SAVE EARLY, SAVE OFTEN

#SaveEarly #SaveOften #retirement #jobs
In previous generations, people (usually the man of the household) worked, using the money to raise his family.
Couples married fairly young, had children young, and concentrated on giving the kids the best life they could.
When the kids grew, graduated college etc., parents were still working, still fairly young, and began to save for retirement.
In the few years between when the kids grew up and when they actually retired, investing their nest eggs into fairly safe investments, they could accumulate a decent amount of money. Using that savings, plus pension and Social Security – and, if desired, a low-stress part-time job – they could put together a pretty good life in retirement.
That was then. Now, young people, who may or may not marry young, need to begin thinking about saving for retirement as soon as they get their first jobs. But, as life would have it, most young people postpone saving for retirement, and pay the price later.
Two articles from USA Today, both also published April 22, 2018, in The Atlanta Journal-Constitution, take on this topic.
“Wasting just five short years at the start of your career would cost you nearly $500,000 (if you invest $250 a month), reads a headline under a column by Peter Dunn, known at Peter the Planner.
“Too little cash. Don’t know what I’m doing. Not the right time.” These are some of the excuses cited in an article by Adam Shell about postponing key financial decisions in life.
To sum up these articles: save early, save often. Let time work in your favor. Whatever inconvenience one must endure to put a regular amount of money from each paycheck away, not to be touched until later in life, it will be so worth it.
When you analyze the scenario above, you realize that times have greatly changed. Previous generations could bank on a certain amount of job security. Today’s workers have virtually no job security, no matter what they are doing.
The job security of previous generations allowed them to wait until later years to save. They knew they could work until, say, age 65, and save for a comfortable retirement in a few short years.
Today, many workers are forced to retire long before they want to. Younger people may work for eight, nine or 10 employers over their lifetime, without little, or no, pensions. Social Security probably won’t go away, experts say, but in coming years benefits could be reduced.
That leaves the bulk of one’s retirement nest egg up to his or her own decisions.
That means that no matter what you are earning, put some of it away and let it grow. You may only be able to afford, say, $5 a week. Start with that, and keep increasing it as your pay increases – presuming it does. (There’s no assurance of that anymore).
Something else to consider: perhaps you might take a few non-work hours a week to pursue your dream of a comfortable retirement. How? There are many vehicles out there that, with a few hours a week of part-time effort, could produce a substantial income, without interfering with your regular, W-2 job.
To check out one of the best such vehicles, message me.
Since one cannot count on employers or other entities to ensure a good retirement, one must take matters into his or her own hands. Certainly, you want to provide a good life for your family, if you start one. Certainly, you want to pay rent or a mortgage, put food on the table, pay the electric bill etc.
But you HAVE to think about the future. You have to think about what will happen to you if your job goes away. Presuming you don’t want to work until you die, you have to think about, as the TV ad says, not how long you expect to live, but how long you could live.
If you are young, time is your best ally. If you are nearing retirement, and don’t have what you need, you have to perhaps think outside the box on how you are going to make up what you didn’t, or were unable, to do when you were young.
Save early, save often.
Peter

WHAT YOU COULD DO WITH YOUR SUMMER-JOB MONEY

#saving #investing #SummerJobs #stocks
It’s summer, and students (college and high school) are getting jobs as lifeguards, cooks etc. that pay an average of, say, $10 a hour.
In practical terms, most of those students will sock away a good bit of what they earn to pay for college, or some other higher education.
But Rubicoin, an educational investment app., calculated what you could do in the future if you decided to invest that money in the stock market.
Adam Shell wrote a short piece for USA Today on the study. The article also was published June 8, 2018, in The Atlanta Journal-Constitution.
Rubicoin calculated how much money a worker earning $10 an hour in a 25-hour workweek for 13 weeks, each summer for the past four years, Shell writes.
“If they invested half of their before-tax pay equally on Aug. 31 each year in the four FANG stocks (Facebook, Amazon, Netflix and Google), the $6,500 investment since 2014 would be worth $15,899 today, Shell quotes Rubicoin. If a student favors a bigger bet – investing in Netflix alone – it would have been worth $22,639, or $19,544 if they invested in just Amazon.
Certainly, these FANG stocks have skyrocketed recently. Doing that now, when they are at high prices, would be impractical. Doing it then, when their prices were relatively low, would have been a big risk for a student.
Perhaps planning your financial future would be better after your education is finished. Every dime you earn should be saved for the expenses for school – unless, of course, you come from a wealthy family and can do what you want with what you earn. Most students, however, are not in that position.
So, here’s another thought: what if you could take a percentage of what you earn in ONE summer, invest it in something that might give you the kind of bright financial future that no one will take away from you? A small investment, plus some part-time effort on your part throughout your life, could lead to an income stream that could allow you to never worry about money again.
There are several such ventures out there that could do that. To check out one of the best, message me.
There are few financial advisers who would recommend that a student invest a chunk of his summer income in stocks – despite their potential – would be a big risk.
Young investors should start out conservatively. They should move gradually from a bank savings account – get out of that as quickly as you can – to conservative funds, to stocks with some potential as your nest egg grows.
The important message from Shell and Rubicoin is to start saving your money while you are young. The more you can do at a young age, the more you will have as you get older.
Remember that the job you think is secure now may not be so in the future. Having the discipline to save and invest carefully, with the proper advice, will hopefully prevent devastation later in life.
In short: when you are off from school in the summer, work (more than 25 hours a week, if you can). Use that money to invest in your education. When your education is finished, continue the pattern of saving a certain percentage of your income, progressively investing over time.
If you use the money before retirement, make sure it is for something like buying a house. Don’t blow it on vacations and other non-durable items. Keep saving for a retirement that could come before you want it to.
Remember: the little things you do when you are young will give you more options in the future.
Peter

NOT BUYING LUNCH CAN CREATE $90,000

#LunchMoney #savings #retirement
On average, Americans eat out lunch twice a week.
It could be more than that, if you buy your lunch at work every day.
The average American forks over $11.14 twice a week for lunch, according to a Visa survey.
If a person skipped that meal – or made or brought his own lunch – and redirected that money into an investment account earning 6 percent, he’d have an estimated nest egg of $88,500 30 years later.
These numbers were quoted in an article by Adam Shell for USA Today, also published in the June 8, 2017, edition of The Atlanta Journal-Constitution.
OK, sometimes dining out for any meal is a nice treat. And, one does not want to live a life of deprivation.
But if you are having trouble saving for retirement, or you believe you don’t have the money to do so, perhaps one can find the money in places he never thought to look.
As a child, if your parents gave you an allowance, it usually was meant to teach you how to make the most of your money.
If you got a weekly allowance, did your spending habits cause you to run out of money before your next allowance installment?
Ask the same thing, now that you are an adult, about your paycheck. Are you accustomed to cashing the check and spending the money until you run out? Put another way, how much of your money do you spend without first giving it a thought?
Some people are well off in retirement because they had a great job, with great benefits and a great pension plan or 401(k). Others have a nice retirement because, from the beginning of adulthood, they earned a paycheck, and knew where every cent was going. These folks also made sure that a certain percentage went into savings.
Once they saved enough money, perhaps they parlayed it into a house, which, for them, was probably a good investment. As they kept saving, they then began to invest in other things so that, when they reached retirement, they didn’t have to worry how they were going to live.
The younger you start this process, the more you will have when you get older.
So, let’s pose the question again: is skipping a couple of lunches out every week worth close to $90,000? Some might say that $90,000 won’t go far in retirement, which is true. But eating lunch at home, or bringing your own lunch to work, is just one way to build a bigger nest egg, even if your job is hardly lucrative.
Another way is to use some of your non-work time to find, and work on, other great ways to make extra money. There are many such vehicles out there that don’t involve taking a second job. To check out one of the best, message me. Perhaps you will also find other ways to save money, besides not buying lunch.
So, it is possible to have a nice retirement, even though your income is hardly a rich person’s tally. You may have to do without some things that give you a moment of pleasure. Naturally, don’t cut ALL fun out of your life, but just take great care in your spending habits. Perhaps you could not only bring your own homemade lunch to work, you could brew and Thermos your own coffee.
Then, you have to be disciplined enough to put that money into safe savings at the start. As your nest egg grows, you can graduate into investing, without being overly aggressive at first. Then, as the money grows you can parlay it into more diversified investing – all with the help of a trusted adviser.
So, to borrow from Stephen Sondheim, here’s to the ladies (and gentlemen) who lunch – without spending $11 a pop.
Peter

MILLENNIALS: MORE SAVERS AND SPENDERS THAN INVESTORS

#millennials #investors #savers #spenders
Millennials don’t see themselves as investors.
According to the 2016 Fidelity Investments Millennial Money Study, 46 percent of the millennials surveyed considered themselves as savers, 44 percent considered themselves spenders and only 9 percent considered themselves investors.
This study was quoted in an Adam Shell article for USA Today, which was published April 27, 2017, in The Atlanta Journal-Constitution.
Despite Wall Street’s attempts to woo the nation’s largest generation into the stock market, millennials have yet to embrace investing, Shell’s article says. Only one in three say they invest in stocks, the article quotes a Bankrate.com survey.
A Black Rock study says nearly half of the millennials surveys found the market “too risky,” the article says.
And, four in 10 say they don’t have enough spare income to put away for the future, the article quotes a financial literacy survey from Stash, a financial app.
Let’s break down the facts. If you are a saver, and are putting money away, where are you stashing it? In a bank? Under your mattress?
In this market, the rates of return on that money between those alternatives are not far apart.
Secondly, there is wild and crazy – “risky” – investing, and there is careful investing. Each requires consultation with someone you trust , but here’s a good rule of thumb: as you start investing, look for more conservative vehicles, i.e. relatively safe mutual funds. As your wealth grows, you can diversify and take a few, well-thought-out risks. If you really do well, and want to play, take a very small amount of money and invest aggressively.
Here’s another rule: it’s difficult to have a nice nest egg for retirement just keeping your money in a bank. There are very few, if any, traditional, regulated banking products that are paying decent returns. Banks are wonderful institutions for your checking account, and perhaps a small savings account to cover unexpected expenses.
But to really be a saver for retirement, you have to take SOME risk. And, make no mistake, EVERYONE has to save for retirement. As stock-market-loving baby boomers can attest, you never know when your job is going to go away.
For those of you in the category of not having enough spare money to save for the future, there are ways to solve that problem. First and foremost, you have to make saving for the future a priority in your life. Even if you see yourself as a spender rather than a saver, you have make SOME saving a priority, or the fun you are having today will turn into poverty when you retire, or when that good job goes away.
A suggestion might be to look at the many ways out there to use your spare time to earn a secondary income. To check out one of the best such vehicles, message me.
In short, saving is not just prudent, but necessary. The more you save when you are young, the more you will have, and the better your life will be, when you are older. If you are a millennial, talk to your parents about what to do. However their lives have turned out, there are lessons in their lives that will apply to you. Don’t underestimate their story, or their advice.
As you save, some risk will become necessary. Though the stock market looks scary, over time it has proved to provide the best returns. Find a trustworthy, knowledgeable adviser to help you get started, and who will continue to work with you. Don’t be afraid to ask lots of questions about fees, returns etc., so that you will have a clear picture of how to proceed.
Finally, watch what you spend. Don’t deprive yourself, necessarily, but look for things you can eliminate to allow you to save more money. Remember that a dollar in your pocket generally is better for you than a dollar you put into someone else’s pocket.
Your future could well depend on decisions you make in your youth. You don’t have to depend on things “going right,” if you make good choices now.
Peter

CONFUSION IN THE STOCK MARKET

#stockmarket
“Main Street” is dumping stocks.
Professional investors keep investing, as the market, as of June 2014, was hitting new highs. The Dow since has passed the 17,000 mark.
Adam Shell, in an article June 12, 2014 in USA Today, writes that average investors in mutual funds are getting out of the funds heavily weighted toward stocks and moving into bonds and bond funds. That obviously hasn’t stopped the stock market from hitting records.
Shell’s article theorizes that the average investor, after going through the downturn starting in 2008, believes that the stock market can’t keep going up forever. On average, Shell writes, the stock market goes through a correction every 18 months. So far, it’s been 32 months since the last correction.
Yet, professional investors pumped $5.5 billion into U.S.-based exchange-traded stock funds.
It’s true that professional investors are accustomed to the ups and downs of the market, and have plenty of money to lose. Average investors could lose everything, and are more cautious.
But perhaps it’s more than that. Average investors are probably having to dip into their nest eggs sooner than they had planned. Perhaps they’ve lost a job, and can’t find another that pays as well. Perhaps they were forced to retire early – before they could build a sufficient nest egg.
If you consider yourself an average investor, it’s certainly OK to be cautious. It’s certainly OK to take your profits if you are not comfortable with the risk. Still, it may be unwise to let fear govern your decisions.
Sure, your investment adviser may be a “professional.” But if you trust your adviser, let him or her guide you through this time. Interest rates and inflation are still low. The hyper inflation that the naysayers predicted a few years ago has not come to pass.
Make no mistake. Interest rates and inflation can’t stay this low forever. The Federal Reserve has stopped pumping as much money into the system as it has been, which may signal rising interest rates. Rising interest rates are not all bad. If you are not borrowing money, but have cash on the sidelines, rising interest rates will help you.
In short, if your trusted adviser is telling you to stay put, it’s probably OK. If he’s recommending that you move your money, he may have an inkling that something is coming, and may be exercising caution with your precious dollars.
If you are among those who is going through an economic pitfall, visit www.bign.com/pbilodeau. You certainly won’t get investment advice, but you may find a great way to put more money in your pocket.
Obviously, the more money you have, the more risk you can tolerate. But try not to take what you believe is desperate action. Desperate action can just make a bad situation worse. Make sure you are making decisions rationally, rather than emotionally. Let your trusted adviser guide you.
No one wishes for another stock market crash. Still, they happen. But most advisers say that timing the market is unwise. It might be best to find investments you are comfortable with, and roll with the ups and downs. If it goes down, put more money in. If it goes up, let it keep growing. Most of all, follow your adviser’s guidance.
Investors operate on fear and greed. Make sure your fear is justified and rational. Try not to get too giddy with greed.
Peter