Wealth in Words

Common investment knowledge suggests that “you shouldn’t put all your eggs in one basket.” In effect, this phrase is attempting to convey that you need to diversify. In the context of your finances, diversification is not just placing your assets into random buckets with the hope that nothing bad will happen. Instead, you need to allocate your assets in an optimal manner to achieve your desired results .   Diversification for Investing The right mix of diversification  will be unique to each investor based on your preferences for risk and return. Accordingly, determining the appropriate blend of assets is the starting point in building a diversified portfolio. As an investor you may be more risk seeking than others who are more risk averse and yet an optimal portfolio  can be built for both preferences along the continuum of risk and reward. Additionally, throughout your lifetime the diversification of your portfolio will naturally change. That is

Even though we are just past the midpoint of 2017 there is still time to make improvement in your finances  before year-end. Five areas that can make the biggest difference in your financial life right now include cutting costs, automating and diversifying your investments , paying down debt, making more money, and planning for the things you want. According to the paradox of choice, when we have too many options or goals we end up never focusing on any of them. Instead of getting overwhelmed by thinking about all the financial questions and ideas you may have, concentrate on the following five suggestions which will create big wins  for you in 2017. Cut Costs Cut costs everywhere! Start by assessing your biggest costs first, like your mortgage, rent, or car payment, as there will be the most room for cash to be freed up by reviewing these big ticket items. Also, try to find any recurring costs, purchases or subscriptions that collectively amount to a la

Frequently I am asked questions regarding how a couple should invest money  for their children’s future. From my experience, the best option is to use a Dividend Reinvestment Program or DRIP. A DRIP is a stock-based investing plan  that is issued by most major corporations that pay a dividend. A dividend  is simply excess cash returned to shareholders. Historically, dividends have accounted for most of a stock's growth . To start a DRIP investment plan you will need to invest an initial amount of money, say $100, in the account and then your account will automatically reinvest dividends each time they are paid. For example, the $100 of cash used to purchase shares in a dividend paying stock may allot you one share of stock. Additionally, the stock has an anticipated yearly dividend of $2.00. Typically, dividends are paid quarterly or four times a year. Every time a dividend is paid the money is used to purchase new shares at the current market price. So

Starting anything new can be daunting. Certainly, learning to invest your money is no different. However, whether you have saved some money and want to begin investing or you just want to learn how to invest, putting a proven plan  in place will set you on the right path to tackle this new challenge. If you don’t take the time to design and plan your life you will have to settle for what life gives you… -         Joe Duncan, @Before5AM Select an Investment Strategy Before you start investing you need to learn about markets and understand how they work. The odds of making money are greatly stacked against most individual investors so getting familiar with different profitable strategies  is important.  Perhaps you choose to focus on timeless methods like value investing  (buying under-priced stocks) or cost-effective indexing (passively managed assets) that are proven to grow your wealth. The “Little Book” investing series is a good place to get a basic unders

If you are like most Americans you will be getting money back from the government this year. In some cases this tax refund can be fairly substantial. Managing the money correctly  will help give you some serious breathing room in your finances . No matter what you did with your money in the past, try picking one or a few of the options below to set yourself up for a better financial future . Pay Off Debts The first priority should be paying off any outstanding debts  as much as possible. For example, any student loan, car loan, credit card, or mortgage balance outstanding should be eliminated with some of the tax refund you get back from Uncle Sam. Additionally, focus on paying off some of the highest interest rate debt (typically, credit cards) before any lower interest rate loans. Debt accumulated on credit cards will continue to compound , but not in your favor. In other words, as your outstanding credit card balance grows so too will the amount of interest