Tag Archives: stocks

‘FEEDING THE PIG’ TAKES DISCIPLINE

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#saving #investing #stocks #mutual funds #bond funds #equity funds #FeedThePig
A man rides on the step of an ice cream truck.
He spots another man, dressed as a piggy bank, walking down the street.
He jumps off the ice cream truck, tackles the pig-man, and drops some cash in the slot on the pig-man’s head.
“Same time next week?” the man asks.
“Well, of course,” says the pig-man.
This TV ad from feedthepig.org is meant to encourage people to save a little regularly, preferably every week.
The ad is supposed to alert savers that it takes effort and discipline to be a good saver. You have to commit to it every week – or however often you get a paycheck. You have to make sacrifices and take risks, like riding on the step of a moving truck and tackling the pig-man.
In this economy, however, trying to save can be difficult. Gasoline prices are high, as are food prices, rent and other living expenses.
To be able to save, however little you can, from each paycheck requires intentionality.
The pig-man, too, is symbolic. If you really want to save, you should put the money into a savings account, rather than a piggy bank or under a mattress.
As the savings account grows, you may want to graduate to a certificate of deposit (CD), which generally pays a bit higher interest than the savings account. But, you have to tie up your money for the period of the CD, lest you pay a penalty.
Given that you must tie up your cash, the difference in interest rates between the accessible savings account and the CD has to be worth it. You should discuss this with your banker before making that commitment.
As your CDs grow in value, you can then think about other investments that require small risk, but much better return. Mutual funds fit this category, as do bond funds, equity funds etc.
You may need better advice than your banker can give you for these vehicles. That advice often comes at a cost so, again, make sure the cost is worth it before embarking on that journey.
Your financial adviser may encourage you, as your account grows, to invest in individual stocks. Make sure the money you put into those is money you can afford to lose. If you go this route, you may have a mix of losses and gains. Some losses can be deducted from your income tax return.
If you go this route, resist the temptation to invest in “the next big thing.” These are shiny objects that don’t always materialize as promised. If your adviser comes off as an aggressive salesperson trying to get you into “the next big thing,” find a different adviser.
Building wealth is not easy. It takes effort. It takes sacrifice. But, if you do it successfully, managing risk along the way, it will pay off over time.
Also, as you make the difficult wealth journey, make sure your big purchases, like a home, are worth your effort.
And, it’s OK to enjoy some ice cream or other pleasures along the way, providing that you spend with care.
Peter





WHAT YOU COULD DO WITH YOUR SUMMER-JOB MONEY

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#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