Summer $ Reading

Many newspapers and magazines offer book lists for light, summer reading.

As you know, if you want to learn something, read.
Read books. Read magazines. Read websites.

Perhaps reading about money and investing is not considered light reading but when you are determined to care for your money and make it work for you, it is essential reading.

Here are a few books to consider:

The Little Book of Common Sense Investing
by John Bogle, the father of index investing.
Mr. Bogle, also the founder of Vanguard, offers timeless and sensible advice.

A Random Walk Down Wall Street
by Burton Malkiel, helps you understand the workings of Wall Street.

The Investment Answer
by Daniel Goldie and Gordon Murray, give easy to understand investment knowledge.

The Little Book of Main Street Money
by Jonathan Clements (often seen on PBS) provides good, basic financial advice.

One book I suggest for widows or newly divorced is
On Your Own: A Widow's Passage to Emotional and Financial Well-Being
by Alexandra Armstrong and Mary Donahue, offers easy-to-follow advice with step-by-step guidance.

If tackling a book is too heavy for your summer schedule pick-up a financial magazine like MONEY, Kiplingers or FORBES. Read it all - read the ads, the comments, the table of contents, the articles, cover to cover. The more you read the more familiar you become with the terms and the language of finance. The better you understand the language, the less intimidated you feel.

Be $ Smart - Build your confidence. Grow your assets. Learn about investing. Your future is yours to create.

Words of Wisdom

With graduations just behind us we often think of offering guidance to young people as they embark on life's journey. Here are two thoughts to pass along which I found in a WSJ column.

The path to long-term wealth includes:
- living within your means,
- a commitment to putting away so much money each year,
- allocating those long-term savings wisely among stocks, bonds and cash using low-cost, passively managed mutual funds, index funds and ETF's,
- and keeping costs (fees and taxes) associated with those investments as low as possible.


Be aware of "life-style creep".
As you climb the corporate ladder or wend your way through a career, each pay raise will bring new opportunities and choices.

How you handle those raises can be critical.
Think about spending the new money in ways that will bring enjoyment, but not commit you to an immediate and future higher spending level.

Commit to spending "just" half the raise for enjoyment and allocating the other half to ongoing savings.
Reaching financial independence will get easier and come sooner as well.

Be $ Smart - Over-spending and over-eating have consequences; diets are never fun.

U.S. Treasuries

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.

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.

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!

Welcome to My Blog!

Hi!  My name is Eileen Hawe.  I’ve been working in financial services and personal finance for almost 30 years.  It’s an industry that’s rife with conflict of interest.  I witnessed it first hand and understand the need for basic, clear, unbiased information. 

Have you ever had to make an important decision, looked for help or direction and didn’t know whom to trust?  Or, while sitting across from a financial adviser heard that little voice in the back of your head wonder “what’s in it for him/her?”

I will answer your questions, even the “dumb” ones, clearly and simply.  I will guide you through the rough times, get you back on your feet and help you realize that personal finance is not rocket science. 

I love what I do.  I have a skill which I am happy to share with you.  It makes me feel good; we both benefit. 

Follow my blog where I will post important financial facts on a regular basis.

For example: are you familiar with The Rule of 72?

Take the interest rate you are earning on an investment (a CD earning 2%).

Divide that number into 72 to show the number of years it will take to double your money.  (72/2=36)  Thirty-six years. An investment with a higher return of 6% would double your money in 12 years.  (72/6=12)  Twelve years. Higher returns may have higher risk.

 Also, IRA Conversion:  did you know that this year might be a good time to convert your regular IRA (individual retirement account) to a Roth IRA? Many portfolios have lost money in the second half of 2011 so the taxes due on the conversion may be less.

If these tips have helped you, contact me to schedule a meeting and I will guide you to financial security.