The Finance Blogger


Best short term investments for small amounts of money

April 21st, 2018 ernie Posted in Investments | No Comments »

Consumers love to talk about the stocks that have increased in value exponentially. Very few actually participate and make a lot of money in these situations. But most of us cannot time the market, may be afraid to get involved in the market or just do not have the time to monitor investments like these. So what are consumers going to do, in order to make the best short term investments for them? It is actually quite simple. If you look at the debt that you currently have and you focus on paying the highest interest debts first you will actually be making a very good investment.

Best short term investments

Let’s talk about credit card debt for a moment.  The interest-rate on unpaid balances of credit card debt is typically 21% or even higher. Sure there are some credit cards that offer 7% or 10% for a short period of time. But if you carry the debt beyond that grace period, they quickly jump to 21% or higher. Now if you pay that debt off you are actually paying yourself a 21% interest-rate on any amount that you pay off. That is much better than anything you will get on average in the stock market.

Even if you have a car loan at 5%, or a personal loan at seven or 8%., most people will save themselves that interest by paying off the debt early. When the debt is repaid you have even more cash flow to utilize to pay off either debt or to buy some of the things that you really would like to have, or to set aside money for future expenses that will be of an emergency nature.

Once you have all of your debt repaid the next area of your focus is to save some money for emergencies that always show up at the worst times, and to pay yourself long term for retirement. Invest your retirement savings well, diversified, and in secure investments to ensure that your savings will be there in the long term and generate the kind of income you need when you do finally retire.

 

 

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How do I Avoid Probate?

March 21st, 2018 ernie Posted in Wills | No Comments »

Before we answer the question, how do I avoid probate, we should really define what probate actually is. The actual process of going through probate will vary state by state and province by province, however in general terms probate can be defined in the following way. It is a legal process that ensures that all of your debt is paid before distributing assets to your heirs. There is a probate fee associated with this process base on the size of the estate which can vary a great deal depending on the state that you live in.

Probate is all about winding up your financial affairs in a fair way that follows the instructions outlined in your will. If there is no will, the court will step in and distribute your assets, paying debts first and distributing the remainder to your heirs based on local legal requirements.

If there are insufficient funds to cover your debts, the court will develop a formula again based on local laws that will see your assets distributed in a fair manner to pay all of your debts as much as possible. Some debtors will receive penny’s on the dollar.

How Do I Avoid Probate?

Most lawyers would tell you that you should not avoid probate. The probate process ensures that everything is completed in a legal manner and funds or assets are distributed according to the instructions outline in the deceased’s will.

You can minimize the probate tax which is really the objective of most people. Assets that are jointly owned usually pass automatically to the surviving partner and do not become part of the probate process unless their share is specifically mentioned in the will.

For example, a home owned by two people is jointly shared and would pass automatically to the surviving spouse. You may still need to register a change to the deed to reflect a change in the ownership from joint ownership to single ownership.

Probate laws vary across the country. Check with your lawyer to plan your probate tax strategy and always make sure that you have a will.

For more ideas about avoiding taxes and especially probate taxes, click here.

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What is Credit Utilization

February 21st, 2018 ernie Posted in Credit Repair | No Comments »

credit utilization Credit utilization is a relatively new term that was initiated because many consumers were being penalized for having many credit cards open. We have all found ourselves inundated with credit card applications, stores that offer significant discounts if you open an account with them. Then there are the special offers from the credit card companies themselves. Free debt transfers, low interest rates, travel points etc. The offers go on and on. We cannot help ourselves and end up with a significant number of credit cards. many cards have a $5000 credit limit or larger. Even if you just have 6 cards, that’s a potential $30,000 in debt that could be added to your debt load.

Many people were penalized for having so many credit cards and such large potential debt loads. Their credit scores were lowered due to the potential debt load even though they carried a nil balance and paid their balances in full each month. As a result credit utilization was added to our credit scores as another factor to determine the credit score.

Credit Utilization Defined

Let’s take our sic credit cards as defined early and assume that this person only carries an unpaid balance of $2000 on one of the cards. All of the others have a zero balance. He pays the minimum payment each month and has a good record of paying everything on time. His credit utilization  would be $2000 divided by $30,000 or 6.6% when expressed as a percentage.

Lenders look for a ratio under 30% which is amply met by this consumer. In previous days, most people would close credit card accounts to improve their credit score. Lets assume that this person closed five of his credit cards and just used the one that he has a balance on. His credit utilization would go to 40% and would be well above the objective that many lenders look for.

This consumer would have been better off to keep his five credit card accounts open and just not use them. His credit utilization would still be low and contribute favorably to his total credit score.

There are many other factors that contribute to a credit score. An obvious one is paying all of your monthly bills on time every month. Never have a late payment and repay all debt as quickly as possible.

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Recurring Payments Improve Credit Scores

January 31st, 2018 ernie Posted in Cash Flow | No Comments »

Paying bills on time each month is important for consumers, business customers and merchants. Recurring payments improve credit scores and maintain good relations with merchants, landlords and all providers of services. Failure to make monthly payments on time can also cost money in terms of increased interest charges for overdue payments and possibly penalties for late payment.

Business customers who invoice customers on a regular basis also benefit by issuing recurring invoices automatically. Invoices are issued on time, debits are automatically made to a customer’s credit card or debited from checking accounts. Funds are transferred immediately to your account. Cash flow is managed and businesses find that time spent on collection activities and follow up are minimized. These reduced activities improve profitability and lowering operating expenses.

Recurring Payments Improve Credit Scores

Once merchants implement recurring payments improve credit scores and it is accepted by their customers, both parties are happy with the arrangement. Businesses find that their cash flow is better managed, their late accounts decline and they spend less time chasing after customers. In fact, customer satisfaction actually improves since there are fewer negative conversations about paying bills on time. Customers are confident that the same amount will be deducted from their accounts at the same time each month. There is no need to try to remember if they paid a bill and incur late payment fees or interest charges. Their credit score can actually improve over time saving them money when it comes time to borrow money for loans and mortgages.

A merchant who wants to bill a customer on a regular basis must first arrange for consent with the customer for them to withdraw funds automatically from their bank account or credit card. This is a one-time consent provided by the customer to the merchant which can be withdrawn at any time. In many cases the amounts are fixed, however consent can be provided for variable amounts based on a set of services that are provided each month. This process works well for both parties and the processes to manage the start and stop of recurring billing is extremely easy for both the consumer and the merchant.

In conclusion, there are benefits for everyone when they implement and agree to recurring billing payment processes.

Merchants no longer have to chase customers for payment; cost of collections is significantly reduced; cash flow improves; expenses decline and profits increase; pro-rata payments can be added to help with clients who are already overdue; if an automated payment does fail the merchant is notified immediately; cash flow is much more predictable and manageable; and funds are transferred directly to designated company accounts.

Customers also benefit from participating with merchants who employ recurring billing systems. No more worries about whether you paid that invoice or not; payments and cash flow can be predicted; credit scores are maintained and sometimes actually improve; no more late fees or penalties for late payment; better credit scores mean lower interest loans and mortgages. The benefits of a properly implemented system that is well managed can be enormous for both the merchant and the client.

 

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Do I need a lawyer for a will or can I do it myself with an online form?

January 21st, 2018 ernie Posted in Wills | No Comments »

do I need a lawyerThe quick answer to do I need a lawyer for a will is no you do not always need a lawyer to prepare a will, however there are reasons why you might consider having a lawyer prepare your will for you. If your assets are complicated or you have multiple beneficiaries, then using a lawyer might make their lives and yours easier.

Even if your worried about the expense of preparing a will using a lawyer, always make sure you have one. Having a simple will is better than no will at all. At the very least your intentions are made known and your heirs will have to sort things out based on your directions. A simple will basically says everything goes to your spouse unless they die at the same time, or predecease you. In that case everything goes to your heirs as per your specific instructions which could simply be split evenly between them.

Do I Need a Lawyer for a Will?

Over 50% of consumers do not have a will. They delay and procrastinate and do not really understand what happens if you die without a will.

For a straight forward will, a lawyer will charge something in the order of $500 to $1000 and can complete it within an hour or two. You review it, sign it and they witness it. It is pretty easy.

You can also use one of the online will websites for around $100. They are also pretty straight forward. Just make sure that you use the forms that are legal for the state you live in.

More complicated wills should really have a lawyer prepare and review them. Your instructions will be clear and you will be following all tax laws etc. Homes, cars, stocks, heirlooms etc. can all be specified in the will to be dealt with as per your instructions.  With no will the courts will step in and divide the assets according to their formula which may not be what you had planned.

Finally, make sure you keep your will up to date as life changes take place. Getting married, having kids, divorce, moving, deaths in the family can all be reasons you may want to review and possibly update your will. Tell your heirs where the will is and how to find it. If you use a lawyer, they will also keep a copy. Your heirs should also be aware of the lawyer that you used.

For more information on wills, click here.

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Financial Lessons For My Kids

December 21st, 2017 ernie Posted in Adult Children | No Comments »

What are the most important lessons you can tech your kids? There are lots of things, however this site is focused on financing and saving money. We put together 4 or 5 financial lessons that we think are the most important. It is never too early to begin start educating your kids about money. It will serve them well during their lives and hopefully make their quality of life easier.

Financial Lessons To Improve Your Life Style

Save 10% of Your Income

Regardless of how much you make always set aside 10% of your income for a rainy day. Or for retirement or for emergencies. Invest the funds in a diversified account. Never touch them until you have a real emergency or it is time to retire. Manage the funds, make sure they are invested in blue chip stocks that pay regular annual dividends. You will be amazed at how much you can accumulate over 30 years allowing you to retire early if needed.

Separate Wants and Needs

Whether you are 10 years old or 65 years old, knowing the difference between things you would like to have and those that you need can go along ways to saving a lot of money. Saving money by not purchasing those things you want to have can mean a huge improvement in your lifestyle over the long term.

Material Possessions vs. Wealth

Anything you purchase is worth less as soon as you walk out the door of the store. That expensive car you just purchased may look great, but you lost 20% of its value the moment you drove off the car lot. It is now a used car. On top of this loss consumers forego saving money and earning interest off of it.

Material items may impress for awhile, then you have to buy another to maintain your image. Next thing you know you are spending all of your money on depreciating goods and not saving anything for a rainy day or retirement.

Compound Interest Earnings

Earning interest on top of interest is one of the fastest ways to build savings for retirement or vacation or emergency funds. The rule of 72 is appropriate to discuss. Divide 72 by the investments rate f return to find out how long it will take for the investment to double.

If It Sounds Too Good to Be True, Then it Probably Is

Always be careful of promises tat sound better than they really should be. If you are doubtful, check the promise out in detail and run if you suspect any kind of a scam.

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35% of Consumers Make this Money Mistake

November 21st, 2017 ernie Posted in Financial mistakes | No Comments »

money mistakeHow many automatic payments are you making every month? If you don’t know you’re not the only one. Over 35% of consumers do not know how many automatic monthly payments they make each month.

These automatic payments are for subscriptions to magazines, membership services to gyms, automatic renewals for coffee shop memberships and more.

They often start associated with the service as a free trial. Many consumers forget to cancel it at the end of the free trial and they receive unexpected charges as a result. This is a pretty standard approach for many company’s who are trying to grow their business.

It turns out that generation X members are the most likely to have signed up for auto pay programs. Parents are more likely than none parents to be enrolled in such programs. Even people with higher education and income levels are more likely to be enrolled then those with lower incomes or education.

Why are people making these money mistakes?

We are all inundated with offers of two months or three months free on some service. All we have to do is sign up and provide a credit card. The company that we’re dealing with is hoping that we will forget that we signed up for in the first place.

By the time we notice this recurring monthly payment, at the very least one or two months have gone by. If we don’t check our accounts on a regular basis it could be six months or year before we notice. At 10 or $20 a month this can add up to two or $300 a year. That’s a lot of money in my book.

If we have several of these it would not be long before we’re spending $1000 a year and not even realizing that we’re getting these recurring services. In fact we may have forgotten all about them. With so many people falling into this trap it is no wonder that companies take this approach.

Take a few minutes right now and examine all of the transactions that have taken place in all of your accounts over the past three months. Follow up on any that you don’t recognize. If there are recurring charges being deducted from your account, check to make sure that this is something that you really want.

You could save yourself $1000 a year without any problem. You could have enough money to go on a three or four day trip!

For more financial money mistakes to avoid, click here.

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Buying Common stocks advantages and disadvantages

October 21st, 2017 ernie Posted in Stock Dividends | No Comments »

Common stocks advantages and disadvantages are frequent. In the past 8 years almost anyone who bought equities on the stock market when it hit bottom in 2008 has more than doubled their investment. Gains in the value of the equities as well as income from dividends has outperformed almost any other investment.

Some of the advantages and risks associated with stocks include income from dividends, growth opportunities, diversity of investments and being able to sell your investment quickly. Before you invest in the stock market, many investors believe that buyers should develop a strategy that matches their objectives and their tolerance for risk. If an investor cannot stomach the volatility of the stock market, equities or stock might not be the right investment vehicle for you.

Strategy for Common stocks advantages and disadvantages

A typical investment strategy which considers common stocks advantages and disadvantages could be as follows:

Blue chip – invest in high quality companies that have been around for many years, pay  dividends on a regular basis and have a strong future in the industry they are in.

Income – If you need income, dividend paying stocks have advantages. Some companies have a history of increasing dividends every year. They perform much better than GIC’s and other fixed investment income vehicles.

Dividends – Companies pay a dividend every 3 months to the stock holder. Many pay cash direct to the investors account. Many companies also allow re-investment of the dividend into the same stock. This is an excellent way of avoiding any broker charges and growing your investment at the same time.

MER – is the fee charged by mutual fund companies for managing the fund. You pay this fee regardless of whether the mutual fund performs well or not. Investors should decide if they want someone managing the investment for them and what they are willing to pay for the service.

Diversity – Never place all of your money into one investment – stock, mutual fund or GIC. Diversify your investments across several stocks in various industry segments.

Risk – the market is considered high risk. There have been significant upticks and down ticks in the market over the years. This is both an advantage and a disadvantage of common stock investing.

For more information about stock dividends, click here.

 

 

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How do I keep my heirs from having to go through probate?

September 21st, 2017 ernie Posted in Wills | No Comments »

probating my willMany consumers want to avoid an estate having to go through probate. Probating my will is something that most people try to avoid by doing appropriate planning prior to their passage. They are trying to reduce the probate charges that the government will charge for the probate process. Let’s start by saying that you should take a will through probate while at the same time taking steps to minimize the cost of probate.

Why would you want to probate a will? First it is the legal process that declares to the public that someone has died and their estate is about to be closed. If there are claimants, this is the legal notice that gives them a chance to make a claim for money owed or to contest the will. While no one wants to deal with this situation, it is better to deal with it legally than face claims later on. Don’t avoid probating my will but do take steps to minimize the charges.

Probating my Will – Minimize Probate Charges

Probate charges vary depending on the location you live in. IN some locations, everything is included when calculating the probate cost. While in many locations there is a deductible with probate calculated on the remaining balance after the deductible has been included. Your challenge prior to your death is to minimize the amount of your assets that will be included in the probate calculation.

For example if you own a home it will be included in probate calculations if your spouse has passed away prior to your death. One method many people use to avoid this is to make their home jointly owned with their kids. Joint ownership items pass automatically to the remaining owner and avoid being included in probate. You can apply this approach to many assets. However there are many issues to consider.

One area of concern is with a joint ownership with someone, you need to make sure it is someone that you can trust. Not everyone can be trusted in situations like this. Money is very attractive to many people.

We strongly suggest that you discuss your options with a lawyer and your financial accountant prior to taking these steps. The first bit of data you need is to find out is the probate deductible. Perhaps you will not need to worry about probate costs at all.

 

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How do you pick an executor?

August 21st, 2017 ernie Posted in Wills | No Comments »

pick an executor Last Will and TestamentOne of the main reasons many people put off making a will is that they have to chose an executor. Sure lots just do not want to think about wills and what this means. Some just do not even care, they are going to be gone anyway. Consumers who care about their families and want to make sure that everything is looked after will not only have a will, they will carefully pick an executor as well. For some picking an executor may be difficult, although the majority of people will select a younger family member who will meet whatever criteria they may have. The most important thing is to have a will and select an executor otherwise the government will step in and do it for you.

Criteria to Pick an Executor

Everyone’s situation is different and therefore not all of the criteria will apply to everyone. We have listed several criteria with a few descriptive words to clarify. It is up to the consumer to decide which is more important for them in their situation. This will guide them to making the right decision regarding picking an executor for their will. Here we go:

Someone You Can Trust – above all do you trust the person to do the right thing and carry out your wishes as indicated in the will. Will they be honest with your heirs?

Close Family Member (s) – this is the most common choice for executor and often will be shared between several. Will they work well together and will they treat other members of the family in a fair manner.

Recipient of your estate – if there is only one recipient of the estate, you may as well make that person the executor of the will. As long as they are adults then there should be no problem if they carry out their duties properly.

Proximity to your Home – an executor who does not live close to your home may have to incur some costs traveling back and forth to your home to make arrangements. These costs and possibly their time as well would be charged to the estate prior to distributing the estate.

Complexity of the Estate – complex estates with property, investments etc may require specific expertise to manage and distribute. This expertise can be hired by the executor, however they should have some idea of what to do and what makes sense.

Value of the Estate – probate may be required and a lawyer will need to file probate with the courts in any case for large estates. Large estates with a lot of investments may require someone who has the time to manage them until dissolution.

Legal issues of your Estate – if the will is contested, if their are lawsuits against the estate of the deceased etc, then someone who is familiar with these issues should be considered.

Probate requirements – small estates typically do not require probate although it does depend on where you live and the local laws governing probate. Can your executor deal with probate with the help of a lawyer?

Other – There may be other concerns that are personal in nature. Often relationships affect decisions about who will be executor as well.

Make the best decision for your situation and family. Discuss your request with the person or person you chose to ensure that they are comfortable with being executor and know in general terms where to find everything they will need.

 

 

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Habits to become Financially Stable and Successful

August 7th, 2017 ernie Posted in Financial Advice | No Comments »

habits to become financially stable and successfulIt takes effort and discipline to become financially stable and to stay that way. Even a temporary relaxation of your financial judgement can jeopardize your stability. Spending too much on a credit card, going on a trip you cannot afford, taking on more debt than you should are examples of what not to do. Becoming financially stable and successful also has benefits as well. For example your stress level will be much less. You can relax more when you are not worried about money. Take the time to review where you are when it comes to the following suggestions to become financially stable and successful. What changes do you need to make in your life?

Become Financially stable and Successful

The following are ways that will gradually take you in the direction you need to be financially stable and successful. There will be setbacks from time to time. Emergency payments will be needed which will deplete your savings. This unfortunately is part of life. But if you stick to your plan, you can quickly recapture your savings and reach stability again.

  • Make savings automatic and save all raises or overtime payments you receive
  • Control your impulse spending. Avoid expensive lunches and dinners, clothes etc
  • Evaluate your expenses, and live frugally.  In fact live well below your income.
  • Invest in your future. Save for emergencies and for retirement.
  • Keep your family secure. Save for emergencies so that you can deal with them when they occur.
  • Eliminate and avoid debt. Debt costs money, credit cards have high interest rates. Avoid them like the plague
  • Use the envelope system or the account system. One for savings, one for emergencies and one for every day bills and expenses
  • Pay bills immediately. Set up an automatic payment so that you never miss any payments and negatively impact your credit rating. Late payments also incur penalties and extra fees.

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What impacts your Credit Score

July 21st, 2017 ernie Posted in Credit Repair | No Comments »

If like many consumers, you are wondering what things can impact your credit score, this list will help you understand what you need to do to improve it. There is the obvious item – Payment History. If you are not good at paying your bills on time particularly your loans and credit cards, your credit score is going to suffer. This also includes utility bills as well as rent payments and tax bills. Pay them all on time and in full or negotiate ahead of time to make arrangements. Even if you speak to them ahead of time, there is no guarrantee that your credit score will not suffer. But there are items that will affect your credit score in addition to payment history.

What Impacts Your Credit Score

Credit Utilization – lets say you have three credit cards each with a $5000 limit. If they have a zero balance or less than 30%, then your credit score will not usually be impacted unless your late with payments.

Length of Credit History – New credit and younger people do not have much history that shows how well they manage credit. The longer you can demonstrate that you can manage credit, the better your score is going to be. fifteen years is much better than two years for example.

New Credit History – Open new accounts slowly. Someone who opens many accounts especially credit accounts over a short time period shows that they are highly reliant on credit and may be a higher risk. If you need new credit accounts do so over a period of time over several months.

Credit Mix – credit cards are considered higher risk than student loans, car loans that are secured and mortgages on your home. Lots of credit card debt or potential debt can lower your credit score.

If you want to improve your score and are not dealing with these issues properly, it is time to look at each area and make adjustments in your life. Fixing one or all of these can improve your credit score.

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Financial Checklist When a Spouse Dies

June 21st, 2017 ernie Posted in Estates | No Comments »

financial checklist when a spouse diesWhen your spouse passes away it can be emotionally overwhelming. Your best friend in many cases, has just left you and your wondering what you will do for the rest of your life. There are so many things to do and it just seems that you cannot focus on anything at all. How will you get through the next day let alone the next week and months. There are some things to focus on initially and as the days go on. It will get easier as time goes on. What you need is a financial checklist when a spouse dies to assist you in those first few months.

Financial Checklist When a Spouse Dies

  • Make funeral arrangements
  • Assemble your team
  • Apply for government programs
  • Contact employers
  • Contact life insurance companies
  • Contact banks and investment advisors
  • Update wills and power of attorney
  • Review real estate position
  • Preserve your assets

Make funeral arrangements – this will take most of your time the first few days so focus on this with the help of your family. You should review the will so that you follow any special instructions

Assemble your team – meet your financial advisor, your lawyer and bank manager. Involve your kids or a good friend you can trust to help you with all of the decisions and information that will need to be addressed

Apply for government programs – depending on age, there may be government programs available that will improve your financial situation. Apply for these now.

Contact employers – if your spouse was still working, you will need to let your employer know. There may be additional benefits that are available from your spouses employer.

Contact life insurance companies – to find out what information they need for you to cash in any life insurance

Contact banks and investment advisors –  let them know what has happened and provide the necessary documentation to transfer all assets to you.

Update wills and power of attorney – now that your spouse is gone it is time to update your will and powers of attorney

Review real estate position – discuss your real estate situation with your lawyer and make any transfers that are needed. You may be thinking of downsizing, don’t rush, take your time to make your decisions.

Preserve your assets – you may need all of your savings for the future to pay your own bills etc. Avoid spending your assets until you have a good appreciation of your situation.

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Rent Your Home to Retire Early

May 21st, 2017 ernie Posted in Debt Freedom | No Comments »

Rent your home to retire earlyShould you rent your home to retire early? This is the question many people ask themselves at various stages in life. Retired baby boomers traditionally have a home they have owned for many years. It is paid off and worth a small fortune. Should they unlock this value by remortgaging, selling and renting or take a reverse mortgage? What about millennials just starting out. Should they buy a home now and incur all of the maintenance expenses, taxes etc along with interest payments on the mortgage? Or should they rent an apartment and set aside the savings for investment?

These are hard questions and many do not have easy answers. There are some fundamental truths that everyone should consider before making a decision. Every person will answer them differently. It is very important that you assess these questions from a personal perspective before making a decision.

Rent your home to retire Early – Fundamentals

  • Will you save and invest your savings from renting
  • Can you deal with the risk associated with your investments
  • Income from work only will not allow you to retire early
  • Must have investments that grow on their own – real estate, stocks, equities
  • Can you live in a frugal manner
  • Do you have the discipline to save for retirement
  • Do you have the discipline to not touch your savings

These and a few other questions basically describe someone who is a risk taker, focused on saving, understands that they need to invest in something that will grow over time in addition to the money he or she puts in.

 

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Advice from Warren Buffett

April 21st, 2017 ernie Posted in Financial Advice | No Comments »

Advice from Warren BuffettAdvice from Warren Buffett comes in various forms. Some are made up while others are direct quotes. This particular piece of advice comes from a TV commentator who interviewed Warren Buffett and summarized his comments. It sounded really good to us so we decided to include it in this post for our readers to review.  There are other posts that you might want to review as well which cover his advice over the years. Feel free to check them out. As always if you have comments, please leave them. Our readers will appreciate different points of view.

Advice from Warren Buffett

“The trick in investing is to watch ball after ball go by and wait for the one right in your sweet spot. If people are yelling, ‘Swing, you bum,’ ignore them. There’s a temptation for people to act far too frequently in stocks simply because they’re so liquid.” Later in the film, he observes that “the biggest thing in making money is time. You don’t need to be smart, just patient.”

That is the trouble with most people today. They are too impatient and not willing to wait. Many investments, blue chips that pay good dividends are not going to provide the get rich quick schemes that consumers look for. However over 10 years, these stocks usually grow and they pay dividends all of the time. Reinvest those dividends and combined with growth you will usually do very well if not better than many indexes.

There will also be upticks and down ticks in the stock market. Being patient with good quality low risk blue chip stocks usually pays well. They always seem to return to their previous highs and even higher.

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Be Smarter about Your Money

March 21st, 2017 ernie Posted in Financial Advice | No Comments »

Be Smarter about Your MoneyDo you often wonder why some people seem to have more money to spend than you do? They might even make less than you do, yet can go on trips and have a nicer home. How do they accomplish this feat. The answer is actually quite simple, Be Smarter about Your Money and how you manage it. We have compiled a list that consumers should consider. Applying these ideas will help almost everyone Be Smarter about Your Money and make it last much longer.

Be Smarter about Your Money

Salary – review deductions, eliminate unneeded deductions as appropriate, take advantage of share plans, contribution plans offered by the company, use direct deposit
Saving – designate 10% for future needs, never to be touched unless there is an extreme emergency. This is in addition to retirement savings.
Avoid credit card debt – pay off all credit card debt and avoid the high 19% + interest charges
Live below your means – and you will always have money to save and provide independence during retirement years
But credit itself is important – you need to have a good credit rating. Borrow some money and pay it back on time and never miss a payment
Understand your spending habits – keep a budget and track expenses. Make decisions about miscellaneous expenses that cause you to fritter away your money
Automate everything – utility payments, taxes, mortgage payments, loan payments etc to avoid ever missing a payment. Missed payments are expensive in terms of fees and credit card ratings.
Get the big purchases right – save big dollars by negotiating, comparison shopping and only making the purchase once you have worked out your budget and payment
Build up that savings account – for emergencies that will always come up. This is in addition to the 10% we mentioned earlier
Cover your insurable needs – including mortgage, loans, education for the kids etc
Always get the match. To 401(k) plan to get the employer match – this is like a bonus and can add thousands of dollars to your retirement savings plans
Save a little more each year – when you get a raise, your savings amount should go up accordingly
Choose your friends and neighborhood wisely – it is tough competing with wealthier friends or big spenders. Don’t! You will not be tempted.
Talk about money – with the family so that they understand your goals and how they can contribute.

Material purchases won’t make you happier in the long run – focus on friends and family

Read a book, or 10 – There are countless personal finance books out there.
Know where you stand – prepare a financial plan every year and asses your progress towards your goals
Taxes matter – minimize taxes owed every year as much as possible
Make more money – get another job to help meet your goals
Don’t think about retirement, but financial independence – meaning when you have enough to retire, you are now independent and can pursue other dreams or continue working

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How Rich People Ruin their Financial Lives

February 21st, 2017 ernie Posted in Financial mistakes | No Comments »

How Rich People Ruin their Financial LivesEven rich people, with huge financial cash flow’s can ruin their lives and not have enough money left over for retirement, let alone avoiding bankruptcy. With large incomes the assumption is that the money will continue to flow forever. The reality is that they often overspend, change jobs or worse yet lose their jobs. There also can be a downturn in the market affecting their cash flow if they derive their income from investments. We put together a list of areas about how rich people ruin their financial lives that we all should pay attention to including those who make six figures incomes.

How Rich People Ruin their Financial Lives

These are a list of the things that most people should do, but often do not, regardless of the level of income that you make.

Establish a budget and track spending – to help understand where your money is going and how it is being spent. Add some control on how you spend money.

Plan for social security – when your income drops or stops all together.

Develop a long-term investment plan and budget – with goals and targets. Add in stress tests to help decide what action you should take.

Assuming the big income will last forever – is usually a mistake, nothing lasts forever.

Not developing a tax strategy – will help minimize the amount of taxes you pay leaving more for you to spend

Wasting money on too many toys and bad investments – leaves little for savings and retirement.

Not increasing savings as income grows – helps to maintain your standard of living when the income stops or you retire.

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Playing in the Stock Market

January 21st, 2017 ernie Posted in Financial Advice | No Comments »

Playing in the Stock MarketA friend of mind had never been a stock market guy. EVER! He always had been very leery of the whole deal. But, this fella William O’Neil is starting to change that for him. His book is really good. Thought you may have heard of him. Playing in the Stock Market can be like gambling, however you can educate yourself and increase the odds of success. However there is still a large risk which you have to be prepared to accept.

My response to him was as follows and maybe it will help others which is why I posted here!

Playing in the Stock Market

I have been in the stock market for many years and have done very well.

Based on my experience you have to decide what kind of an investor you are. – speculative, growth, income, low risk income. They all come with different levels of risk and it depends on how risk tolerant you are.

I stay away from mutual funds, MER’s are too expensive and they get paid regardless of how they perform.

I guess I am an income guy, which means I invest in Blue chip Canadian stocks that pay a dividend each quarter. They have a long record of paying their dividends and have a history of increasing their dividends on a regular basis.

Make sure you are diversified with no more than 5% of my investment in any one company. Part of managing risk.

The blue chips also have a slow growth element in addition to paying dividends. I use yahoo to track my progress. There are lots of ups and downs. When it goes down 10 or 15% it is pretty hard to handle. But if you are well invested, hang on because they will come back and you still get your dividends.

This guy is talking more about speculation which takes lots of time to manage. It is gambling on the stock market!

I would develop your own strategy and stick to it based on your risk tolerance. Review and adjust your strategy every 6 months. Decide if you want to take the dividends in cash or re-invest in the same stock or buy something else with the cash.

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Are you smarter than a millennial about finances

December 21st, 2016 ernie Posted in Financial Advice | No Comments »

Are you smarter than a millennial about financesMillennial’s have a reputation for having the following issues – stagnant wages, increasing student loan debt, fear of the stock market and they have a tendency to overspend on their social lives. Are you smarter than a millennial about finances? Other generations have their own issues with managing their finances. At the present time baby boomers are overly concerned about retirement and whether they will have sufficient money set aside to live a high quality of life during retirement. We decided to compare both ends of the spectrum.

Are you smarter than a millennial about finances?

Millennial’s are demonstrating that they are good in several areas the baby boomers have not excelled in. For example they are creating budgets, tracking to those budgets and following the budget. This is something that boomers are not known for doing.

They are also setting savings goals for everything from retirement, two non-retirement items such as travel, a home, and other things they deem important in their lives.

They are also not afraid to ask for help. If they don’t understand something they will seek advice, usually online and from other millennial’s. The baby boomers on the other hand have traditionally been very independent and avoid seeking advice from professionals.

Baby boomers have a tendency to set retirement goals. They plan to retire in a given or specific time frame in their lives. Millennial’s on the other hand are more focused on ensuring they have sufficient money for retirement. They are willing to work longer to achieve some of their goals.

Bottom line, is that millennial’s are still young and untested as far as life’s challenges are concerned. The big question will they be forever different than baby boomers. Or will they gradually follow the same path as their baby boomer parents and grandparents?

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How to invest a financial windfall 

December 7th, 2016 ernie Posted in Financial Advice | No Comments »

How to invest a financial windfall You have just received some money and you want to know how to invest a financial windfall. Develop an investment strategy based on your risk tolerance. Not everyone can tolerate the wide swings in the stock market. If you are the type to lay awake at night and worry about the value of your investments as the market response to various world events you probably should not be in the stock market. At the very least you may want to invest in solid blue-chip stocks that only pay dividends and have little opportunity for growth or decline.

Your growth and income requirements over the lifetime of your investments should also be considered. It is much better to start when you’re going towards saving for retirement. However if you have only 10 or 15 years to retirement you may want to be more aggressive with regards to your investment strategy.

How to invest a financial windfall

The following broad guidelines should also be considered as part of your investment strategy for your financial windfall.

Diversify across industries and within industries. You might be familiar with one industry or you got a hot tip from a friend. Ignore these temptations and focus on protecting your investment by investing across industries as well as within those industries. Never replace all of your money in one company or investment.

Diversify between the stock market and the bond market. The bond market is actually larger than the stock market in terms of total amount of money invested. You should consider investing in bonds to receive a steady income of interest payments.

Invest money in bonds using a bond ladder approach. When you invest in bonds, they should have a laddered maturity dates. In other words you want each one to mature in a different year so that you never have all of your money maturing in a low interest year.

Save some cash for a rainy day and for emergencies. Your windfall is a great opportunity to make sure that you have some cash set aside for emergencies. There may come a time when you need some cash to cover the debt or emergency expense. This emergency fund will come in handy.

If you have not already got the message, never put all of your eggs in one basket. This is the most important advice in this entire post. You have just received at financial windfall. You want to make sure that it continues to provide you with income investment equity for a long period. The best way to do this is to make sure it is invested diversely.

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