Should you stay invested in this wild market?
Many investors are skittish of the wild ride in the stock market – up sharply one day, then dropping precipitously two days later. Every day there is different explanation to justify the markets’ jittery moves. One day it appears that the EU has reached agreement for another bailout; the next day, the reports are that the bailout will be too little, too late. In this country, investors are worried that unemployment is high and economic growth is weak; the next day, investors may be happy with future company earnings and continuing low interest rates. And just for good measure, there are the days when the markets move opposite to that suggested by the news. Continue reading
Should you buy gold?
It is hard to open a newspaper or flip to a financial channel without seeing the price of gold for the day…or an advertisement to buy gold coins. Should you buy gold now?
Why are investors buying gold? Investors worry that the U.S. and other developed nations will spend years digging themselves out of debt and that stocks will therefore underperform. They believe that gold will provide protection against inflation of other assets and currencies, including the U.S. dollar. Many investors view gold as having more buying power than the dollar. Continue reading
The Gardener’s Guide to Growing Money Slowly
After a hard winter for most of the country, spring is beginning to sprout. Here in the Philadelphia region, the green tips of daffodils are just beginning to push up through the moist, cool soil. White snow drops and purple crocuses are already blooming, adding welcome color to the brown palette all around us. At the birdfeeder, little American Goldfinches’ winter coloring of dull brown and tan shades is giving way to a lemony green tint that will turn to bright gold (in males) by late spring. The seasons are changing. Continue reading
3 Ways to Boost Your Social Security Benefits
As many Americans know, you can retire and start collecting Social Security benefits anytime from age 62 to 70. Most people start collecting right away at age 62.
But what many people don’t know is that you can raise your benefit substantially with one of the following three options: Continue reading
Improve Your Future; Start Planning Now for Your Next Job
As an independent Certified Financial Planner, I’ve noticed a couple of emerging patterns, such as the large number of people who have nothing saved for retirement and no spare money to invest, or those who are young and may be able to use flexibility to get ahead.
At first glance, it may seem that there is little some people can do to change their lives. They may be single mothers with young children, have consumer debt or have low-paying jobs with no ladder to climb. It appears to be a dilemma. Continue reading
3 Steps to Remove Financial Stress from Your Life
When Jennifer and Rob came to my office, they were desperate and despondent. With three young children and a boatload of credit card debt, they felt they were helpless to improve their life. They had tried to change their free-spending ways, but felt like failures, adrift, fighting against the current of continual financial stress.
Before your finances threaten to ruin your life, try the GAT method to remove the stress:
Set Goals.
It’s very important to write down your objectives. Discuss your goals – long and short term. Decide on your priorities and be specific. If getting out of credit card debt is the first goal, write down how much you can reasonably expect to reduce your debt every month. If saving for a new home is the goal, decide how much has to be saved. By keeping your written goals in front of you, you have an incentive to forego the temptation to splurge and instead, work purposefully to achieve your goals.
Accept your Natural Tendencies.
How did you get into this fix? Why are you overspending? What are you overspending on? Many times, people don’t understand exactly where their money is going. To take control, you must understand where your money is going and why.
Try this: track your spending for two months. Choose a method that appeals to you: pencil and expense booklet, computer spreadsheet, or an online budget planner. At the end of two months, you will probably be surprised to see that you are spending quite a bit of money on things you don’t even care about.
Just as important is countering your natural tendencies. If bills aren’t paid because they get lost, find an organizational method that appeals to you so you’ll do it – a filing cabinet in the basement, 3-ring binders in the bookcase, a basket in the kitchen to collect the bills. It doesn’t matter as long as it works for you. Then determine which partner at this point has the time and interest to pay your bills in a timely fashion.
Take Advantage of Technology.
Throughout the whole process, use technology as much as possible to streamline and automate. If saving more is one of your goals, set up a separate bank account and have money automatically deducted from your paycheck and deposited into it. Or use a separate account as the discretionary spending account funded automatically with an agreed-upon amount. Pay bills online. Use your smart phone or computer to remind you of your goals.
Jennifer and Rob easily identified their goals of spending less and paying down debt, and agreed to specific monthly amounts to do so. After some discussion, they mutually agreed to give Jennifer the bill-paying role because she enjoyed organizing papers and putting expenses into a spreadsheet. Sharing the bill-paying had previously left some bills unpaid. They both agreed to stop trying to keep up with the Joneses and both wanted to change. Jennifer took a job that removed her from the daily neighborhood peer pressure and brought in more money. Just by having a concrete written plan in place, they both felt relief and a sense of purpose that they could have the life they wanted.
Tammy Kraig is a Certified Financial Planner™ professional licensed with a registered investment adviser that provides personal financial advice online for a fee. She specializes in working with couples to help them identify and work toward their investment and retirement goals, long-term or short. Contact Tammy for help with virtually any financial need.
Too Much Information…
The end of the quarter is a good time to reassess your investment allocations. And maybe you want to invest that income tax refund that is coming your way. Don’t get too caught up in all the information, analysis, and direction coming from the financial gurus. If you are going to put in massive amounts of time to research and stay current on the financial markets – all the time – well and good. You are armed and ready to buy and sell at a moment’s notice. But for most people who aren’t making a living from analyzing the financial world, investing their retirement dollars can be done very well with a Simple Plan.
Four Steps to a Simple Plan:
1. Your Risk Tolerance: “To thy own self be true.” Shakespeare was correct. It’s your retirement money, and you need to be able to sleep at night. This means take an afternoon or evening and really contemplate how you felt when the stock market dropped 37% in 2008. Did you tell yourself you have plenty of time until you need the money? And, hey, these companies are still in pretty good shape. I should buy while prices are low. Or did you feel panicky and a little despondent? If you don’t ever want to go through a drop like that again, you will be more comfortable with a more conservative portfolio. But, you have to accept that returns will not be as fabulous as the returns of the next person bragging at a cocktail party about his killing in the latest start-up.
2. Your Targets: Often, creating a plan comes down to defining your goals – and especially your time frame. When you’re saving for something that is coming right up, you want to preserve your principal with a conservative investment. Historically, CDs, bank savings accounts, and money market funds have provided the greatest stability to preserve principal.
If you will take some money out for a medium-range goal, you might want to consider supplementing your money markets with investments in short-term bonds and perhaps a small allocation to stocks. Bonds usually offer more growth potential than cash – but, of course, there is risk.
For a target that is long-term, stocks offer the most potential – and the most risk.
3. Your Asset Allocation: Once you have decided how much risk you can comfortably take and are clear on your time line, create a plan for your investments. Select a few mutual funds that will allow you to sleep at night. An Index 500 mutual fund will attempt to mimic the market return – ups and downs. Sector funds such as Energy and Health Care can be more volatile and usually require more attention. If you are conservative, keep a portion in bond funds or money markets.
4. Stick to your plan. Perhaps the most important rule. We have seen individual investors come into our firm who have gotten out of the market at the very bottom and now want to get back in – but they have missed much of the rally. Establish a regular schedule for investing; take advantage of automated deductions such as payroll deductions into a 401(k) account or regular deposits into an IRA. And then stay disciplined through the ups and downs.
Four steps to a Simple Plan. Simplify all the dire predictions and too much information handed out by various self-proclaimed experts. Your time targets and risk tolerance determine your asset allocation.
Tammy Kraig is a Certified Financial Planner™ professional licensed with a registered investment adviser that provides personal financial advice online for a fee. She specializes in working with couples to help them identify and work toward their investment and retirement goals, long-term or short. Contact Tammy for help with virtually any financial need.
Ron Peremel
Kevin Condon
