"The best government is that which teaches us to govern ourselves." - Johann Wolfgang von Goethe
Tuesday, 14 November 2017
Monday, 13 November 2017
Quote for the day
"The biggest commitment you must keep is your commitment to yourself." - Neale Donald Walsch
Sunday, 12 November 2017
5 Types of Money Personalities and the Mistakes They Make
By Dana Anspach
Everyone approaches life, money, and saving in a different way. By understanding your approach, you can avoid common money mistakes that people like you are prone to making. Below are five types of people, and the financial mishaps they tend to make.
1. The Entrepreneur
Entrepreneurs and small business owners don’t think of retirement in traditional terms. They have a vision for their business and they put all their energy and financial resources into the business.
They are absolutely sure it will work out. Entrepreneurs need to maintain that level of certainty while also keeping their financial house in order.
Biggest Money Mistakes
Save? What, I need to save? If you spend it as soon as it’s in your bank account, this would be you. If you don’t change your ways you’ll need to plan on working until you take delayed Social Security at 70.
Biggest Money Mistakes
Biggest Money Mistake
Everyone approaches life, money, and saving in a different way. By understanding your approach, you can avoid common money mistakes that people like you are prone to making. Below are five types of people, and the financial mishaps they tend to make.
1. The Entrepreneur
Entrepreneurs and small business owners don’t think of retirement in traditional terms. They have a vision for their business and they put all their energy and financial resources into the business.
They are absolutely sure it will work out. Entrepreneurs need to maintain that level of certainty while also keeping their financial house in order.
Biggest Money Mistakes for Entrepreneurs
If you are an excellent saver and spend within your means, then you fall in this category.
For example, do you fully fund your IRA or 401k accounts each year, and always have savings in the bank? Have you stayed at the same job for quite awhile? Do you have company benefits and perhaps a pension? If you fall in the steady-as-they-go category it is likely you’ll be able to retire earlier than many of your peers.
It’s also likely you’ll enjoy retirement by spending within your means.
- Cashing out retirement plans to fund the business.
- Using too much debt.
- Getting behind on taxes, particularly self-employment taxes.
- Maintain an adequate emergency fund both personally and for the business.
- Using debt wisely to fund the acquisition or start-up of a business by developing a realistic business plan and projection of income and expenses. Don’t borrow until you’ve established this.
- Make contributions to a retirement plan each year even if it is just a few thousand dollars to an IRA or ROTH IRA.
- Get a good accountant and meet with them to set up quarterly tax payments.
If you are an excellent saver and spend within your means, then you fall in this category.
For example, do you fully fund your IRA or 401k accounts each year, and always have savings in the bank? Have you stayed at the same job for quite awhile? Do you have company benefits and perhaps a pension? If you fall in the steady-as-they-go category it is likely you’ll be able to retire earlier than many of your peers.
It’s also likely you’ll enjoy retirement by spending within your means.
Biggest Money Mistakes
- If you’re the steady-as-they-go type, honestly, there isn’t much you need to watch out for. You’ve probably got your financial house in order.
Best Advice
- Run a financial projection. You may realize you don’t need to save quite as much. Maybe there’s enough to do a few extra fun things along the way.
3. The Professional High Income Earner
Doctors, attorneys, accountants, surgeons and other similar professions tend to fall into two sub groups. Some are excellent savers, more like the steady-as-they-go group above. Others make big incomes, and develop big lifestyles to match. The big income/big lifestyle type have problems in retirement. They do not save enough to be able to maintain their lifestyle. It is a shock to them when they see that they must either work far longer than anticipated or make a substantial change in their standard of living to save enough.
Doctors, attorneys, accountants, surgeons and other similar professions tend to fall into two sub groups. Some are excellent savers, more like the steady-as-they-go group above. Others make big incomes, and develop big lifestyles to match. The big income/big lifestyle type have problems in retirement. They do not save enough to be able to maintain their lifestyle. It is a shock to them when they see that they must either work far longer than anticipated or make a substantial change in their standard of living to save enough.
Biggest Money Mistakes
- Not realizing that when you make a lot, you must also save a lot to be able to maintain that lifestyle later in life.
- Letting ego dictate your spending decisions.
- Using too much consumer debt like big car loans and credit card bills.
- Pay yourself by setting aside dedicated amounts to go to savings before you buy the nicer car, big house or decide on a private school for the kids.
- Run a plan so you know how much you need to save to maintain your lifestyle. If you’re not willing to give up your lifestyle now, realize you will be forced to downsize everything later.
- Set monthly spending limits.
Save? What, I need to save? If you spend it as soon as it’s in your bank account, this would be you. If you don’t change your ways you’ll need to plan on working until you take delayed Social Security at 70.
Biggest Money Mistakes
- Not saving anything.
- Doing no financial planning of any kind.
Best Advice
If you save some and spend some you probably fall in this group. You might think ‘No one knows what the future may bring.’ You better take that trip now or buy that cabin or the boat… and it’s ok because you’re also contributing to savings on a regular basis. And sometimes it is ok; other times the spending can outpace the savings and catch up with you later.
- It feels good to have money in the bank — really, really good. Just try it. Once it's there, if you really don’t like, you can always go spend it.
- Try a financial fast. It’s one of the best ways to get a handle on spending.
If you save some and spend some you probably fall in this group. You might think ‘No one knows what the future may bring.’ You better take that trip now or buy that cabin or the boat… and it’s ok because you’re also contributing to savings on a regular basis. And sometimes it is ok; other times the spending can outpace the savings and catch up with you later.
Biggest Money Mistake
- Fully funding tax-deferred accounts like 401k plans, but having no after-tax savings.
- Waiting until a few years away from retirement to create a financial projection that shows you what your retirement income might look like.
- Hire a financial advisor. You can easily move into the steady-as-they-go group with a little planning.
- Create a balance of tax-deferred savings and after-tax savings. When you retire, if all your income must come out of a tax-deferred account, taxes will take a bigger hit than you might think.
Source: www.thebalance.com
Quote for the day
"Winners compare their achievements with their goals, while losers compare their achievements with those of other people." - Nido R Qubein
Saturday, 11 November 2017
10 Golden Rule of Investment
By Raviraj Parekh
How to invest money? What is a golden rule of Investment? Well, saving and investments are the foundation for the financial success. However, many of us neglect to put this into practice and, therefore, faces difficulties in achieving financial goals. Most individual accept that they invest in financial products without understanding. In short they don’t take informed decisions. This will cause a delay in fulfilling financial dreams of the individual. Considering this fact, I am here with 10 Golden Rule of Investment. These rules will surely help you to achieve financial success.
Rule 1 – Invest Regularly
We earn regularly, we spend regularly, but we don’t invest regularly. So, my first golden rule of investment is “Invest Regularly”. The regular and systematic investment will help you to achieve your financial goals like buying house, car etc. Most of these goals require substantial money upfront in order to be fulfilled. The regular investment will help you to fulfil these goals.
Rule 2 – Start Early
The day you start earning money you should start making investments. The earlier you start more return you will get on the investment. The compounding effect helps you to earn interest over interest. You can build substantial wealth by starting at the early stage of life.
Rule 3 – Understand Financial Product before making investment
The third golden rule of investment is to understand the product well before making an investment. It reminds me about one old proverb: “All that glitters is not gold.” There are many products available in the market which is complicated in nature. If you are planning to invest in these products you should understand it properly. I have seen marketing of some products are done in the manner which will lure investor with unrealistic returns. You must stay away from these products. This product may contain some hidden risks which are unknown.
Rule 4 – Diversify your Investment
You should diversify your investment. Never keep all your eggs in one basket. Invest in multiple investment products as per your financial goal and risk appetite. Diversification does not give you guarantee in profit, however, it will help you to reduce the overall risk associated with your portfolio.
Rule 5 – Monitor & Re-balance your portfolio at regular interval
You should monitor and rebalance your portfolio at regular interval. The ideal frequency of monitoring your portfolio is six month.
At the younger age, you should explore and invest in equity because at the initial stage your risk taking capacity is high. As you grow old you should reduce your investment from equity and invest in fixed income/debt-based instruments.
Rule -6 – Expect Reasonable returns from Investment, Exit once you reach target
It is better to expect reasonable returns from investments. Once you achieve your investment target you should book the profit and exit from the investment. Never expect unreasonable returns from the investment. For example, if you think that your investment has potential of earning a return of 15%, you should exit once you reach this target.
You should never become greedy. Remember “No gain satisfies a greedy mind”.
Rule -7 – Never invest or sell in Hurry
You should do a proper analysis before making an investment. You should hold back yourself from buying or selling in a hurry as it may lead to financial losses. Proper study and homework are necessary to make a profit from investments.
Rule- 8 – Inflation and Taxes will eat your returns
Inflation and Taxes are two important factors you should consider before making the investment. You should judge investment product from the actual rate of return. The actual rate of return is return is given by investment- Inflation rate – Taxes.
We cannot control growing inflation rate, but we can select tax friendly investment option to earn more returns.
Rule -9 – Spend Time on your investments
You should spend sufficient time with your investment, before and after making an investment. Proper homework will help you to select a right investment. Performance monitoring after investment will help you to stay on track. If you can’t spend time with your investment you should get in touch with a financial planner.
Rule -10 – Don’t make Investment only on Tips
Last golden rule of investment never relies on tips for making an investment. Instead of investing on the basis on tips, you should consider fundamentals of the investment instrument.
I would like to end this article by sharing a most effective rule of money management by Warren Buffet.
"Rule -1 Never Lose Money.
Rule -2 Never Forget Rule -1"
Hope this golden rule of investment will help you to achieve financial success.
www.moneyexcel.com
How to invest money? What is a golden rule of Investment? Well, saving and investments are the foundation for the financial success. However, many of us neglect to put this into practice and, therefore, faces difficulties in achieving financial goals. Most individual accept that they invest in financial products without understanding. In short they don’t take informed decisions. This will cause a delay in fulfilling financial dreams of the individual. Considering this fact, I am here with 10 Golden Rule of Investment. These rules will surely help you to achieve financial success.
Rule 1 – Invest Regularly
We earn regularly, we spend regularly, but we don’t invest regularly. So, my first golden rule of investment is “Invest Regularly”. The regular and systematic investment will help you to achieve your financial goals like buying house, car etc. Most of these goals require substantial money upfront in order to be fulfilled. The regular investment will help you to fulfil these goals.
Rule 2 – Start Early
The day you start earning money you should start making investments. The earlier you start more return you will get on the investment. The compounding effect helps you to earn interest over interest. You can build substantial wealth by starting at the early stage of life.
Rule 3 – Understand Financial Product before making investment
The third golden rule of investment is to understand the product well before making an investment. It reminds me about one old proverb: “All that glitters is not gold.” There are many products available in the market which is complicated in nature. If you are planning to invest in these products you should understand it properly. I have seen marketing of some products are done in the manner which will lure investor with unrealistic returns. You must stay away from these products. This product may contain some hidden risks which are unknown.
Rule 4 – Diversify your Investment
You should diversify your investment. Never keep all your eggs in one basket. Invest in multiple investment products as per your financial goal and risk appetite. Diversification does not give you guarantee in profit, however, it will help you to reduce the overall risk associated with your portfolio.
Rule 5 – Monitor & Re-balance your portfolio at regular interval
You should monitor and rebalance your portfolio at regular interval. The ideal frequency of monitoring your portfolio is six month.
At the younger age, you should explore and invest in equity because at the initial stage your risk taking capacity is high. As you grow old you should reduce your investment from equity and invest in fixed income/debt-based instruments.
Rule -6 – Expect Reasonable returns from Investment, Exit once you reach target
It is better to expect reasonable returns from investments. Once you achieve your investment target you should book the profit and exit from the investment. Never expect unreasonable returns from the investment. For example, if you think that your investment has potential of earning a return of 15%, you should exit once you reach this target.
You should never become greedy. Remember “No gain satisfies a greedy mind”.
Rule -7 – Never invest or sell in Hurry
You should do a proper analysis before making an investment. You should hold back yourself from buying or selling in a hurry as it may lead to financial losses. Proper study and homework are necessary to make a profit from investments.
Rule- 8 – Inflation and Taxes will eat your returns
Inflation and Taxes are two important factors you should consider before making the investment. You should judge investment product from the actual rate of return. The actual rate of return is return is given by investment- Inflation rate – Taxes.
We cannot control growing inflation rate, but we can select tax friendly investment option to earn more returns.
Rule -9 – Spend Time on your investments
You should spend sufficient time with your investment, before and after making an investment. Proper homework will help you to select a right investment. Performance monitoring after investment will help you to stay on track. If you can’t spend time with your investment you should get in touch with a financial planner.
Rule -10 – Don’t make Investment only on Tips
Last golden rule of investment never relies on tips for making an investment. Instead of investing on the basis on tips, you should consider fundamentals of the investment instrument.
I would like to end this article by sharing a most effective rule of money management by Warren Buffet.
"Rule -1 Never Lose Money.
Rule -2 Never Forget Rule -1"
Hope this golden rule of investment will help you to achieve financial success.
www.moneyexcel.com
Quote for the day
"Only a burning patience will lead to the attainment of a splendid happiness." - Pablo Neruda
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