentially, I bought shares of stock and then labeled them "Artemis". I didn't buy them specifically for her, since the trading costs would be a bit high for a diverse portfolio. Instead, she shares my investment strategy, and I allocate some shares to her based on her current balance.

When Artemis needs her money, there are various ways to return it. The easiest will be if I have a matching amount in cash, which I can give her directly (wary of gift taxes of course). Alternatively, I can take an IRA distribution for an equal amount. I can also take a loan or distribution from my 401K. But most likely I will simply exchange the allocated shares for cash and she'll be on her way.

Some people may think that this is too risky, that I am gambling the stock market with her money. The truth is, this is exactly backwards. If I let her investments rot at 3% interest, they could well be worth less when she withdraws the money. Aggressive investing is the way to at least match the market, and hopefully beat it. So far I have earned her about 25% return in 6 months, which is damn good. I'll post updates as her and my portfolio changes.

A couple quick notes. First, I am especially sensitive to this issue, as I too had a large amount of money when I was quite young, the result of a dog bite and subsequent lawsuit. The funds I received were put into the most conservative investment possible for more than 10 years, earning almost nothing while CD rates of more than 10% were available. Not smart. Money that should have doubled or tripled instead gained about 35%.

Also, as many of you know, I work in financial services. While my diet and exercise advice are based mostly on common sense and experience, my financial insights are researched and reliable.

Tomorrow I'll talk about what investments I've chosen for Artemis and myself.

Monday (below) I began writing about exercise. Today, I'll elaborate.

Last year, I noticed that some weeks I worked out plenty, but other weeks that I didn't work out at all. Without any marker or record for the amount of exercise I did, it was difficult for me to gauge if I was doing, overall, enough.

This year, I instituted a new system of tracking the amount that I work out. I estimate that I should exercise hard for 15 minutes per day. I don't work out every day, but the days I exercise, I accumulate multiples of 15 minutes. So, starting on January 1, I "owed" 15 minutes of exercise. On Jan 2, I "owed" 30 minutes (since I didn't exercise). Each day, I add another 15 minutes, writing my current "balance" on my calendar. On days that I exercise, I subtract the amount of exercise (generally 1 hour) and write in the new balance. The best I can get to is zero - there isn't any "credit" balance.

This system has worked even better than I anticipated. For the year, I currently "owe" 3 hours (I missed my 1 hour today). This is the 258th day of the year, so the total I should have exercised is 64.5 hours. So, I've worked out a little over 60 hours this year. Some weeks have been busier than others, but overall I have exercised consistently. The result has been very good - I lost about 15 lbs from New Year's through the summer, and I'm healthy (side note: I can eat anything again, too. Ha!)

Let me emphasize that the exercise must be pretty intense. I don't count walking to/from my car or carrying Artemis around. I only count real sweaty, heart-pounding effort. An exception was when I built the fence - that was a lot of effort, but even so I only counted each 6 hours of work (carrying wood, digging post holes, etc) as 1 hour of exercise since it wasn't very intense.

Another good feature of this time-accumulation method of measuring exercise is that I feel pressured to exercise to prevent my "debt" from getting too high. On several occasions I have put in an extra day of exercise just to push my balance down. Everyone has their own forms of motivation, so if this works for you, give it a try.

Is 15 minutes exercise (on average) per day right for everyone? Could you get by with 10? Do you need 20? I'm going to take my cue from Chef on South Park and say: 15. If you're young, old, in shape, out of shape: 15. But what if...? 15. Except when...? 15.

If you already exercise more than 15 minutes per day but don't get the results you want, then either your expectations are too high (expecting to look like cover model) or your exercise lacks intensity. In this case, work harder, not smarter!

Good luck.

More exercise tips tomorrow. The photo above is from the Greenbelt Labor Day parade - the lovely young lady is Miss Greenbelt 2003 - yesterday's news, the poor dear.

Last week I wrote about establishing and maintaining a healthy diet. Today, I'll take a look at exercise.

First, let me say that I don't work out a lot. I spend about 2.5 hours per week jogging to and from the soccer field and playing soccer. For the years since I started running again, I've never run more than a few times per week. I don't think people need to work out more than a couple times per week to stay in good shape, and I don't especially enjoy exercise, so I don't do it more than necessary (even though my games are a lot of fun).

A lot of people don't exercise at all. That is, in my opinion, a big mistake. The human body responds to how it is used. When you exercise (or work hard), you demand more of your muscles, and in response they change. They build more blood vessels and basically learn to deliver oxygen, remove toxins, and expend heat more efficiently. If you don't do anything, then your muscles will adjust to the non-use, and become very averse to work. You may retain strength or mass or whatever, but the muscles will no longer be able to work for an extended period of time. If walking up a flight of stairs or running a 1/4 mile or doing 20 push-ups tires you, then you're probably very out of shape.

The strategy I use is to use my muscles just enough that they remain fit. I am not trying to bulk-up or get very cut - I just want to be healthy. For me, 2 hours of exercise per week does that. In fact, I think even 1 hour per week would keep me from losing durability - but I certainly wouldn't be getting in better shape, either.

A lot of people will disagree that 1 or 2 hours is enough, and that's expected. The reason most people need to work out more - and often don't get good results anyway - is that they don't exercise hard enough. I believe that exercise needs to really stress your body in order to have an appreciable effect. I don't mean stress it in an unhealthy way, such as lifting more weight than you are able, but rather to really work the muscles.

By the end of a workout, you should be winded and a bit tired, if not nearly exhausted. Certainly you should sweat quite a lot, and elevating your heart rate is important too. The heart rate is very important for any kind of cardiovascular activity. If your heart rate isn't elevated for a good 20 minutes, then you aren't getting a cardio workout. The range of elevation varies with the person, but for me, my normal rate is somewhere around 100 beats per minute and my elevated rate is around 160 or 170 bpm, with a big sprint getting me up to 180 or higher. It may sound high, but a real cardio workout can not be done while reading a magazine (headphones certainly work, though).

There is one major misconception I come across a lot, and that is the myth that intensity doesn't matter so much as length of workout. For example, people seem to think that walking 3 miles is just as much of a workout as running 3 miles. This is true in a physics sense, as Work = Weight * Distance. So, your body is technically doing the same amount of work whether you walk or run. But exercise is not just the amount of work done, it is the amount of work done in a given amount of time. Or, alternatively, the time required to do a certain amount of work. It's obvious to anyone that walking 3 miles is a hell of a lot easier than running 3 miles - it is common sense that running is harder than walking.

If you want to push your body for exercise, you need to do what is difficult for you to do. If you can run 3 miles, then run it faster or run longer. If you can swim 10 laps, swim them faster, or do more laps. If you can do 5 pullups, do more. By continually pushing yourself, you send the message to your muscles: I need more from you. And your muscles will respond, and they'll be able to do more, and you'll be healthier. It is simple but you'll still see people WALKING on treadmills at the gym. Why are you walking? You can already walk - walking MORE isn't going to do much. Pick it up and exhaust yourself. It feels great and works a lot better than endless hours in a gym slowly spinning the LifeCycle.

Tomorrow, more on this topic.