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We love when people with great, financial wisdom give of their time to answer questions. We were lucky enough to have Richard Smith of Fool.com do any interview with us. Rich is know in the Internet world as a financial writer that knows his stuff. Although he mostly writes for the Fool.com, Rich has also been seen on AOL DailyFinance, Yahoo Finance, and many other high-authority financial websites.

A former lawyer, Rich knows his stuff and is always willing to help people out by sharing his wisdom. Rich is an individual investor, part-time financial writer, and recovering international lawyer based in Indianapolis. We would just like to thank Rich for taking the time to answer the following questions!

Motley Fool

What do you enjoy most about finances?

Rich: Bargain-hunting. Whether it is shopping for a cheap stock, taking advantage of a tax break on my daughter’s 529 plan, or scoring a great deal at the supermarket (it’s on sale *and* I have a coupon? Hurray!), I am always on the lookout for a bargain.

Where do you try and save the most money?

Rich: Honestly, like most people, I probably spend too much time on the wrong things. Clipping coupons and looking for sales on the Internet. If I were smarter, I would spend more time on — and I would urge others to spend more time on — trying to save money on bigger ticket purchases.

To illustrate, I spent hours shopping for the best deal on a 50″ flat screen TV this past holiday season, and probably saved $100 to $200 as a result. If I spent the same amount of time shopping for a used car, the savings would likely be in the $1000 to $2000 range. Or if I sank the same amount of time into researching a mortgage refinance, and haggling with my banker over the “junk fees” charged on the refinance, the savings could easily be $1000 upfront, and thousands more over the lifetime of the mortgage.

What do you like most about the FOOL.com?

Rich: The people. The Motley Fool is made up of hundreds of thousands of individuals, all working together to find winning stock investments, and help each other vet these investments for the best bargains. But it’s also got hundreds of discussion boards dedicated to everything from exchanging advice on tax filings to home economics to starting and running a small business. We’re all in this together, and the Fool is our online “home base.”

InvestAt what age would you recommend people to start investing?

Rich: The “miracle of compound interest” means that the longer you invest, the greater your ultimate profit — so the short answer to this question is “whatever age you are right now.” As for the common arguments against investing in stocks, I’ll address them in two examples: With banks paying 0.1% interest rates, there’s little reason for a retiree to not buy a steady, safe utility stock paying a 5% dividend.

At the other end of the scale, what little kid wouldn’t like to have a share certificate hanging on their wall, declaring them to be a part owner of Disney? There’s no such thing as too old, or too young, to invest.

What are your thoughts on the credit card industry during 2011? Future (2012)?

Rich: 2011 was a great year to invest in credit card companies, because everyone was worrying about the effect of the cap on debit card fees that the banks could charge. Like Warren Buffett says, you want to get greedy when everyone else is fearful.

2012, and beyond, I only see the industry growing. Online retail is the only aspect of retail that is really growing great guns, and you need a credit card to shop online, so …

What credit card companies do you think will see growth in the 2012 stock market?

Rich: I would shy away from the issuers, generally. There’s a lot of non-credit-card related danger in the big banks, with their unknown exposure to the European debt crisis. If I had to buy an issuer, though, I think Capital One is attractively priced at about 6 times earnings, with long-term growth of more than 7%.

If you had to invest in one credit card company, who would it be and why?

Rich: I prefer the “real” credit card companies, which act as toll booths collecting a fee every time someone uses a card. Visa, Mastercard, Discover. Of the three, Discover is the lowest quality company, but has a much more attractive price.

I’d buy that one today, or wait for another industry-wide scare and use that as an opportunity to buy Mastercard or Visa. (And yes, there’s also AmEx, but I’ve never liked AmEx much. It’s policy of charging higher fees than the others tends to irritate retailers, and irritating your customer base just never seemed smart to me.)

Be sure to check out the American Express Blue Card by clicking here! You can apply instantly.

Percent signs

Real quick, 3 Pros and Cons of Investing in Credit Card Companies

Pros: Fast growth, reasonable (and in Discover’s case, cheap) valuation, and easy to understand business models

Cons: For the issuers, the non-credit-card-related businesses have unknowable risks to them. That’s a con. Their prices look cheap, but may be “cheap for a reason.” Call that con number two.

And I’ll throw out a wildcard con in the form of a movement to force Amazon and other online retailers to collect sales taxes from online purchasers — that will dampen growth in the short term, but may also create a buying opportunity because long-term, I still see electronic purchases as the long-term trend away from physical cash.

We would just like to thank Rich for taking the time to answer the following questions!

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Disclaimer: This content is not provided or commissioned by American Express, Visa, MasterCard, Discover, or any other credit card company or issuer. The opinions expressed here are the author's alone, not those of any credit card company or issuer, and have not been reviewed, approved or otherwise endorsed by any credit card company or issuer. Credit Card Chaser may be compensated through various affiliate programs with advertisers. As always, Credit Card Chaser is an independent website commmitted to helping people research credit card offers and find the best credit card!

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