Among the safest investments are U.S. Treasuries. They are backed by the full faith and credit of the U.S government. (Backed by you and me and the taxes we pay.) When you start at the bottom of the investment pyramid, Treasuries are part of your investment foundation along with savings accounts, CD's and money markets.
Essentially, when you buy a Treasury you are lending money to the government.
Because U.S Treasuries are so safe, they earn very little interest as they carry minimal risk.
U.S. Treasuries come in several durations:
A Treasury Bill, or TBill, will mature in under a year,
Treasury Notes will mature in 1, 3, 5, 7 or 10 years and
Treasury Bonds, long bonds, mature in 20 and 30 years.
The most known Treasury is the 10 year which is used as a benchmark (measuring/comparison tool) for the Treasury market and for mortgage rates.
Treasuries may be bought through a brokerage account, at a federal bank and online at www.TreasuryDirect.gov.
Be $ Smart - build your investment portfolio foundation with some U.S. Treasury bills, notes or bonds for safety and predictability.
Wednesday, December 31, 2014
Wednesday, November 26, 2014
Becoming a Better Investor - Whom to trust?
The financial services industry can be very confusing and intimidating. Many people either stay away or jump in blindly and get fleeced.
So how do you find someone to help and guide you?
Let's start with some titles and designations:
Financial Advisor - a very broad term which translates to someone who can help you with finance and investments.
WMA - Wealth Management Advisor - same as financial advisor but has more snob appeal.
CFP - Certified Financial Planner - a person who has taken many courses and passed a rigorous exam covering all the aspects of personal finance. They have a good grasp of money management and investing.
Stock broker - aka Financial Advisor - this person has passed the Series 7 exam, is register with the SEC (Securities and Exchange Commission) and has a good knowledge of investing.
Let's review how they get paid:
Financial advisor, WMA and stock broker rely essentially on sales. The more they sell you, the more commissions they make. (Both buy and sell orders generate commissions for the broker.) If you are being advised to buy and/or sell often, the only person making money is your broker.
A Fee Only Financial Planner prepares a comprehensive plan for you and your family. It may include buying a home, additional education for you or your spouse, education for your children, taxes and other financial goals leading to retirement. Since this plan takes many hours of gathering information and analysis the planner will charge a substantial fee - somewhere between $1000 to $2500 or more, depending how complicated your situation may be. The planner then sends you to a financial advisor or broker to implement the plan.
Another type of Financial Planner will prepare a less comprehensive plan and implement it for you. The fee for the plan will be covered by the charges for investing. (You don't get the plan for nothing.)
Remember to ask:
"What's this going to cost me? How do you get paid?"
There are ways for you to determine if a broker or investment advisor is a bad apple. Go to BrokerCheck at finra.org website or call the BrokerCheck hotline 800-289-9999. Here you will learn a broker's current license status and history, employment history and any reported regulatory proceedings, disputes and settlements.
(FINRA - the Financial Industry Regulatory Authority is the self-regulator for the securities industry.)
When you work with a financial professional it is important to know the extent of his/her expertise in the various areas of finance. Although they may exhibit a certain level of knowledge, there is no test or regulation for integrity and trust. You must seek a professional who is worthy of your trust and the care of your money.
Be $ Smart - take the time to research and interview financial advisers before you give them your hard earned money.
So how do you find someone to help and guide you?
Let's start with some titles and designations:
Financial Advisor - a very broad term which translates to someone who can help you with finance and investments.
WMA - Wealth Management Advisor - same as financial advisor but has more snob appeal.
CFP - Certified Financial Planner - a person who has taken many courses and passed a rigorous exam covering all the aspects of personal finance. They have a good grasp of money management and investing.
Stock broker - aka Financial Advisor - this person has passed the Series 7 exam, is register with the SEC (Securities and Exchange Commission) and has a good knowledge of investing.
Let's review how they get paid:
Financial advisor, WMA and stock broker rely essentially on sales. The more they sell you, the more commissions they make. (Both buy and sell orders generate commissions for the broker.) If you are being advised to buy and/or sell often, the only person making money is your broker.
A Fee Only Financial Planner prepares a comprehensive plan for you and your family. It may include buying a home, additional education for you or your spouse, education for your children, taxes and other financial goals leading to retirement. Since this plan takes many hours of gathering information and analysis the planner will charge a substantial fee - somewhere between $1000 to $2500 or more, depending how complicated your situation may be. The planner then sends you to a financial advisor or broker to implement the plan.
Another type of Financial Planner will prepare a less comprehensive plan and implement it for you. The fee for the plan will be covered by the charges for investing. (You don't get the plan for nothing.)
Remember to ask:
"What's this going to cost me? How do you get paid?"
There are ways for you to determine if a broker or investment advisor is a bad apple. Go to BrokerCheck at finra.org website or call the BrokerCheck hotline 800-289-9999. Here you will learn a broker's current license status and history, employment history and any reported regulatory proceedings, disputes and settlements.
(FINRA - the Financial Industry Regulatory Authority is the self-regulator for the securities industry.)
When you work with a financial professional it is important to know the extent of his/her expertise in the various areas of finance. Although they may exhibit a certain level of knowledge, there is no test or regulation for integrity and trust. You must seek a professional who is worthy of your trust and the care of your money.
Be $ Smart - take the time to research and interview financial advisers before you give them your hard earned money.
Tuesday, November 11, 2014
Becoming a Better Investor
Achieving financial freedom or financial independence is a worthwhile goal to pursue at any age. Life can be more enjoyable and less stressful when you have enough money to live the life you want.
I have learned I can only work so many hours each day, each week. Realizing that, I must put my money to work by investing.
Over the next few weeks I will give tips on investing. Actually, last week's $ Tip discussed the services offered by a Full Service Broker vs a Discount Broker, was a good start.
Education is the key. I offer four suggestions. Pick one or two to raise your understanding and commitment to investing:
1. Take a class. Most adult education programs at your local high school or college offer a class on personal investing. Take a friend. Learn together. Go out after the class and discuss what you learned and what you can implement.
2. Read. Join AAII, the American Association of Individual Investors.
The cost is $29 per year. They are dedicated to people like you who are learning about investing. They offer a monthly publication filled with good, basic information. Also, they offer chapter meetings where you can meet others interested in investing. Go to www.aaii.com.
3. Read more. Buy one, yes one, money/investing magazine. Read it cover to cover, even the ads. Here you are familiarizing yourself with a new vocabulary. The more you see and read the words, the sooner you will understand their meaning. You don't really need a year's subscription until you find one magazine you enjoy and understand. Or, regularly read the Business Section of your newspaper.
4. Find a "money buddy". Doing things with another person is always more fun. Just as Weight Watchers encourages buddies and exercise routines suggest partners, you know you are more likely to stick to your financial goals and learn more if you have a buddy.
Be $ smart - learn investing to build wealth and financial independence.
I have learned I can only work so many hours each day, each week. Realizing that, I must put my money to work by investing.
Over the next few weeks I will give tips on investing. Actually, last week's $ Tip discussed the services offered by a Full Service Broker vs a Discount Broker, was a good start.
Education is the key. I offer four suggestions. Pick one or two to raise your understanding and commitment to investing:
1. Take a class. Most adult education programs at your local high school or college offer a class on personal investing. Take a friend. Learn together. Go out after the class and discuss what you learned and what you can implement.
2. Read. Join AAII, the American Association of Individual Investors.
The cost is $29 per year. They are dedicated to people like you who are learning about investing. They offer a monthly publication filled with good, basic information. Also, they offer chapter meetings where you can meet others interested in investing. Go to www.aaii.com.
3. Read more. Buy one, yes one, money/investing magazine. Read it cover to cover, even the ads. Here you are familiarizing yourself with a new vocabulary. The more you see and read the words, the sooner you will understand their meaning. You don't really need a year's subscription until you find one magazine you enjoy and understand. Or, regularly read the Business Section of your newspaper.
4. Find a "money buddy". Doing things with another person is always more fun. Just as Weight Watchers encourages buddies and exercise routines suggest partners, you know you are more likely to stick to your financial goals and learn more if you have a buddy.
Be $ smart - learn investing to build wealth and financial independence.
Saturday, November 1, 2014
Stock Market Turbulence
The market's up, the market's down - what is all the buzz about?
In the past few weeks the stock market has been bouncing like a rubber ball on speed. But in recent days, it appears to have lost the bounce.
The DOW (Dow Jones Industrial Average) is comprised of 30 stocks. Usually very large multinational US companies.
The S & P 500 (Standard & Poors, a rating agency) holds the top 500 US companies.
These two indices are what folks usually refer to when they speak of the "stock market". There actually are over 5000 companies publicly listed - meaning that you and I and millions of other people may buy and own shares. (There are also thousands of companies privately held - e.g. Mars, the maker of Snickers, M&M's, Uncle Ben's, etc. is owned exclusively by the Mars family of McLean,VA. that are not included in either index.)
The value of a company stock will go up and down depending on many factors. If world or local events or an accident (like an oil spill) give cause to think the company is in trouble and cannot perform well and grow, the stock will bear a lower price. And the reverse is true - if everything good is happening - good sales, controlling costs, general public optimism - the stock price will rise.
Right now there are many factors, both home and abroad, affecting why the stock market has fallen (prices/values have dropped.) If you view the stock market as a living breathing organism inhaling and exhaling, you might realize the market has been inhaling for a very long time. The stock market has been rising with no substantial correction (drop) for a few years. The market cannot grow without substance. There has to be employment growth, a sound economy and solid political leadership to build and sustain a rising market. "The market hates uncertainty" is a quote I learned way back in the beginning of my career. It has proven to be true.
So how does this affect you? If I showed you a graph of the stock market from 1900 through 2014 you would easily see an upward trend, with occasional down blips. Seeing that visual might ease your concerns.
Be $ Smart - be aware the market goes up and down daily, and over the long-tern the trend has been up. It's the best way to make your money grow long term and to keep up with inflation.
The next $ Tip will take a look at how you feel/react to the ups and downs of the market - also known as Risk Tolerance.
In the past few weeks the stock market has been bouncing like a rubber ball on speed. But in recent days, it appears to have lost the bounce.
The DOW (Dow Jones Industrial Average) is comprised of 30 stocks. Usually very large multinational US companies.
The S & P 500 (Standard & Poors, a rating agency) holds the top 500 US companies.
These two indices are what folks usually refer to when they speak of the "stock market". There actually are over 5000 companies publicly listed - meaning that you and I and millions of other people may buy and own shares. (There are also thousands of companies privately held - e.g. Mars, the maker of Snickers, M&M's, Uncle Ben's, etc. is owned exclusively by the Mars family of McLean,VA. that are not included in either index.)
The value of a company stock will go up and down depending on many factors. If world or local events or an accident (like an oil spill) give cause to think the company is in trouble and cannot perform well and grow, the stock will bear a lower price. And the reverse is true - if everything good is happening - good sales, controlling costs, general public optimism - the stock price will rise.
Right now there are many factors, both home and abroad, affecting why the stock market has fallen (prices/values have dropped.) If you view the stock market as a living breathing organism inhaling and exhaling, you might realize the market has been inhaling for a very long time. The stock market has been rising with no substantial correction (drop) for a few years. The market cannot grow without substance. There has to be employment growth, a sound economy and solid political leadership to build and sustain a rising market. "The market hates uncertainty" is a quote I learned way back in the beginning of my career. It has proven to be true.
So how does this affect you? If I showed you a graph of the stock market from 1900 through 2014 you would easily see an upward trend, with occasional down blips. Seeing that visual might ease your concerns.
Be $ Smart - be aware the market goes up and down daily, and over the long-tern the trend has been up. It's the best way to make your money grow long term and to keep up with inflation.
The next $ Tip will take a look at how you feel/react to the ups and downs of the market - also known as Risk Tolerance.
Risk Tolerance
Risk - the permanent loss of capital (money).
Over the past few weeks we have experienced much volatility in U.S. stock markets.
Volatility is the gyrations of stock prices in reaction to social and economic conditions. With the market moving up and down - making money and losing money - how do you protect your money and your future?
How much money can you bear to lose? NONE - most would say.
If we ask the question slightly differently - how much money must you keep absolutely safe to allow you to sleep at night? Your answer may show how much risk you are willing to take. Some may say 100% - then you would be considered risk adverse.
Others may say 20%; they would be considered to have a low risk tolerance.
But none of us likes to lose money. So how do I know where to put my money?
Money needed soon (1-2 yrs.) for a definite goal - a house down payment, a new car, an upcoming vacation - all must remain safe with little or no risk. The safe places to keep this money are:
savings accounts,
CD's (certificates of deposit at a bank)
most money markets.
You have NO risk tolerance for this money.
Money slated for mid-term goals (3-8 yrs.) - an Alaskan cruise in 5 years, college tuition for your ten-year old, a vacation house in 4 years - may earn slightly more interest if invested in short-term bond funds or certain high quality (blue chip) stocks.
You have small risk tolerance for these goals.
Money designated for retirement - 15, 20, 30 years away need greater exposure to risk to provide the growth necessary to build a sufficient nest egg. Here is where investing in stocks and bonds gives you growth opportunity but also increases loss possibility.
You have moderate risk tolerance for long term goals.
Extra money, over and above all your savings, may be allocated to higher risk.
This is not the rent or mortgage money. This is money you can afford to lose.
Real estate, commodities (e.g.metals, oil, coffee, grains) fluctuate wildly(high volatility)
You have high risk for these investments.
Be $ Smart - know your risk tolerance. Invest wisely so you may sleep well.
Over the past few weeks we have experienced much volatility in U.S. stock markets.
Volatility is the gyrations of stock prices in reaction to social and economic conditions. With the market moving up and down - making money and losing money - how do you protect your money and your future?
How much money can you bear to lose? NONE - most would say.
If we ask the question slightly differently - how much money must you keep absolutely safe to allow you to sleep at night? Your answer may show how much risk you are willing to take. Some may say 100% - then you would be considered risk adverse.
Others may say 20%; they would be considered to have a low risk tolerance.
But none of us likes to lose money. So how do I know where to put my money?
Money needed soon (1-2 yrs.) for a definite goal - a house down payment, a new car, an upcoming vacation - all must remain safe with little or no risk. The safe places to keep this money are:
savings accounts,
CD's (certificates of deposit at a bank)
most money markets.
You have NO risk tolerance for this money.
Money slated for mid-term goals (3-8 yrs.) - an Alaskan cruise in 5 years, college tuition for your ten-year old, a vacation house in 4 years - may earn slightly more interest if invested in short-term bond funds or certain high quality (blue chip) stocks.
You have small risk tolerance for these goals.
Money designated for retirement - 15, 20, 30 years away need greater exposure to risk to provide the growth necessary to build a sufficient nest egg. Here is where investing in stocks and bonds gives you growth opportunity but also increases loss possibility.
You have moderate risk tolerance for long term goals.
Extra money, over and above all your savings, may be allocated to higher risk.
This is not the rent or mortgage money. This is money you can afford to lose.
Real estate, commodities (e.g.metals, oil, coffee, grains) fluctuate wildly(high volatility)
You have high risk for these investments.
Be $ Smart - know your risk tolerance. Invest wisely so you may sleep well.
Full Service or Discount Broker
I was with some friends this weekend and one asked me "What is a discount broker?"
As I often encourage you to invest your money to help it grow, this might be a good time to explain the difference.
A full service broker is a firm like Merrill Lynch or Morgan Stanley. Here you will find a "broker" or sales person who may be called a Financial Advisor, Wealth Management Advisor or Retirement Specialist.
These large, full service firms will give you financial advice, help determine your financial goals and your risk tolerance. They typically have large research departments or purchase outside research on various companies' stocks and bonds. They use this research to recommend to their clients a mixture of investments (asset allocation) and will direct the buying and selling of these investments - usually for a substantial commission.
The commission charged is based on the price of the stock times the number of shares. The cost to buy or sell could be hundreds of dollars. This is how they get paid.
(Remember:
"What's this going to cost me? How do you get paid?" from a previous $ Tip.)
A discount broker is a firm with many of the same functions as above but without as many services. They will offer "canned" research, something anyone can find online. They will not call you recommending investments nor will they take pains to get to know you.
These firms are more "do it yourself". They assume you know what you are doing. They will take your order to buy or to sell and they will not offer comment.
Actually, the greater discount on buying and selling is when you talk to no one and enter the trade online. (A trade is a buy or a sell.)
There is one discount brokerage that charges $5 per trade for almost any size trade (50, 100, 1000 shares). Others may charge $7.50, $10 or $20 per trade. Scottrade, eTrade, Ameritrade are some discount brokerage firms.
Be $ Smart - know what type of brokerage firm is best for you to build wealth and financial security.
As I often encourage you to invest your money to help it grow, this might be a good time to explain the difference.
A full service broker is a firm like Merrill Lynch or Morgan Stanley. Here you will find a "broker" or sales person who may be called a Financial Advisor, Wealth Management Advisor or Retirement Specialist.
These large, full service firms will give you financial advice, help determine your financial goals and your risk tolerance. They typically have large research departments or purchase outside research on various companies' stocks and bonds. They use this research to recommend to their clients a mixture of investments (asset allocation) and will direct the buying and selling of these investments - usually for a substantial commission.
The commission charged is based on the price of the stock times the number of shares. The cost to buy or sell could be hundreds of dollars. This is how they get paid.
(Remember:
"What's this going to cost me? How do you get paid?" from a previous $ Tip.)
A discount broker is a firm with many of the same functions as above but without as many services. They will offer "canned" research, something anyone can find online. They will not call you recommending investments nor will they take pains to get to know you.
These firms are more "do it yourself". They assume you know what you are doing. They will take your order to buy or to sell and they will not offer comment.
Actually, the greater discount on buying and selling is when you talk to no one and enter the trade online. (A trade is a buy or a sell.)
There is one discount brokerage that charges $5 per trade for almost any size trade (50, 100, 1000 shares). Others may charge $7.50, $10 or $20 per trade. Scottrade, eTrade, Ameritrade are some discount brokerage firms.
Be $ Smart - know what type of brokerage firm is best for you to build wealth and financial security.
Friday, October 10, 2014
Social Security Estimate of Benefits - a valuable tool!
Many years ago, the Social Security administration did not mail benefit estimates. You had to visit one of their offices to learn what you might receive at retirement. Then in 1999 they began mailing them. With the advent of the Internet, they stopped mailing mid-2011 as a cost cutting measure. Now, by popular request, they will send the statements to those workers 25, 30, 35, etc. Every 5 years you will be mailed a statement until you are 60, then it will come every year.
What is so important about this statement?
It is a valuable financial planning tool that gives workers important information about their earnings, tax contributions and estimates for retirement, disability and survivor benefits!!
If your estimated benefits will pay you $1800 per month and you need $5000 a month to live, then you know you need to save enough to provide $3200 monthly.
It can be a real wake-up call to start saving! Every five years it can be a beneficial jolt to make you sit down and calculate if you are on track for retirement. The numbers may reveal that you must work longer than you planned.
You may view your benefits more frequently if you open a MySocialSecurity account online. Go to SSA.gov and input your SS number, mailing address and valid e-mail address. There will be security questions only you will know that match the information on file with SS.
With an online SS account you will receive an annual reminder to verify and update your information. It is critical to review your earnings as sometimes there may be errors. SS gives only a limited time to correct any earnings errors.
Be $ Smart - know your estimated SS benefits. Open a SS account online.
What is so important about this statement?
It is a valuable financial planning tool that gives workers important information about their earnings, tax contributions and estimates for retirement, disability and survivor benefits!!
If your estimated benefits will pay you $1800 per month and you need $5000 a month to live, then you know you need to save enough to provide $3200 monthly.
It can be a real wake-up call to start saving! Every five years it can be a beneficial jolt to make you sit down and calculate if you are on track for retirement. The numbers may reveal that you must work longer than you planned.
You may view your benefits more frequently if you open a MySocialSecurity account online. Go to SSA.gov and input your SS number, mailing address and valid e-mail address. There will be security questions only you will know that match the information on file with SS.
With an online SS account you will receive an annual reminder to verify and update your information. It is critical to review your earnings as sometimes there may be errors. SS gives only a limited time to correct any earnings errors.
Be $ Smart - know your estimated SS benefits. Open a SS account online.
Friday, September 12, 2014
Dual Purpose - Roth IRA
Saving for retirement can be tough while you are trying to build an emergency fund, pay off student loans, car loans and other expenses. But we all know the importance of saving early. The earlier you start saving for retirement, the faster your money will compound and grow.
Here is where a Roth IRA (Individual Retirement Account) can serve two functions. The principal (original money invested) may be withdrawn without penalty and taxes at any time making that money available for emergencies. (It's the earnings - dividends and interest - that would be subject to taxes and penalty if you are under 59 1/2.)
Aim for three months emergency fund in a savings account and three months in your Roth.
How to open a Roth IRA:
You may open an IRA at a bank, credit union, brokerage house (e.g. Fidelity, Vanguard, Merrill Lynch) in person or online.
Questions to ask:
- What is the minimum investment?
- What fees are charged for the account and for transactions?
- What investments are available? Stocks? Bonds? Mutual funds? Exchange Traded Funds (ETF's)?
- How may I arrange for monthly automatic transfer from my savings or checking account?
Your biggest stumbling block may be the required initial deposit. Some firms require only $500 where others $1000 or $3000. Subsequent investments may be as little as $25 or $50. If you are expecting a bonus or a tax return, it may be a good use of that money. Otherwise, keep the emergency money building in your savings account until you reach the required minimum amount then open the Roth.
Using the Roth as part of your emergency fund means taking NO big risks with the money. Choose a very conservative investment for the emergency portion. As your balance grows, start to invest the difference more aggressively.
Keep in mind a Roth IRA is not for everyone. Only those individuals with earned income may contribute. And individuals earning under $112,000 and couples under $178,000 may contribute $5500 (if over 50, $6500). Remember it's not all or nothing. If you cannot contribute the max, contribute some amount.
Be $ smart - use the flexibility of a Roth IRA to your advantage in building your emergency fund.
Here is where a Roth IRA (Individual Retirement Account) can serve two functions. The principal (original money invested) may be withdrawn without penalty and taxes at any time making that money available for emergencies. (It's the earnings - dividends and interest - that would be subject to taxes and penalty if you are under 59 1/2.)
Aim for three months emergency fund in a savings account and three months in your Roth.
How to open a Roth IRA:
You may open an IRA at a bank, credit union, brokerage house (e.g. Fidelity, Vanguard, Merrill Lynch) in person or online.
Questions to ask:
- What is the minimum investment?
- What fees are charged for the account and for transactions?
- What investments are available? Stocks? Bonds? Mutual funds? Exchange Traded Funds (ETF's)?
- How may I arrange for monthly automatic transfer from my savings or checking account?
Your biggest stumbling block may be the required initial deposit. Some firms require only $500 where others $1000 or $3000. Subsequent investments may be as little as $25 or $50. If you are expecting a bonus or a tax return, it may be a good use of that money. Otherwise, keep the emergency money building in your savings account until you reach the required minimum amount then open the Roth.
Using the Roth as part of your emergency fund means taking NO big risks with the money. Choose a very conservative investment for the emergency portion. As your balance grows, start to invest the difference more aggressively.
Keep in mind a Roth IRA is not for everyone. Only those individuals with earned income may contribute. And individuals earning under $112,000 and couples under $178,000 may contribute $5500 (if over 50, $6500). Remember it's not all or nothing. If you cannot contribute the max, contribute some amount.
Be $ smart - use the flexibility of a Roth IRA to your advantage in building your emergency fund.
Technology to the rescue! Use bank apps.
In order to improve their bottom line, banks have been charging fees on everything. One of the most costly fees is that on overdrafts. Not balancing your check book or keeping a very low balance in your account can push you into overdraft with a big fat fee of $35! Do that two or three times a month and you have the cost of a dinner out.
Take advantage of your bank's app. It allows you to check your balance, make payments, set alerts, etc. Set an alert for when your balance falls below a certain amount to avoid overdraft fees.
Statistics show that the youngest and poorest bank customers are paying the larger share of fees. These are folks who cannot afford to fund the bank's profits. One overdraft fee could buy a bag of groceries. Online banking is giving customers more control. Take advantage of the apps your banks offer to manage your money wisely.
Some features my bank app offers:
- deposit a check by snapping a picture of it,
- send money to someone to pay an IOU,
- transfer money between my checking and savings accounts,
- view my account balance,
- make sure "direct deposit" checks have been credited properly,
- view bill due dates,
- pay bills,
- find an ATM for my bank to avoid non-bank ATM fees.
Be $ smart - Keep more money in your pocket by using bank apps.
Take advantage of your bank's app. It allows you to check your balance, make payments, set alerts, etc. Set an alert for when your balance falls below a certain amount to avoid overdraft fees.
Statistics show that the youngest and poorest bank customers are paying the larger share of fees. These are folks who cannot afford to fund the bank's profits. One overdraft fee could buy a bag of groceries. Online banking is giving customers more control. Take advantage of the apps your banks offer to manage your money wisely.
Some features my bank app offers:
- deposit a check by snapping a picture of it,
- send money to someone to pay an IOU,
- transfer money between my checking and savings accounts,
- view my account balance,
- make sure "direct deposit" checks have been credited properly,
- view bill due dates,
- pay bills,
- find an ATM for my bank to avoid non-bank ATM fees.
Be $ smart - Keep more money in your pocket by using bank apps.
Friday, July 25, 2014
Third in a series - THE Important Conversation
As you may have guessed, the past two Tips were the primary steps in "putting your financial house in order." Be it your house, your parents' or a friend's, it all makes life easier when you are organized and can find important information quickly and in an emergency.
Other information to have readily available would be a
List of Professionals including their name, address and phone number:
Attorney
Accountant
Financial Advisor
Insurance Agent
A List of Investments including the name of the institution, account number, phone number and online access (User ID and PWD):
Brokerage accounts
Checking and Savings Accounts
Pension
IRA
401k or 403b
529 College Savings Plan
ESOP (employee stock ownership plan)
You may organize all this information in a 3-ring binder. Ideally, update it annually. Or you may buy a book with all the categories organized and separated for you. There are several offered by Amazon or any bookstore. e.g. Putting Things in Order or Get It Together: Organize Your Records so Your Family Won't Have To.
Be $ smart - put your financial house in order to give you quick and easy access as well as peace of mind.
Other information to have readily available would be a
List of Professionals including their name, address and phone number:
Attorney
Accountant
Financial Advisor
Insurance Agent
A List of Investments including the name of the institution, account number, phone number and online access (User ID and PWD):
Brokerage accounts
Checking and Savings Accounts
Pension
IRA
401k or 403b
529 College Savings Plan
ESOP (employee stock ownership plan)
You may organize all this information in a 3-ring binder. Ideally, update it annually. Or you may buy a book with all the categories organized and separated for you. There are several offered by Amazon or any bookstore. e.g. Putting Things in Order or Get It Together: Organize Your Records so Your Family Won't Have To.
Be $ smart - put your financial house in order to give you quick and easy access as well as peace of mind.
Thursday, July 17, 2014
THE Important Conversation
Too many families are avoiding THE important conversation. No, not the one about the birds and the bees; the one about estate planning. Estate means what you own and planning means how it will be used in the future. You don’t have to own much to do some estate planning.
Maybe you are young and have not built your estate yet but chances are you have parents who have accumulated a few things. You need to know what they have done about estate planning. It then becomes tricky. You hesitate to ask your parents about their retirement or estate plans. You might not want to appear greedy or eager to see them pass on. Your parents are reluctant to share this information with you for fear of giving you hopes (or disappointment) about inheritance. So everyone is in the dark!
Not having “the important conversation” can lead to misconceptions. Who will care for your aging parents? You? Your sibling? Or are you hoping your parents will have the resources to move into an assisted living facility? Won’t you be surprised when they decide to move in with you! Or better yet, take your inheritance and buy a fancy home in St. Thomas.
Do your parents have sufficient income to stay in their own home? Will they need both physical and financial help from you along the way? Maybe they have sufficient assets to live a long and comfortable life. How will you know, as they age, if they have participated in some scam that could drastically reduce their assets unless you know what assets they have?
At first it might feel awkward. Start with a few simple questions like: how are you and dad doing? What are your plans for the future? How will you make that happen? It might take two or three tries but eventually they will open up and you’ll all feel better.
If you are the parent, make time to have THE conversation with your children or loved ones.
Be $ smart - give yourself and your parents peace of mind. Have THE conversation.
Maybe you are young and have not built your estate yet but chances are you have parents who have accumulated a few things. You need to know what they have done about estate planning. It then becomes tricky. You hesitate to ask your parents about their retirement or estate plans. You might not want to appear greedy or eager to see them pass on. Your parents are reluctant to share this information with you for fear of giving you hopes (or disappointment) about inheritance. So everyone is in the dark!
Not having “the important conversation” can lead to misconceptions. Who will care for your aging parents? You? Your sibling? Or are you hoping your parents will have the resources to move into an assisted living facility? Won’t you be surprised when they decide to move in with you! Or better yet, take your inheritance and buy a fancy home in St. Thomas.
Do your parents have sufficient income to stay in their own home? Will they need both physical and financial help from you along the way? Maybe they have sufficient assets to live a long and comfortable life. How will you know, as they age, if they have participated in some scam that could drastically reduce their assets unless you know what assets they have?
At first it might feel awkward. Start with a few simple questions like: how are you and dad doing? What are your plans for the future? How will you make that happen? It might take two or three tries but eventually they will open up and you’ll all feel better.
If you are the parent, make time to have THE conversation with your children or loved ones.
Be $ smart - give yourself and your parents peace of mind. Have THE conversation.
Important Documents to Have on Hand..
Last week I spoke of THE important conversation about estate planning. This week I will continue that theme with a list of documents that should be current and readily available.
Having these documents will save you time, money and angst.
Top of the list is a will. Is it current? Have you married, divorced, had kids or changed the state in which you live? Who has the original? We left ours with our attorney who reitred and moved leaving no contact information. When my husband died we had a copy but needed the original. So technically, he died intestate. What a nightmare I was left to unravel in the throes of grief.
Will
Durable Power of Attorney
Property Deeds (house, land)
Letter of Instruction (last wishes)
Marriage License
Divorce Decree and Judgment
Birth Certificate(s)
Vehicle Titles (boat, car, RV, motorcycle)
Outstanding Personal Loan Agreements (friends, family)
Life Insurance Policies
Healthcare Proxy
Living Will
Deed for Cemetary Plot
Take an inventory of your documents. How many can you find? How many do your parents have on hand?
You may have to request a copy from your attorney or town clerk. And of course, keep them in a safe place in a fireproof box.
Promise yourself you will collect these documents by Labor Day 2014.
Be $ smart, update and inventory your important documents to save you time and money.
Having these documents will save you time, money and angst.
Top of the list is a will. Is it current? Have you married, divorced, had kids or changed the state in which you live? Who has the original? We left ours with our attorney who reitred and moved leaving no contact information. When my husband died we had a copy but needed the original. So technically, he died intestate. What a nightmare I was left to unravel in the throes of grief.
Will
Durable Power of Attorney
Property Deeds (house, land)
Letter of Instruction (last wishes)
Marriage License
Divorce Decree and Judgment
Birth Certificate(s)
Vehicle Titles (boat, car, RV, motorcycle)
Outstanding Personal Loan Agreements (friends, family)
Life Insurance Policies
Healthcare Proxy
Living Will
Deed for Cemetary Plot
Take an inventory of your documents. How many can you find? How many do your parents have on hand?
You may have to request a copy from your attorney or town clerk. And of course, keep them in a safe place in a fireproof box.
Promise yourself you will collect these documents by Labor Day 2014.
Be $ smart, update and inventory your important documents to save you time and money.
Friday, June 20, 2014
www.bettermoneyhabits.com
Have you heard about Khan Academy? It's a not-for-profit with the goal of changing education. It offers a wonderful, easy way to learn by providing a free, world-class education for anyone anywhere. It covers math, science, finance and history.
They have recently partnered with Bank of America and created a website offering videos that teach about money management: www.bettermoneyhabits.com
You may learn how to compute compound interest, to manage credit and to buy or rent a house. You do not have to be a BoA customer as the site stands alone.
We are so fortunate to live with and use technology. If we don't know something, there are so many ways we may learn using the internet. Check out the site and see what new ideas they offer. My favorite section is on understanding credit. It really opens your eyes to the cost of borrowing and building your credit score.
Be $ smart; keep learning how to better manage your money.
They have recently partnered with Bank of America and created a website offering videos that teach about money management: www.bettermoneyhabits.com
You may learn how to compute compound interest, to manage credit and to buy or rent a house. You do not have to be a BoA customer as the site stands alone.
We are so fortunate to live with and use technology. If we don't know something, there are so many ways we may learn using the internet. Check out the site and see what new ideas they offer. My favorite section is on understanding credit. It really opens your eyes to the cost of borrowing and building your credit score.
Be $ smart; keep learning how to better manage your money.
Wednesday, June 4, 2014
The Tortoise and the Hare - $ Version
So many folks postpone saving for retirement "until I get on my feet". That day can be very illusive! Below is an example of how starting early gives you a head start towards a winning goal. ($5000 a year breaks down to $416.66 per month or $96.15 per week.)
Angie, age 30, decides to begin saving for retirement this year. She invests $5,000 a year and earns a constant 6% return. After ten years, she stops making contributions but lets the money remain in the investment, earning 6% annually, for her retirement at age 65. Dave, also age 30, does not begin to save for retirement until ten years later when he is 40 years old. From age 40 until age 65, he contributes $5,000 annually, earning a constant 6 percent return.
By the time Angie and Dave reach age 65, Angie will have invested a total of $50,000, while Dave will have invested $125,000. Intuitively, one might assume that Dave will have accumulated more. However, in 35 years, Angie will have a total of almost $225,000; Dave will have accumulated just less than $195,000.
Accumulated Amounts
Angie—$5,000 annual contributions for 10 years;
$50,000 total contributions
Year 1 $5,300
Year 5 29,877
Year 10 69,858
Year 11 Contributions cease
Year 15 93,486
Year 20 125,005
Year 25 167,419
Year 30 $224,045
Dave—$5,000 annual contribution beginning in year 11 for 25 years;
$125,000 total contributions
Year 1 $0
Year 5 0
Year 10 0
Year 11 Contributions begin
Year 15 29,877
Year 20 69,858
Year 25 123,363
Year 30 $194,964
The numbers in this chart assume all contributions are made at once at the beginning of each year; 6 percent interest is calculated and applied at the end of each year. Source: WebCE
The secret is compound growth over time. Dave put aside $75,000 more than Angie but had fewer years of the money building on itself - compound growth.
Be $ smart, start saving early!
Angie, age 30, decides to begin saving for retirement this year. She invests $5,000 a year and earns a constant 6% return. After ten years, she stops making contributions but lets the money remain in the investment, earning 6% annually, for her retirement at age 65. Dave, also age 30, does not begin to save for retirement until ten years later when he is 40 years old. From age 40 until age 65, he contributes $5,000 annually, earning a constant 6 percent return.
By the time Angie and Dave reach age 65, Angie will have invested a total of $50,000, while Dave will have invested $125,000. Intuitively, one might assume that Dave will have accumulated more. However, in 35 years, Angie will have a total of almost $225,000; Dave will have accumulated just less than $195,000.
Accumulated Amounts
Angie—$5,000 annual contributions for 10 years;
$50,000 total contributions
Year 1 $5,300
Year 5 29,877
Year 10 69,858
Year 11 Contributions cease
Year 15 93,486
Year 20 125,005
Year 25 167,419
Year 30 $224,045
Dave—$5,000 annual contribution beginning in year 11 for 25 years;
$125,000 total contributions
Year 1 $0
Year 5 0
Year 10 0
Year 11 Contributions begin
Year 15 29,877
Year 20 69,858
Year 25 123,363
Year 30 $194,964
The numbers in this chart assume all contributions are made at once at the beginning of each year; 6 percent interest is calculated and applied at the end of each year. Source: WebCE
The secret is compound growth over time. Dave put aside $75,000 more than Angie but had fewer years of the money building on itself - compound growth.
Be $ smart, start saving early!
Taxable - Tax-exempt - Tax-deferred - Tax-free
Clients often ask me to explain the differences among their various accounts. Taxes play an important role in how you invest and how much money you will be able to keep after paying taxes.
The following are simple explanations. For expert tax guidance please speak with your accountant or tax attorney.
Taxable: an account that holds money on which you have already paid taxes - e.g. bank checking or savings accounts or brokerage accounts. These accounts may have stocks, bonds, CD's, etc. Every year you receive a 1099 of all reportable earnings, dividends and interest. You enter these numbers on your tax return and pay taxes accordingly.
Tax-exempt: refers to bonds (loans) issued by municipalities (states, cities, towns, counties). These bonds are exempt from federal taxes. As an incentive to its residents to buy these bonds, which finance local projects, you pay no state taxes on the interest. As a NY resident, if you purchase a NY State bond, it will be double tax exempt as you will pay no state or federal taxes on the interest. However, NY reserves the right to tax the interest earned on other states' bonds.
Tax-deferred: means you pay no taxes now but when you withdraw the money both state and federal taxes are due. IRA, SEP, 401k, 403b all grow tax-deferred. Your 401k or 403b plan from work will take money from your paycheck before deducting taxes, deposit the money into your plan where it will grow tax-deferred (you will not receive a 1099 each year). Taxes will be paid when you start withdrawing money from these accounts later in retirement. The money will be taxed, as your income is taxed, both by the state and the federal government. Hopefully, in retirement you will be in a lower tax bracket and, consequently, pay less in taxes.
Tax-free: refers to a Roth IRA where money grows without paying taxes each year and is distributed without being taxed. Actually, the money contributed to most Roth IRA's is money on which you have already paid taxes; it is the earnings (growth) that are tax-free.
Be $ smart. Know your tax rate. Learn about the impact of taxes on your investments.
The following are simple explanations. For expert tax guidance please speak with your accountant or tax attorney.
Taxable: an account that holds money on which you have already paid taxes - e.g. bank checking or savings accounts or brokerage accounts. These accounts may have stocks, bonds, CD's, etc. Every year you receive a 1099 of all reportable earnings, dividends and interest. You enter these numbers on your tax return and pay taxes accordingly.
Tax-exempt: refers to bonds (loans) issued by municipalities (states, cities, towns, counties). These bonds are exempt from federal taxes. As an incentive to its residents to buy these bonds, which finance local projects, you pay no state taxes on the interest. As a NY resident, if you purchase a NY State bond, it will be double tax exempt as you will pay no state or federal taxes on the interest. However, NY reserves the right to tax the interest earned on other states' bonds.
Tax-deferred: means you pay no taxes now but when you withdraw the money both state and federal taxes are due. IRA, SEP, 401k, 403b all grow tax-deferred. Your 401k or 403b plan from work will take money from your paycheck before deducting taxes, deposit the money into your plan where it will grow tax-deferred (you will not receive a 1099 each year). Taxes will be paid when you start withdrawing money from these accounts later in retirement. The money will be taxed, as your income is taxed, both by the state and the federal government. Hopefully, in retirement you will be in a lower tax bracket and, consequently, pay less in taxes.
Tax-free: refers to a Roth IRA where money grows without paying taxes each year and is distributed without being taxed. Actually, the money contributed to most Roth IRA's is money on which you have already paid taxes; it is the earnings (growth) that are tax-free.
Be $ smart. Know your tax rate. Learn about the impact of taxes on your investments.
Friday, May 16, 2014
Financial Jargon
Most professions have their own terminology or lingo. Unfamiliar financial terms can be very intimidating or confusing. Here are a few translations you may find useful:
Equities - stocks.
Fixed Income - bonds, CD's.
Volatility - the inevitable, daily ups and downs of the markets. (not good or bad)
Standard deviation - risk. It graphically maps historical returns.
ROI - return on investment - how much your money has grown.
Mutual funds and Exchange traded funds (ETF) - pools of stocks or pools of bonds. Vehicles which give access to multiple stocks (or bonds) at one time
Correlation - Choosing investments that do well at different times by determining the relationship of one investment to another. A way to avoid putting all your eggs in one basket.
Cap (as in capitalization) - size.
Mid-cap or large-cap stock are terms that classify the size of a company.
A way to measure the size of a company by multiplying the number of outstanding shares by its share price.
Alternative investments - other than stocks, bonds or cash. May include precious metals, art, real estate, commodities (e.g. coffee, corn, soy beans, pork bellies).
Alphabet Soup:
ETF - exchange traded fund (grouping of stock or bonds)
IRA - individual retirement account (tax-deferred savings for retirement)
SEP - simplified employee plan (retirement plan for small business)
REIT - real estate investment trust (groupings of different types of real estate- e.g. shopping malls, office buildings, senior housing).
CD - certificate of deposit (issued by banks for a set time, a set interest rate and a set amount of money).
EFT- electronic funds transfer - a means of transferring money from one account to another.
Be proactive. Learn the language or ask for a translation. Be $ smart.
Equities - stocks.
Fixed Income - bonds, CD's.
Volatility - the inevitable, daily ups and downs of the markets. (not good or bad)
Standard deviation - risk. It graphically maps historical returns.
ROI - return on investment - how much your money has grown.
Mutual funds and Exchange traded funds (ETF) - pools of stocks or pools of bonds. Vehicles which give access to multiple stocks (or bonds) at one time
Correlation - Choosing investments that do well at different times by determining the relationship of one investment to another. A way to avoid putting all your eggs in one basket.
Cap (as in capitalization) - size.
Mid-cap or large-cap stock are terms that classify the size of a company.
A way to measure the size of a company by multiplying the number of outstanding shares by its share price.
Alternative investments - other than stocks, bonds or cash. May include precious metals, art, real estate, commodities (e.g. coffee, corn, soy beans, pork bellies).
Alphabet Soup:
ETF - exchange traded fund (grouping of stock or bonds)
IRA - individual retirement account (tax-deferred savings for retirement)
SEP - simplified employee plan (retirement plan for small business)
REIT - real estate investment trust (groupings of different types of real estate- e.g. shopping malls, office buildings, senior housing).
CD - certificate of deposit (issued by banks for a set time, a set interest rate and a set amount of money).
EFT- electronic funds transfer - a means of transferring money from one account to another.
Be proactive. Learn the language or ask for a translation. Be $ smart.
Monday, May 12, 2014
Building Wealth One Level at a Time...
Every building project begins with a plan and a foundation. Building wealth is no exception. The base of your investment portfolio will be the broadest component providing safety and stability. As you build your portfolio, the higher up, the greater the risk - and potential reward.
Let's take a quick look at what is commonly called "the investment pyramid":
Futures, options, commodities
Real estate
Small-cap stocks, junk bonds
Mid-cap stocks, lesser rated bonds
Blue chip, dividend paying stocks, municipal and AAA corporate bonds.
The broad base holds safe money - cash, savings accounts, CD's, U.S. Treasury bills, notes and bonds.
It would not be wise to jump into a "hot stock" in the small-cap area if you had not built the foundation layers of your investment pyramid. You might be taking on more risk than you can handle.
Real estate is high on the risk ladder because it is illiquid (you never can tell how long it might take to sell and realize cash in your hand).
Junk bonds are usually backed by "a promise" to pay back the money - not by colateral.
Start at the bottom. Build steadily. Be $ smart!
Let's take a quick look at what is commonly called "the investment pyramid":
Futures, options, commodities
Real estate
Small-cap stocks, junk bonds
Mid-cap stocks, lesser rated bonds
Blue chip, dividend paying stocks, municipal and AAA corporate bonds.
The broad base holds safe money - cash, savings accounts, CD's, U.S. Treasury bills, notes and bonds.
It would not be wise to jump into a "hot stock" in the small-cap area if you had not built the foundation layers of your investment pyramid. You might be taking on more risk than you can handle.
Real estate is high on the risk ladder because it is illiquid (you never can tell how long it might take to sell and realize cash in your hand).
Junk bonds are usually backed by "a promise" to pay back the money - not by colateral.
Start at the bottom. Build steadily. Be $ smart!
Monday, May 5, 2014
Protecting Your Wealth
As you build your wealth it is critical you take measures to protect your wealth.
The proper insurances - life, health, auto, home, liability - all are forms of protection against risk. Homeowner or renter's insurance provides protection in the event of fire or theft.
Life insurance is certainly essential if you have a young family or own a large home which requires two salaries to maintain it. Losing your spouse or partner can be a horrible experience but to lose your home at the same time can be catastrophic.
If you recently got married or had a child please assess your needs now, meet with an agent and put the necessary insurance in place ASAP. You are not invincible!
Older folks may not need life insurance. If children are grown and educated, if the mortgage is paid down, or if there is no one dependent upon you, then stop paying those life insurance premiums. The premiums only increase as you get older. But, if the life insurance policy is one way of assuring you have some money to leave to heirs, then that is a good reason to continue paying life insurance premiums.
Another protection is to verify your beneficiaries are correct and current. If you've recently married or divorced, or have had children please contact your bank, brokerage and HR department for Beneficiary Designation forms to make changes.
Also, is your will up to date? A will determines how your wealth is distributed. Again, major life changes (marriage, births, divorce) require adjustments to your will.
Do not try to change your will yourself. In some states, writing on a will may void it. Contact your attorney. A codicle - an amendment to a will - is appropriate for small changes. Drafting a new will may be necessary for more extensive changes.
You've worked hard to build your wealth, take the steps to protect it.
Be $ smart!
The proper insurances - life, health, auto, home, liability - all are forms of protection against risk. Homeowner or renter's insurance provides protection in the event of fire or theft.
Life insurance is certainly essential if you have a young family or own a large home which requires two salaries to maintain it. Losing your spouse or partner can be a horrible experience but to lose your home at the same time can be catastrophic.
If you recently got married or had a child please assess your needs now, meet with an agent and put the necessary insurance in place ASAP. You are not invincible!
Older folks may not need life insurance. If children are grown and educated, if the mortgage is paid down, or if there is no one dependent upon you, then stop paying those life insurance premiums. The premiums only increase as you get older. But, if the life insurance policy is one way of assuring you have some money to leave to heirs, then that is a good reason to continue paying life insurance premiums.
Another protection is to verify your beneficiaries are correct and current. If you've recently married or divorced, or have had children please contact your bank, brokerage and HR department for Beneficiary Designation forms to make changes.
Also, is your will up to date? A will determines how your wealth is distributed. Again, major life changes (marriage, births, divorce) require adjustments to your will.
Do not try to change your will yourself. In some states, writing on a will may void it. Contact your attorney. A codicle - an amendment to a will - is appropriate for small changes. Drafting a new will may be necessary for more extensive changes.
You've worked hard to build your wealth, take the steps to protect it.
Be $ smart!
Thursday, April 24, 2014
Are you a Saver or a Spender?
Ideally, it would be beneficial to be a balance of each.
Savers love to see their money grow. It gives them great pleasure to open bank and brokerage statements and see the values increase. It can be physically painful when account values drop, even a small amount. Hence, savers avoid risk for fear of losing money. They may even deprive themselves of creature comforts and the joy of giving.
Spontaneity is out.
Spenders take bigger risks feeling somehow the money will appear. Negative consequences don't even enter their minds. They are big spenders, big tippers and very generous with friends and family. They get tremendous joy from making others feel good.
Serious issues arise when a spender marries a saver. Then the sparks fly!
Ideally, you want both aspects. Once you recognize your strengths and weaknesses you develop strategies to managing your money and spending habits.
A simple spending plan will give a saver permission to spend and set limits for the spender. Going back to "know your numbers" - knowing how much you have budgeted for clothing or entertainment puts you in control and gives you the power to make good money decisions.
Knowing you have alotted $1000 for clothing (or sports) for the year lets you buy that special dress (or golf club) without guilt. Keeping tab mentally lets you keep track and leads to a better spending decision.
You will be giving yourself a gift of confidence by striking a balance between enjoying today and enjoying tomorrow. You will truly Be $ Smart!
Savers love to see their money grow. It gives them great pleasure to open bank and brokerage statements and see the values increase. It can be physically painful when account values drop, even a small amount. Hence, savers avoid risk for fear of losing money. They may even deprive themselves of creature comforts and the joy of giving.
Spontaneity is out.
Spenders take bigger risks feeling somehow the money will appear. Negative consequences don't even enter their minds. They are big spenders, big tippers and very generous with friends and family. They get tremendous joy from making others feel good.
Serious issues arise when a spender marries a saver. Then the sparks fly!
Ideally, you want both aspects. Once you recognize your strengths and weaknesses you develop strategies to managing your money and spending habits.
A simple spending plan will give a saver permission to spend and set limits for the spender. Going back to "know your numbers" - knowing how much you have budgeted for clothing or entertainment puts you in control and gives you the power to make good money decisions.
Knowing you have alotted $1000 for clothing (or sports) for the year lets you buy that special dress (or golf club) without guilt. Keeping tab mentally lets you keep track and leads to a better spending decision.
You will be giving yourself a gift of confidence by striking a balance between enjoying today and enjoying tomorrow. You will truly Be $ Smart!
What is a Step-Up in Basis?
Often I speak with clients who wish to "gift" their home to their children or clients whose parents want to "transfer" stock, bonds or a home to them. Sometimes this can be a good idea, many times it isn't. Thorough reseach and advice from an attorney or accountant can help determine how beneificial the move will be.
When you buy a house or investments there is always a "cost". That number - the cost - is the basis upon which you will pay taxes down the road when you decide to sell. It is also the number that determines if you have made or lost money. If you have been fortunate to see the value of your investment grow, you will have a profit when you sell it, which adds to your wealth.
Of course, Uncle Sam then steps in for his share of your winnings - capital gains tax. How much tax you pay will be determined by your tax bracket. (Depending on taxable income capital gains tax runs from 10% to 39.6%)
A step-up in basis occurs when you inherit investments or real estate. The cost basis will be the value of the investment on the "date of death" of the owner or nine months later.
Say you or your parents bought a house in 1980 for $250,000. In the present market it's worth $750,000. You die and leave the house to your only child. Your child has the house appraised and sells it for $750,000. How much capital gains tax must your child pay? Zero! The cost basis of the house was "stepped up" to the value on date of death.
If, instead, you decide to "transfer" the house to your child. He is now the owner and then you die. What would the tax consequences be? Assuming he is in the 25% tax bracket, he would owe 15% capital gains tax on $500,000. He would owe $75,000. He received no "step-up in basis" because with a transfer, he assumed your original cost basis of $250,000.
The same thing happens when stocks, bonds and other investments are transferred; there is no step up in cost basis. So if today you inherit 500 shares of IBM grandpa bought in 1950 at $.25 per share ($125) and you sell those shares today you would receive $95,000 free and clear. If grandpa had transferred those shares to you instead of bequeathing them, you would owe taxes on $94,875 ($95,000 - $125) X 15% =$14,231.
Be sure to consult an accountant or an attorney before transferring investments or real estate. You don't want to share with Uncle Sam more than necessary.
Be $ smart!
When you buy a house or investments there is always a "cost". That number - the cost - is the basis upon which you will pay taxes down the road when you decide to sell. It is also the number that determines if you have made or lost money. If you have been fortunate to see the value of your investment grow, you will have a profit when you sell it, which adds to your wealth.
Of course, Uncle Sam then steps in for his share of your winnings - capital gains tax. How much tax you pay will be determined by your tax bracket. (Depending on taxable income capital gains tax runs from 10% to 39.6%)
A step-up in basis occurs when you inherit investments or real estate. The cost basis will be the value of the investment on the "date of death" of the owner or nine months later.
Say you or your parents bought a house in 1980 for $250,000. In the present market it's worth $750,000. You die and leave the house to your only child. Your child has the house appraised and sells it for $750,000. How much capital gains tax must your child pay? Zero! The cost basis of the house was "stepped up" to the value on date of death.
If, instead, you decide to "transfer" the house to your child. He is now the owner and then you die. What would the tax consequences be? Assuming he is in the 25% tax bracket, he would owe 15% capital gains tax on $500,000. He would owe $75,000. He received no "step-up in basis" because with a transfer, he assumed your original cost basis of $250,000.
The same thing happens when stocks, bonds and other investments are transferred; there is no step up in cost basis. So if today you inherit 500 shares of IBM grandpa bought in 1950 at $.25 per share ($125) and you sell those shares today you would receive $95,000 free and clear. If grandpa had transferred those shares to you instead of bequeathing them, you would owe taxes on $94,875 ($95,000 - $125) X 15% =$14,231.
Be sure to consult an accountant or an attorney before transferring investments or real estate. You don't want to share with Uncle Sam more than necessary.
Be $ smart!
Financial Jargon Translated
Most professions have their own terminology or lingo. Unfamiliar financial terms can be very intimidating or confusing. Knowing the language can give you a great advantage. Here are a few translations you may find useful:
Equities - stocks.
Fixed Income - bonds, CD's.
Volatility - the inevitable, daily ups and downs of the markets. (not good or bad)
Standard deviation -defines risk. It graphically maps historical returns.
ROI - return on investment - how much your money has grown.
Mutual funds and Exchange traded funds (ETF) - pools of stocks or pools of bonds. Vehicles which give you access to multiple stocks (or bonds) at one time
Correlation - Choosing investments that do well at different times by determining the relationship of one investment to another. It is one method to avoid putting all your eggs in one basket.
Cap (as in capitalization) – designates size.
Mid-cap or large-cap stock - are terms that classify the size of a company.
It is a way to measure the size of a company by multiplying the number of outstanding shares by its share price.
Alternative investments – are those other than stocks, bonds or cash.
May include precious metals, art, real estate, commodities (e.g. coffee, corn, soy beans, pork bellies).
Alphabet Soup:
ETF - exchange traded fund (grouping of stock or bonds)
IRA - individual retirement account (tax-deferred savings for retirement)
SEP - simplified employee plan (retirement plan for small business)
REIT - real estate investment trust (groupings of different types of real estate- e.g. shopping malls, office buildings, senior housing).
CD – a certificate of deposit (issued by banks for a set time, a set interest rate and a set amount of money).
EFT - electronic funds transfer - a means of moving money from one account to another.
Protect yourself. Learn the language or ask for a translation. Be $ smart.
Equities - stocks.
Fixed Income - bonds, CD's.
Volatility - the inevitable, daily ups and downs of the markets. (not good or bad)
Standard deviation -defines risk. It graphically maps historical returns.
ROI - return on investment - how much your money has grown.
Mutual funds and Exchange traded funds (ETF) - pools of stocks or pools of bonds. Vehicles which give you access to multiple stocks (or bonds) at one time
Correlation - Choosing investments that do well at different times by determining the relationship of one investment to another. It is one method to avoid putting all your eggs in one basket.
Cap (as in capitalization) – designates size.
Mid-cap or large-cap stock - are terms that classify the size of a company.
It is a way to measure the size of a company by multiplying the number of outstanding shares by its share price.
Alternative investments – are those other than stocks, bonds or cash.
May include precious metals, art, real estate, commodities (e.g. coffee, corn, soy beans, pork bellies).
Alphabet Soup:
ETF - exchange traded fund (grouping of stock or bonds)
IRA - individual retirement account (tax-deferred savings for retirement)
SEP - simplified employee plan (retirement plan for small business)
REIT - real estate investment trust (groupings of different types of real estate- e.g. shopping malls, office buildings, senior housing).
CD – a certificate of deposit (issued by banks for a set time, a set interest rate and a set amount of money).
EFT - electronic funds transfer - a means of moving money from one account to another.
Protect yourself. Learn the language or ask for a translation. Be $ smart.
Wednesday, March 12, 2014
Buying or Leasing a Car
I am ever so grateful I only buy a car once every few years. I dread negotiating with a car dealer. Most folks have similar feelings, though I have met a few individuals who truly enjoy the challenge.
It is best to plan the purchase as opposed to being forced to buy because your car has died. You want as little pressure as possible. You must be able to walk away if the deal does not suit you.
The best times to buy/lease:
1. at year end,
2. at month or quarter end,
3. during bad weather when most folks are inclined to stay home,
4. at the end of the day,
5. late summer, early fall when the new models are introduced.
All these times force dealers to give discounts to meet sales targets.
Next steps:
1. Determine what make, model and options you want.
2. Pick four or five dealers. Use the internet to shop dealers and compare prices before ever stepping into a showroom. Talk with the dealer's internet person, give them the details of what you're seeking and ask for their best price. Make sure you get the name of each person with whom you speak.
3. Go to the next dealer and ask if they can beat that price. Do the same with the next dealer. Try to get the deal done on the phone before heading to the dealership.
4. After a week of conversations, you then state "I am very serious about this purchase!"
You may even ask a friend to get a price quote from a "buyers' club" where they hold a membership to verify "a good deal".
Be prepared to walk away until they meet your terms.
If you are trading in your present car clean it inside and out beforehand. Having the service record could be a plus.
If you do your homework and time it right you could save up to $2000 or more.
Be $ smart!
It is best to plan the purchase as opposed to being forced to buy because your car has died. You want as little pressure as possible. You must be able to walk away if the deal does not suit you.
The best times to buy/lease:
1. at year end,
2. at month or quarter end,
3. during bad weather when most folks are inclined to stay home,
4. at the end of the day,
5. late summer, early fall when the new models are introduced.
All these times force dealers to give discounts to meet sales targets.
Next steps:
1. Determine what make, model and options you want.
2. Pick four or five dealers. Use the internet to shop dealers and compare prices before ever stepping into a showroom. Talk with the dealer's internet person, give them the details of what you're seeking and ask for their best price. Make sure you get the name of each person with whom you speak.
3. Go to the next dealer and ask if they can beat that price. Do the same with the next dealer. Try to get the deal done on the phone before heading to the dealership.
4. After a week of conversations, you then state "I am very serious about this purchase!"
You may even ask a friend to get a price quote from a "buyers' club" where they hold a membership to verify "a good deal".
Be prepared to walk away until they meet your terms.
If you are trading in your present car clean it inside and out beforehand. Having the service record could be a plus.
If you do your homework and time it right you could save up to $2000 or more.
Be $ smart!
Thursday, February 27, 2014
Do it yourself or hire an expert.
Have you saved enough money to invest?
Do you have the time to research stocks, bonds, etc?
Do you enjoy following the stock market and discussing opportunities with friends? Not everyone does.
I do not repair my own car nor do I repair the plumbing in my home. I hire an expert. You may consider hiring an expert to manage your money if you have neither the time nor the inclination to figure out investing.
A stock broker (aka financial advisor, wealth management advisor) works for an investment firm and will build a portfolio for you, buy and sell investments and charge you commissions on your trades. Stock brokers do not work under a fiduciary agreement where they are required to put the clients' interests before their own. There may be a "conflict of interest" because what they sell you affects how they get paid.
Remember a previous $ Tip: ask "What's this going to cost me? How do you get paid?
A "fee only" advisor will charge a fee for services like preparing a financial plan or making financial recommendations. Fees might be hourly or per service provided. Since they do not sell the investments they recommend there is no conflict of interest.
A money manager or investment advisor will charge a percentage of the money they manage for you. They do not charge a commission for each "buy" or "sell". You pay an annual rate, usually paid monthly and deducted from your account. That rate may range from 1% to 3% (or more). If you give a money manager $50,000 and they charge 1.2% you would pay $600 for the year or $50 per month. It is in the interest of the money manager to make your money grow as he/she would receive more in fees over time as your money grows - e.g. 1.2% of $75,000 = $900. 1.2% of $100,000 = $1,200 . Money managers usually operate under a fiduciary rule to put their clients' interests first.
No matter which route you take, ask questions, research the individual online (SEC website) and if it sounds too good to be true - RUN!
Be $ smart.
Wednesday, February 19, 2014
Do yourself a favor - keep your old 401k (or 403b)
The temptation is great - you left your job, cash is tight, you have money invested in your 401k - makes sense to cash out the account - right?
NO! Here are four good reasons to leave the money where it is:
1. You will need the money some day in retirement. Money invested while you are young has many more years of compounding growth than if you double up on savings in your 50's.
2. Your 401k is protected from creditors and bankruptcy.
It makes no sense to cash out and then lose the money in bankruptcy or to your creditors. Keep it for yourself.
3. Taxes, taxes and penalty eat away the proceeds.
The money you receive will be taxed as ordinary income (whatever tax bracket you are in) by both your state and the federal government. If you are under 59 1/2 you will pay a 10% penalty.
e.g. $5000 in your plan.
Federal tax 28% + state tax 6% + 10% penalty = 44% X $5000 = $2200.
$5000-$2200 = $2800.
Your $5000 shrinks to $2800. If you leave it to grow $5000 could build to over $8000 in 10 years, $10,000 in 15 years earning a mere 5%.
4. 401k plans usually have better investment choices.
Your company has negotiated for good, diversified funds not always available to the individual investor.
Give it some thought - keeping your 401k will bring rewards later in life.
Be $ smart!
NO! Here are four good reasons to leave the money where it is:
1. You will need the money some day in retirement. Money invested while you are young has many more years of compounding growth than if you double up on savings in your 50's.
2. Your 401k is protected from creditors and bankruptcy.
It makes no sense to cash out and then lose the money in bankruptcy or to your creditors. Keep it for yourself.
3. Taxes, taxes and penalty eat away the proceeds.
The money you receive will be taxed as ordinary income (whatever tax bracket you are in) by both your state and the federal government. If you are under 59 1/2 you will pay a 10% penalty.
e.g. $5000 in your plan.
Federal tax 28% + state tax 6% + 10% penalty = 44% X $5000 = $2200.
$5000-$2200 = $2800.
Your $5000 shrinks to $2800. If you leave it to grow $5000 could build to over $8000 in 10 years, $10,000 in 15 years earning a mere 5%.
4. 401k plans usually have better investment choices.
Your company has negotiated for good, diversified funds not always available to the individual investor.
Give it some thought - keeping your 401k will bring rewards later in life.
Be $ smart!
Thursday, February 6, 2014
Putting your money to work...
Once I finished school and started working it did not take me long to realize I had to start saving some money to "thrive", not just survive.
I recognized there were only so many hours in each week that I could work. I had to work smarter. I had to put my money to work!
I could not ignore the dollars starting to build in my savings account. The bank was paying low interest so I knew my money could not grow very fast.
Taking some risk, I learned to invest.
I started small by opening a mutual fund account at Vanguard Funds. I chose a fund that invested in the top 500 companies in the U.S. That meant I owned a little bit of 500 different companies. It's called diversification. If something negative happened to one company, the other 499 could do well and compensate for the losing one.
I did not buy just one stock which is like putting all my eggs in one basket.
Vanguard had a minimum initial purchase of $3000 which is the amount I invested. (Some companies charge less, some charge more.) I then set-up automatic withdrawal from my savings account for $100 a month.
Over time, I watched the account grow - with the normal ups and downs of the stock market. When the account reached $10,000 I bought another mutual fund and switched my $100 per month to the new fund. This fund held international companies - all outside the U.S. When the international fund reached $6000 I purchased yet another fund - a total bond fund. And again, changed the $100 to build the new fund.
Stocks and bonds sometimes move in sync and sometimes not.
We never know year to year which part of the market will do best so we buy a little of each.
This might sound very basic but many people have no idea how to start investing. It does not require a great deal of money. It does require determination and patience.
I have had great satisfaction watching my money grow. I am willing to help anyone get started. Call or email with your questions.
I recognized there were only so many hours in each week that I could work. I had to work smarter. I had to put my money to work!
I could not ignore the dollars starting to build in my savings account. The bank was paying low interest so I knew my money could not grow very fast.
Taking some risk, I learned to invest.
I started small by opening a mutual fund account at Vanguard Funds. I chose a fund that invested in the top 500 companies in the U.S. That meant I owned a little bit of 500 different companies. It's called diversification. If something negative happened to one company, the other 499 could do well and compensate for the losing one.
I did not buy just one stock which is like putting all my eggs in one basket.
Vanguard had a minimum initial purchase of $3000 which is the amount I invested. (Some companies charge less, some charge more.) I then set-up automatic withdrawal from my savings account for $100 a month.
Over time, I watched the account grow - with the normal ups and downs of the stock market. When the account reached $10,000 I bought another mutual fund and switched my $100 per month to the new fund. This fund held international companies - all outside the U.S. When the international fund reached $6000 I purchased yet another fund - a total bond fund. And again, changed the $100 to build the new fund.
Stocks and bonds sometimes move in sync and sometimes not.
We never know year to year which part of the market will do best so we buy a little of each.
This might sound very basic but many people have no idea how to start investing. It does not require a great deal of money. It does require determination and patience.
I have had great satisfaction watching my money grow. I am willing to help anyone get started. Call or email with your questions.
Saturday, February 1, 2014
The Family Bank
The past few years have been truly difficult for our young adults. With diplomas in hand they eagerly sought employment. Some were fortunate to find work but many, not so lucky, "launched" in reverse - they moved back home.
Recent statistics show 44% of parents over 55 financially aided adult children in the past year. It might be tough for the graduates to be back with mom and dad but for mom and dad it strains saving for retirement or even postpones retirement for the next generation.
Continued support for young adults can drain a well-planned retirement.
Parents want to help their offspring but some rules must be considered.
Adult children must realize parents are not bottomless ATM's.
- Room and board could be in exchange for chores: yard work, painting, simple repairs, window washing, clearing a yard or a garage.
- Money loaned needs a signed, promissory note stating the date, amount, interest and term (date of repayment).
- Clear communication of expectations by both sides, in writing, keep feathers from flying.
Yes, parents want to help their children but consider the consequences:
When parents run out of money in retirement where will they go? They will move in with their children.
Parents - do you really want to live with your kids?
Young adults - do you really want your parents moving in with you?
Make it easy for everyone - talk about expectations; put them in writing.
Be $ smart!
Recent statistics show 44% of parents over 55 financially aided adult children in the past year. It might be tough for the graduates to be back with mom and dad but for mom and dad it strains saving for retirement or even postpones retirement for the next generation.
Continued support for young adults can drain a well-planned retirement.
Parents want to help their offspring but some rules must be considered.
Adult children must realize parents are not bottomless ATM's.
- Room and board could be in exchange for chores: yard work, painting, simple repairs, window washing, clearing a yard or a garage.
- Money loaned needs a signed, promissory note stating the date, amount, interest and term (date of repayment).
- Clear communication of expectations by both sides, in writing, keep feathers from flying.
Yes, parents want to help their children but consider the consequences:
When parents run out of money in retirement where will they go? They will move in with their children.
Parents - do you really want to live with your kids?
Young adults - do you really want your parents moving in with you?
Make it easy for everyone - talk about expectations; put them in writing.
Be $ smart!
Monday, January 20, 2014
More than money can buy...
Robert Laura wrote this article for the Retirement Project with retirees in mind.
I think it should be a list for young and old.
A Sense Filled Retirement
When it comes to retirement, the biggest threat many retirees face in losing one or more of their senses. With that in mind, I have assembled a short list of things retirees can set out to see, hear, smell, taste and touch to help give their new found time and flexibility in retirement some specfic direction. A sense-filled bucket list if you will.
SEE
East Coast Sunrise / West Coast Sunset
Broadway musical
Arlington’s Changing of The Guard
Your family’s photo album
Renaissance area painting or sculpture
Championship sporting event
Words on the page of a great classic book like Moby Dick
HEAR
A baby’s laugh
Live performance of Beethoven Symphony #9
Roar of Niagara Falls
Crashing ocean wave
Muscle Car or Jet Engine
Your own breath
4th of July Fireworks Grand Finale
TASTE
Cognac / or a fine wine
Fresh squeezed OJ
Chicago style pizza
Fresh grilled bacon cheesburger
Chilly hot dog with everything
Fresh campfire S’mores
Fresh blueberry pancakes (none of that just add water complete mix)
TOUCH
Silk bed sheets
Snow ball
A heartbeat
Bubble wrap
Dangling your feet in water
Baby hands and toes
Warmth of a camp fire
SMELL
New car
Newborn baby
Fresh cut grass
The air after it rains
Freshly ground coffee
Rose bush
Fresh bread or chocolate chip cookies baking
I think it should be a list for young and old.
A Sense Filled Retirement
When it comes to retirement, the biggest threat many retirees face in losing one or more of their senses. With that in mind, I have assembled a short list of things retirees can set out to see, hear, smell, taste and touch to help give their new found time and flexibility in retirement some specfic direction. A sense-filled bucket list if you will.
SEE
East Coast Sunrise / West Coast Sunset
Broadway musical
Arlington’s Changing of The Guard
Your family’s photo album
Renaissance area painting or sculpture
Championship sporting event
Words on the page of a great classic book like Moby Dick
HEAR
A baby’s laugh
Live performance of Beethoven Symphony #9
Roar of Niagara Falls
Crashing ocean wave
Muscle Car or Jet Engine
Your own breath
4th of July Fireworks Grand Finale
TASTE
Cognac / or a fine wine
Fresh squeezed OJ
Chicago style pizza
Fresh grilled bacon cheesburger
Chilly hot dog with everything
Fresh campfire S’mores
Fresh blueberry pancakes (none of that just add water complete mix)
TOUCH
Silk bed sheets
Snow ball
A heartbeat
Bubble wrap
Dangling your feet in water
Baby hands and toes
Warmth of a camp fire
SMELL
New car
Newborn baby
Fresh cut grass
The air after it rains
Freshly ground coffee
Rose bush
Fresh bread or chocolate chip cookies baking
Wednesday, January 15, 2014
Make the most of your 401k, 403b, IRA.
I found this article in the Employee Benefits Newsletter. The author gives great suggestions but assumes the most important one - automatic savings. It makes no difference what we are saving for as long as we have a goal and put it on automatic pilot. Then we no longer have to think about it and definitely eliminates the guilt if we lose track or forget.
1. Contribute as much as you can.
Remember, we all need to average at least 13% in contributions to our 401(k) accounts each year if we are to retire without reducing our standard of living. Since most of us don't contribute anything close to that amount, advise participants to consider increasing their contribution rates by at least 1% every time they get a raise. Increasing contributions gradually when participants experience a salary increase minimizes the impact of additional 401(k) contributions on take home pay.
2. Grab all of that free money.
Most 401(k) plans have a company matching contribution and, believe it or not, most participants don’t contribute the amount necessary to receive the maximum employer match. As a result, they leave free money on the table. Quick, what is the best performing investment in any 401(k) plan? Of course, employee contributions that result in a company match! In most plans the company match is dollar for dollar up to a certain percentage — resulting in a 100% immediate return on investment.
3. Consider target date funds.
Most participants are too busy to manage their 401(k) accounts properly. As a result, many only look at them in times of stress (think crashing markets). The decisions some make at those points aren’t necessarily helpful in achieving a comfortable retirement. The experts believe 75% of all plan participants should invest 100% of their account balances in target date funds. Professional management can help participants avoid making bad decisions in times of stress.
4. Set goals.
Not enough of us do this. It’s hard to discipline ourselves to save when what we are saving for is ambiguous. It is easier for participants to set meaningful savings goals if they know whether they are going to travel, relocate to a warmer climate or continue to work in retirement. Even if their retirement turns out completely different from what they had planned, having goals now makes the future seem more concrete.
5. Don't take withdraws or borrow.
Plan loans are one of the worst investments participants can make. Amounts borrowed are double-taxed and the rate of return on borrowed funds (a loan is one of the investments in a borrower's account) is equal to the interest rate on the loan. Remember the S&P 500 returned nearly 32% in 2013! Withdrawals permanently remove assets from participant retirement accounts.
1. Contribute as much as you can.
Remember, we all need to average at least 13% in contributions to our 401(k) accounts each year if we are to retire without reducing our standard of living. Since most of us don't contribute anything close to that amount, advise participants to consider increasing their contribution rates by at least 1% every time they get a raise. Increasing contributions gradually when participants experience a salary increase minimizes the impact of additional 401(k) contributions on take home pay.
2. Grab all of that free money.
Most 401(k) plans have a company matching contribution and, believe it or not, most participants don’t contribute the amount necessary to receive the maximum employer match. As a result, they leave free money on the table. Quick, what is the best performing investment in any 401(k) plan? Of course, employee contributions that result in a company match! In most plans the company match is dollar for dollar up to a certain percentage — resulting in a 100% immediate return on investment.
3. Consider target date funds.
Most participants are too busy to manage their 401(k) accounts properly. As a result, many only look at them in times of stress (think crashing markets). The decisions some make at those points aren’t necessarily helpful in achieving a comfortable retirement. The experts believe 75% of all plan participants should invest 100% of their account balances in target date funds. Professional management can help participants avoid making bad decisions in times of stress.
4. Set goals.
Not enough of us do this. It’s hard to discipline ourselves to save when what we are saving for is ambiguous. It is easier for participants to set meaningful savings goals if they know whether they are going to travel, relocate to a warmer climate or continue to work in retirement. Even if their retirement turns out completely different from what they had planned, having goals now makes the future seem more concrete.
5. Don't take withdraws or borrow.
Plan loans are one of the worst investments participants can make. Amounts borrowed are double-taxed and the rate of return on borrowed funds (a loan is one of the investments in a borrower's account) is equal to the interest rate on the loan. Remember the S&P 500 returned nearly 32% in 2013! Withdrawals permanently remove assets from participant retirement accounts.
Thursday, January 9, 2014
Read!
Any new task you hope to accomplish or goal to attain, reading good material will get you closer. Financial jargon looks like English, sounds like English so why don't you understand what it says?
You could pick up a medical report and read the words but because you are not familiar with the terminology, you will not comprehend the meaning. Reading a book on personal finance will help you become familiar with the terms of personal finance.
You could borrow a book from the library or download one from Amazon. Take your time reading, and reread some paragraphs. Use post-it tabs to mark important passages. Keep in mind, it's not rocket science.
If reading a book feels too ambitious, buy a personal finance magazine. Do not buy a subscription at first. Just buy one magazine and read each ad and every article at least once. This will help you become familiar with the words, terms and, eventually the concepts.
Listed are six books suggested by John Bogle, the founder of Vanguard Funds. John is very down to earth; a man of the people and the little investor.
Pick just one! Review them on Amazon to find the right one for you.
The Intelligent Investor
By Benjamin Graham
A Random Walk Down Wall Street
By Burton Malkiel
Unconventional Success
By David Swensen
The Four Pillars of Investing (my favorite, an easy read)
By William Bernstein
Extraordinary Popular Delusions and the Madness of Crowds
By Charles MacKay
The Bogleheads’Guide to Investing
By Larimore, Lindauer and LeBoeuf
A classic, not on Mr. Bogle's list and another favorite of mine:
Making the Most of Your Money Now
By Jane Bryant Quinn
A book for women of a certain age which I have not read is
Hot Flash Financial
By Wendy Weiss
Nobody cares about your money as much as you do!
Be $ smart. Read.
You could pick up a medical report and read the words but because you are not familiar with the terminology, you will not comprehend the meaning. Reading a book on personal finance will help you become familiar with the terms of personal finance.
You could borrow a book from the library or download one from Amazon. Take your time reading, and reread some paragraphs. Use post-it tabs to mark important passages. Keep in mind, it's not rocket science.
If reading a book feels too ambitious, buy a personal finance magazine. Do not buy a subscription at first. Just buy one magazine and read each ad and every article at least once. This will help you become familiar with the words, terms and, eventually the concepts.
Listed are six books suggested by John Bogle, the founder of Vanguard Funds. John is very down to earth; a man of the people and the little investor.
Pick just one! Review them on Amazon to find the right one for you.
The Intelligent Investor
By Benjamin Graham
A Random Walk Down Wall Street
By Burton Malkiel
Unconventional Success
By David Swensen
The Four Pillars of Investing (my favorite, an easy read)
By William Bernstein
Extraordinary Popular Delusions and the Madness of Crowds
By Charles MacKay
The Bogleheads’Guide to Investing
By Larimore, Lindauer and LeBoeuf
A classic, not on Mr. Bogle's list and another favorite of mine:
Making the Most of Your Money Now
By Jane Bryant Quinn
A book for women of a certain age which I have not read is
Hot Flash Financial
By Wendy Weiss
Nobody cares about your money as much as you do!
Be $ smart. Read.
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