The most important concept that determines how financially successful an individual/family is going to be is:
* Deferred gratification
* The hardest part of financial independence is not the investing… it is the savings factor:
In today’s world it is getting harder to be a good disciplined financial household.Â There is so much outside influence and temptation that only the strongest make it (faking success).
** The desire to drive a new flashy car
** “Same as Cash” for everything including Furniture, Electronics, & Plastic Surgery
For more information, including How to Accumulate $1,000,000 by Age 65, visit the show notes at www.moneyguy.com/2007/09/simple-advice-for-your-finances
I personally make use of both credit cards and the large sum of equity that I have in my personal residence. I responsibly pay my credit cards off each month, but thoroughly enjoy the $1,200 to $1,500 of annual rewards and cash back that I receive. I also use my home equity as a tool that allows me not to keep huge sums of cash sitting on the sidelines just in case I need money for an emergency. I want as much of my money working for me at all times, so that eventually my army of working dollars earns more than I can make with my back, hands, and brain. Let’s face it: Investment income that is automatic and pays your monthly bills can open your life to many more opportunities as well as complete financial independence.
However, I am quickly realizing that many have gone too far in the use of debt. Just as Alan Greenspan spoke of the late 90s equity markets with the words, irrational exuberance, I think that we can use the exact the same logic and apply it to the average person’s use of debt. Many have taken the tool of debt to levels that are now causing them to sink into financial ruin.
For more information, visit the show notes at http://www.moneyguy.com/2007/08/financial-devastation-through-debt
the benefits of using Long/Short Funds.
A long/short fund takes advantage of a technique that many hedge funds use that allows them to make money in both a rising and falling market. Long/short fund managers divide their funds’ assets into two types of positions (long and short holdings).
Long positions – meaning they buy stocks expecting that they will rise in value and can be sold at some point in the future at a gain (this is the traditional form of investing that most investors are use to… buy value priced stocks with the anticipation of selling for a gain)
For more information, visit the show notes at http://www.moneyguy.com/2007/08/act-rich-and-protect-yourself-from-a-down-market
I have spent the last two weeks preparing for the IRS. Unfortunately, I still do a small number of business tax returns (old habits are hard to get away from). One of my small business tax clients was selected for a full examination (Audit). I have over over 10 years of experience in completing tax returns, and this is the first business return that has been selected for an audit. I guess it was my turn to sit on the hot seat. We had the IRS agents here in the office on Wed. and then we met at the client’s business on Thursday for a site evaluation and Q&A session. I am elated that we made it through the audit without any problems and the client did not have to pay any additional taxes, but as you can imagine it has been a stress that has caused a few nights of restless sleep. I knew that we had nothing to hide, but you never know where there might be a difference of opinion on deductions.
For more information, visit the show notes at http://www.moneyguy.com/2007/07/attn-small-business-owners-a-legal-way-to-hide-money-from-the-tax-man
I’m a straight talker, so please don’t hate me for a harsh, but true statement: when people are falling short of their financial goals, it’s almost always because of their own actions and decisions.
THE SECRET TO SUCCESS IS THROUGH DEFERRED GRATIFICATION AND TAKING THE ROAD LESS TRAVELED
For more information, visit the show notes at http://www.moneyguy.com/2007/07/are-you-on-the-road-to-wealth-and-independence
A quick review of your financial health is today’s topic.Â I am taking a brief break from talking about investments.Â Instead I am going to load you up with planning ideas and even tools that I use to keep my financial house in order.
Estate Planning & Risk Management (I know that it is dark to talk about death or other bad events that could occur in your life, but it is important to discuss).
Wills – If you have children you must have a Will.Â Otherwise, you are leaving their future in the hands of the state.Â I find it hard to believe that the state would be better at determining your families future instead of you.Â DON’T PLAY WITH FIRE….. GET A WILL!!!
For more information, visit the show notes at http://www.moneyguy.com/2007/06/the-30-minute-financial-plan
First you guys need to know my thoughts on what is known as Efficient Market Theory
Efficient Market – Since everyone has the same information about a stock, the price of a stock should reflect the knowledge and expectations of all investors. The bottom line is that an investor should not be able to beat the market since there is no way for him/her to know something about a stock that isn’t already reflected in the stock’s price.
I feel that this Theory holds true for Large Cap. US Companies. There are really only 1,000 Large Cap Companies (Cap Value > $10 Billion). Meanwhile there are pundits, analyst, and advisors like myself on every street corner to evaluate these 1,000 stocks. With the vast amounts of information and the speed that information now reaches us through the Internet, Cable Business Channels, AM Business Talk Radio how could you know anymore than anyone else?
For more information, visit the show notes at http://www.moneyguy.com/2007/06/how-to-choose-mutual-funds
For more information, visit http://www.moneyguy.com/2007/06/how-to-choose-mutual-funds
There are tons of podcasts out there that explain how to spend less than you make, and how credit card debt can drain financial freedom. How many actually have the training and know how to help you with the crucial portion of your extra cash flow and retirement funds? I would dare to say not many because most either do not know what to tell you or they are trying to sell you a product so they will never tell you (unless you invest $2k into their proprietary system). I am here to help by focusing the next few shows on investing.
Today is the first part of our investment series and we are getting back to the basics, but before I get into the details I wanted to mention an article I read this weekend:
For more information, visit the show notes at http://www.moneyguy.com/2007/05/when-where-and-how-to-invest-investing-101
Tax Refund Challenge:
Now that you have filed your taxes it is time to evaluate where you are financially. Say what you will about filing tax returns they at least allow you to take inventory on how much you earned in 2006. I am always talking about saving for the future and making sure that you are locking away 15%-20% of your gross wages for the future. That is easy to say when you earn a good living, but I know from emails that I receive that many out there are struggling financially. The average refund was estimated to total $2,480 for 2006 up from $2,371 for 2005. I would challenge you to look at your return and if you are not happy with your income level do something about it. Success is easier than you think… You just have to believe and figure out where your passion is. Use the refund money as your initial savings for starting a business, or for going back to school. It is very fulfilling and can be financially rewarding to make a big change and have success that leads you to a better life.
For more information, visit the show notes at http://www.moneyguy.com/2007/04/lazy-investing-can-be-good-investing
The financial markets have been very choppy this quarter. We started off 2007 with day after day of the stock markets hitting new highs. Then one crazy Tuesday in February (27th to be exact) the bottom fell out of the market (I blame it on my producer Heidi; she was off that day spending time with her dentist and a root canal). Ever since it has been up and down to the point that many of you are wondering what in the world is going on.
On today’s show I am going to share with you the resources that help me determine what is going on in the financial world.
For more information, visit the show notes at http://www.moneyguy.com/2007/03/free-professional-advice-and-research-my-little-blackbook
There is a storm of concern that has been building for quite some time, and it is finally getting the attention that it deserves…. 401K FEES:
For more information, visit the show notes at http://www.moneyguy.com/2007/03/are-401k-fees-robbing-you-of-your-retirement
Term Life Insurance is appropriate for people who want life insurance only for a limited term, such as until your children are grown or you reach retirement age.
Term life insurance has become much more affordable in recent years due in part to the fact that people are living longer. A $500,000 term-life policy can now cost as little as $350 a year for 20 years, which is considerably cheaper in comparison to the more than $1,000 a year that it would have cost you in the early 1990s.
For more on Shopping for Insurance, visit the show notes at http://www.moneyguy.com/2007/02/objective-life-insurance-adviceno-really
When I use others’ research I always try to give proper credit to the source. Much of the information and research for today’s podcast comes from Consumer Reports Money Adviser (January 2007 Issue).
If you listen to AM radio, watch any of the cable news networks and/or your evening news, or read a newspaper, you have probably heard the following terms: Federal Reserve, Federal Reserve Chairman Ben Bernanke, Inverted Yield Curve, GDP, and Inflation Rate. How many of us really know what these figures and terms truly represent?
For more information, visit the show notes at http://www.moneyguy.com/2007/02/too-scared-to-ask-economic-indicators-explained
The backbone of good investing is Asset Allocation, and today I am going to load you up with great information.
Terms needed to understand asset allocation:
Domestic Stocks = US Companies
Market Capitilization of US Stocks (According to Morningstar):
Large Cap = US Companies with a Market Cap greater than $11 Billion (these are the companies that are household names like Wal-mart, GE, Home Depot, Coca-Cola, Pfizer, and so forth)
Mid Cap = US Companies with a Market Cap between $2-$11 Billion (these are companies that you might have heard of like HR Block, but are not the size of the previous listed group.
Small Cap = US Companies with a Market Cap below $2 Billion. Probably not going to recognize the small company unless you specifically use their product or they are in your town.
For more financial terms, visit the show notes at http://www.moneyguy.com/2007/01/the-abcs-of-asset-allocation
Before we can look forward I think that it is smart to review what happened in 2006:
Domestic Stock Markets:
* The 2006 market was interesting in the fact that the first half was pretty flat as everyone tried to figure out what the Federal Reserve was going to do with interest rates.
* The second half was El Fuego (“ON FIRE” for my Spanish-challenged listeners). The Fed decided to take a break with interest rates, oil prices dropped, everybody and their brother decided it was a good time to merge with other businesses, corporate profits were better than anticipated, unemployment was lower than expected, and interest rates came down.
* All of this was the perfect mix of optimism and lower inflationairy news that allowed patient long-term investors to be rewarded.
* Actual numbers for 2006 (with dividends reinvested):
S&P 500 Gained 16%
Dow Jones Industrial Average returned 19% (at an all time high)
NASDAQ was up 10% (still more than 50% below 2000 levels)
For more information, visit the show notes at http://www.moneyguy.com/2007/01/what-to-learn-from-2006-and-use-in-2007
A recap on where to get good advice and what to watch out for.
Unfortunately, my industry still has too many short sighted individuals. What I mean by this statement is that there are a lot of advisors, brokers, agents, and reps that are looking for the big score, and could care less about the long term financial health of their clients.
My personal belief is that if you do good things for others it comes right back to you. Fortunately for me and my company most have not realized that you can make more long-term money by being good to your clients.
The government recognizes that most individuals have been asleep at the wheel when it comes to saving for their retirement, and they are also unaware that Social Security is only a few decades from a funding disaster (don’t worry I am not going to go there on today’s show).
As a result of this SILENT BUT DEADLY BUILDING DISASTER the government has made several changes that provide tremendous opportunities for you to save for your future retirement and financial independence.
What retirement option should you use and in which order should they be funded?
For more information, visit the show notes at http://www.moneyguy.com/2006/11/organizing-your-retirement-options
I received an email from a subscriber (thanks Helen) suggesting that I watch the PBS Frontline special titled “Can You Afford to Retire”. I was so impressed with the program that I have decided to focus today’s podcast entirely on the special.
The focus of the program is on the changing retirement landscape.
1974 Retirement Funding:
2006 Retirement Funding:
“Defined Pensions”: The Endangered Species
For more information, visit the show notes at http://www.moneyguy.com/2006/11/retirement-in-crisis/
Ok everyone please quit sending me emails on how to become a Financial Advisor. I have been bullied enough that I will spill the beans.
According to CNNMoney.com I have the 3rd best job in America.
Before you run out and decide to change careers let me provide you with my thoughts:
* You have to be good at taking test and going to school
* To be good you have to love numbers (and I mean truly love numbers)
* This is also one of those professions that requires a unique personality mix – you have to be very analytical (to the point that you are truly a numbers nerd), but somehow enjoy talking with and building relationships with others. Trust me there are not many of us out there; most are good at one but not both and that can lead to limited success.
* This is also one of those industries where you are not paid what you are truly worth for a number of years (3 years of experience required for CFP certification & 2 years of experience required for CPA).
For more information, visit the show notes at http://www.Money-Guy.com/financial-advisor-3rd-best-job-in-america
In this weeks Financial Chaos Topic we discuss the following:
A Creative Way to Give and Avoid Taxes at the Same Time
If you are Charitable and Sick that the Government makes you take taxable RMD from your Retirement Accounts
Wesley Snipes joins the ranks of Willie Nelson and other not so tax smart celebrities. Don't mess with the only organization that can show up and just take your stuff!
In this week's Market and Media Update:
** Should we be concerned with the recent run up of the stock markets?
Investor Apathy Means the Market Stays Bullish - Motley Fool
** Who is this YouTube Inc. guy (Chad Hurley) that is now worth $1.65 BILLION?
Google's Billionaire Boys Club Gets a New Member
** Now that I am depressed about reading about YouTube's success I might as well play the lottery!
How to Play the Lottery; The Smart Way - Howstuffworks
Listen to the show for the following information:
* The Hierarchy of Investment Decisions
* The Cycle of Market Emotions
* Common Investing Mistakes
* How to Solve Investing Mistakes
* How to Accumulate $1 Million by Age 65
* Insight from Warren Buffett
Update on the Market and Media, September 20, 2006
The following statement is harsh but true: Most individuals are not going to become affluent because they take the easy way out in the majority of their financial decisions. Examples: Putting off investing in your ROTH IRA or maximizing your 401k at work...