Wealth in Words

Knowing whether or not you are saving enough is a constant concern. The uncertainties of life consisting of its twists and turns can create even more room for question. Financially speaking, the best way to protect yourself from these unforeseen events and to minimize your worry is to have adequate savings. However, before answering how much you should save, we need to look at how much you can possibly save. In other words, you need to begin documenting your monthly income and expenses. Start by using a simple budgeting worksheet . Fill in your income and subtract expenses to get a quick estimate on whether or not you have any money left over each month based on your current spending habits. If there is no money left, you need to find ways to immediately cut extra expenses, find discounts, and minimize costs  to create money that can be used for savings. Once you do have some positive net income there are several options. First, a portion of it should be put into c...

In light of Mother’s Day I thought it would be helpful to reflect and impart some of the financial wisdom my mother shared with me. These quick, simple nuggets of advice continue to prove useful as I navigate adulthood. 1. Create a budget Soon after graduating college I was able to secure an investment job in the region I wanted. However, this required that I move out of home and begin living on my own. Facing this new chapter in my life, my mother took time to write out a budget  with me detailing my cash inflows versus outflows and determined how much I could expect to have left over. She emphasized that the key was to have something left over each month to  save   or invest   while still living comfortably. Overall, I learned that a budget is nothing more than a road map that helps you maintain control of your finances. 2. Maintain a healthy savings reserve Growing up I did various jobs during my summer breaks from school. During this time my moth...

Dollar cost averaging is a simple, yet effective investment strategy. In effect, you as an investor contribute a set amount of money to an account to buy a fixed amount of an investment regardless of share price. For example, you can set aside $100 a month to invest into a particular product, thereby averaging out the cost per transaction given the fixed amount contributed over the lifetime of your investment. Using dollar cost averaging will allow for you to begin to accumulate wealth in the stock market just as setting aside a pre-determined amount each month for savings will create a financial safety cushion. Additionally, dollar cost averaging is an excellent way to eliminate trying to time the market, which in most cases can lead to paralysis by analysis. In other words, creating a systematic process for investing can help automate the saving process and focus your thoughts on long-term results. For those of you who are new to investing, dollar cost averaging is ...

In the world of investing Blue Chips are known as large, financially established companies with generally attractive stock prospects. Think of iconic American brands like Disney, Walmart, General Electric, Intel, or Visa. In fact, all thirty of the constituents of the Dow Jones Industrial Average can be considered good examples of Blue Chips. Given the financial well-being of Blue Chip companies, they often pay a tasty dividend that can be just as pleasing to your portfolio as those corn tortilla Blue Chips are to your palette. All joking aside, since Blue Chips are well-established financially they generate excess cash that can be returned to shareholders in the form of a dividend. In some cases, the dividend payment and persistent growth in payouts is the best reason for owning one of these stocks. Furthermore, dividend-rich companies can be used as an alternative to comparable fixed income products in a low interest rate environment. In addition to the stream of divid...

For those unfamiliar, the late Jim Rohn was one of leading minds in the business coaching and personal development field. His work covers topics such as business strategy, time management, goal attainment, and personal finance. Rohn’s book “7 Strategies for Wealth and Happiness” contains a plethora of useful, applicable tactics that can dramatically improve your lifestyle through creating paradigm shifts in mindset and actions. He spends a portion of the book discussing an outline for managing a budget.  Specifically, Rohn calls it his 70/30 Rule. The premise is simple to follow and easy to implement. First, you start with your after-tax net earnings each month and multiply that value by 70%. Expenses for the month should not exceed this number (i.e. 70% of net wages). Second, subtract this expense target from after-tax monthly income and you will have 30% remaining. Lastly, this 30% is to be divided evenly into thirds. Rohn advises that the first third (10% of after-tax ...

Realizing your investment goals takes time. Warren Buffett famously remarked, “Successful Investing takes time, discipline and patience. No matter how great the talent or effort, some things just take time: You can't produce a baby in one month by getting nine women pregnant.” While this comment is somewhat tongue-in-cheek, the premise of staying the course for the long-term when investing should not be overlooked. Investors should write out and review goals at least annually. More visual people can use images or physical objects to help them focus on reaching their investment goals. Ultimately, you as an investor need to have a method to keep yourself focused on the long-term objective. Given the ever-present volatility in financial markets, which can create painful unrealized and realized losses in our portfolios, it is easy for investors to become distracted by transitory price shocks and shift to myopic thinking. For example, w anting to withdrawal all your money during a...

Company 401K plans are popular, accessible retirement savings vehicles for most individual employees. A 401K plan allows for workers to accumulate retirement savings by contributing a portion of each paycheck before taxes are taken out, thereby letting one’s savings grow at a higher, tax-deferred rate. Ultimately, taxes are paid once money is withdrawn from the account. In addition to the tax-deferred benefits, employees usually have an employer match program for the plan. For example, the employer will match up to 50% of the first 6% that the employee contributes to the account. Consider the funds from this employer match a “bonus” that is received each pay period and contributed immediately to savings. Within each 401K account every company will have its own list of pre-selected funds through which an employee can create an asset allocation. If no action is taken by the employee, he or she will most likely be automatically enrolled and begin investing contributions into a Targe...