Fortune Watch

I was involved in a discussion some time back and we were discussing this and all of us thought it was ridiculous that they don’t teach a personal finance class in high school, at least not when we were in school. Is it any wonder that when kids go off to college they rack up so much debt? According to some statistics I read that the average undergraduate has credit card debt!

The logic behind teaching children and teenagers about personal finance is pretty obvious. Just think of all of the finance clichés that you’ve heard: start investing as early as you can, the most important factor in investing is time, don’t get into credit card debt, etc. – all things that are best to learn sooner rather than later.

And because many basic aspects of personal finance currently aren’t taught in school and are left to be learned at home, this current system seems to nurture the fact that wealthy people tend to stay wealthy and poor people tend to stay poor. I don’t think it takes a giant leap of faith to see the possible correlation.

A simple personal finance class with discussions on retirement, the negative impact debt can have on a person, automobile financing, and saving for the future instead of buying for the now should be implemented in every single high school across the country.

The best long term solution is educating people so that they want to save by making financial capability a compulsory part of the school curriculum and embarking on a public awareness campaign to show the potential hazards of not saving.

Did I really need to learn Chemistry if I had no interest in any fields that would need it? I would think that learning how to control one’s money would be of more help to most people. Thoughts? Did you have finance classes in high school? If you did, did they help? I would love to hear about your experiences!

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Approximately eighty percent of our investors are male. But I am willing to bet that eighty percent of the most successful investors are women.

I have read many stories and I began to wonder why is it that women tend to be better investors than men. I thought about it over and over, and I could not ignore the facts that women make more successful investors than men.

While this recent research shows that potentially women are naturally talented investors, many are still put off by the macho image of the stock market. Men tend to let their egos make their decisions for them. They hold when they should sell and vice versa. They buy in for fear of missing out on that one big opportunity. They refuse to ask questions or to ask for help in fear of looking silly.

In other words, men are more interested in looking strong, knowledgeable or successful than they are in making money. They invest not to get the best deal out of the market but invest so that they look good.

Women on the other hand, are much more likely to ask questions until they fully understand what they are learning, and they are usually more interested in the goal, (in this case making money) than they are in impressing the people around them.

This quality makes women great investors from all that I have read are that rather than investing according to what will make them look good, women will invest according to a plan—not according to what mood they are in or whether they will be “right” or “wrong”.

Investing is not about being right or wrong. It’s about making money. Women are able to put their egos aside in ways men have trouble doing. This ability to set their ego aside makes women great investors.

Need proof? Ask yourself this: if a man and a woman are lost on a trip, which is more likely to stop and ask for directions? Being involved with Financial Services since a long time I have noticed women are more likely to ask investment questions until they completely understand the concepts. Men, on the other hand, can be too afraid to ask the necessary questions because he may look bad doing so.

Women tend to come to investing with a mind to learn. And when they learn, they execute solid plans. Men can be heard saying they “know that a company is good”, whereas women can usually tell you why the company is good.

“Are women better investors? As the expression goes ‘Men are from Mars and Women from Venus’… in the case of investing in shares it looks like Venus just might be a more sensible place to follow and put your money!”

You’re young, you just landed a new job and you’re going to be getting a decent pay check. You also have bills and student loans to pay and there are also a few items that you’ve always wanted so now you can finally afford them.

Investing for your retirement may be the last thing on your mind at the start of a new career. Especially being so young. Take some advice from those with a little more experience: Start investing early in your career. Start from day one and you will never miss that money you’re setting aside. Even if it’s only a few dollars a week. They add up to millions by the time retirement age rolls around.

It really does make a difference when you start contributing. It is important to invest in your retirement account early in your career for two reasons. First, if you’re fortunate to receive matching contributions, you don-t want to miss out on those added contributions that are a significant part of your benefit. Second, the longer contributions stay in your account, the more you stand to gain. Your money makes money in the form of earnings, and those earnings in turn make money, and so on. This is what is known as the “miracle of compounding.” As money grows in your account over time, the proportion resulting from earnings will become larger compared to the proportion resulting from contributions. And the best part is you don’t have to pay taxes on the earnings until you with draw them.

By investing the money wisely, typically starting off with investments that build slowly but steadily, you are able to better ensure you have money for your later years. And just because your later years are far away doesn’t mean you should wait to invest. The thing is that the best investments are the ones that take time to pay off. The ones that make you rich over night are few and far between and are also the ones that are risky enough to make you broke overnight as well.

The size of your account balance is going to depend on how much you (and your company if they match funds up to a certain percentage) contribute to your account and how your account grows as a result of earnings on your investments. To get an idea of what your retirement account could be in the future, look at the following projection.

A starts putting away $100 a month when she’s 22. Her money grows at 8 percent a year, and after ten years she stops contributing – and lets her stake grow. B waits until he’s 32 to set aside $100 a month, also growing at 8 percent a year, and he keeps it up until he hits 64. When they both retire at 64, she will have $234,600, and he’ll have only $177,400. Need I say more?

Looking at the numbers, it’s hard to imagine why someone wouldn’t start investing immediately!

You will need to make a clear plan of how to get where you want to. The financial plan needs to be broken down into realistic achievable goals with a clear deadline. The plan needs to include how much you are currently using to pay off debts, how much you are currently using to cover all living expenses and how much you are currently saving.

When you have that clear you need to look at where you are going to cut costs.
What can you live without?
Do you subscribe to magazines or newspapers you do not need?
Do you have memberships you do not need?
Is your rent or mortgage very expensive?
Are you spending a lot of money on driving where you do not need to go?
Do you rather eat out then cook yourself?
Do you pay too much for electricity, telephone, Internet connection and TV?
Do you have the best credit card, insurance, rent or mortgage and bank account deals you can get?

The meaning of these questions is that you should not settle with what you have now. Then your situation will stay the same.

Always shop around for better deals and always look at how you can cut costs.
Maybe you find out you need to move to another place where it is less expensive.
Maybe you need to eat more canned beans.
Maybe you need to use your bike, or your feet instead of the car.
Maybe you need to read magazines only when you go to the dentist or to the hairdresser.

Whatever it takes to improve your financial situation; decide to do it.

Write down both the longer term goals, medium term goals and the short term goals and what you will do to achieve them.

You need to set time limits for when you want to achieve the goals you worked out in the previous step.

Write down exactly what you are going to do to achieve them.

Last month I had made a post “Needs and Wants, getting REAL about Money” which attracted a great comment by Althea. I immediately thought that the comment itself would make a good post, so here it goes.

“I liked your article and it’s so true. The following information was taken from the book “The Insider’s Guide To Saving Money” by Michael Ellenbogen. “Cutting back does not necessarily mean giving something up all together, but rather finding a less expensive way to do it. Let us say, for example, that each morning you stop by your favorite coffee shop and buy a cafe latté. It costs $3.00, or $15.00 per week. Another option is that you could stop by a local convenience store and buy your coffee for $1.00. You would save $10.00 per week or $520.00 per year. Not bad for a minor adjustment. If you took the $10.00 savings each week and invested it at a 5 percent return, after 20 years you would have over $17,600.00. Not bad for altering one buying habit. Most people have more than one cup of coffee a day. Just think of those savings. You could even make your own coffee at work, which would save you even more.”

This book was a real eye opener, on the amount of money I have been wasting on cigarettes and so many other things. The savings added up quickly. I will be saving over $86,000.00, over 20 years because I stopped smoking 1 ½ packs per day”.

The term “risk” describes the probability of an undesirable event happening as a result of a present decision or of some future event. In life, we face multitudes of these risks. Financial risk is something you can never eliminate, you can however minimize risk, diversification is one way.

The worlds of business and finance are not much different from our lives when it comes to risk-taking. In any business venture, owners or shareholders are bound to face risks. Like the risks we face in everyday life, some of these business risks can be easily handled and some cannot, and the process of deciding which is which belongs to the practice of risk management.

Risk management refers to the entire process of identifying, analyzing, evaluating, and treating risks. But since businesses are faced with many different types of risks, risk management specializations have also been created to deal with them.

And then there’s financial risk management, which is very similar to general risk management with a specialization in a business’s finances. Financial risk management also follows the processes of risk identification, analysis, evaluation, and treatment. Financial risk management, however, is more focused on finances and makes use of financial instruments to manage a business’s exposure to risks.

Instead of leaving businessmen with a variety of choices for risk treatment, financial risk marketing is focused primarily on hedging, which is the use of two counter-balancing investment strategies to offset the negative effects of price fluctuations. Aside from these differences, everything else is essentially the same.

Business men don’t have much choice but to face risks.It is for this reason that knowledge about financial risk management is very important in the business world. The practice won’t help businessmen avoid risks, but it gives them a chance to counterbalance the negative effects of risks whenever they have to take one.

You and you alone, are ultimately responsible for your financial well being. Your decisions will affect how you live on a day to day basis and in the long term. Handling the financial issues associated with starting out, establishing a household and having more responsibilities can be stressful.

A solid financial foundation can help you spend less time and effort on your finances so you can devote your time and energy to other important matters like your job, your family and your future.

The only reason for earning a fat salary is not to blow it away for the good times; a sensible option can be to save some for future when destiny decides to pick on you. Putting some money aside in a savings account is a safe bet, as the ‘market’ can be a tricky territory to tread!

Reaching a point of financial security is a process that takes time, effort and perhaps some sacrifices. However, the results are worth it. By starting early, you can put time on your side. By doing a few things right from the beginning, you can make that process easier and minimize the sacrifices you may be forced to make later.

Save what you do not spend. After you have paid your bills each month, move what is left over to your savings account. You will probably want to keep some funds in your checking account to cover unexpected expenses, but by moving excess funds to your savings account, you will be accumulating assets and probably earning more that what you would have earned if you left your excess funds in your checking account.

Opening a savings account is easier than gobbling up a delicious piece of cake. All one has to do is to walk up to any high street bank and open an account. There are different types of accounts for different needs; you can easily select yours according to your means and requirements. The good life will be here before you know it. Putting a little money away today means big dollars for later.

The interest rates that you will get, differs from bank to bank and account to account as well. The rates will be slightly lower in an easy access savings account but then you will get instant access to your money whenever you need it and no notice or penalties for on the accounts.

As for now all I can say is no one can foresee the future and one should be ready to tackle the issues waiting for you in the future (yes there will be a few, life is not a fairy tale) and by having a plan B to every problem that raises its head, you can actually give your life a “…happily ever after” ending.

The time to pay up for last years holiday has come around again, but you may have came back from holiday only to find that there a few items on your credit statement that you don’t remember paying for.

Here are some tips on the direction you should take if this occurs. My friend Jag from MyPeculiarThoughts has also compiled Tips to transform yourself into a Savvy Card user is worth reading.

The first thing you should do is to contact your credit card company. If someone has illegally cloned your credit card details, you could find more of the same type of credit card transactions on your next bill.

The next thing you should consider is contacting all the providers of the other credit cards that you took with you on holiday. You should let them know that you think that one or more of your cards has been jeopardized and that you will need to have your accounts checked for abnormal transactions. The simplest way is to let them know when you returned back home from holiday and that any purchases from abroad should be thought of as suspicious.

Tell the credit company to cancel any cards that are thought to have had any suspect transactions performed, and instruct them to send you out new replacement cards. It will usually take a couple of days to receive your new plastic, so in that time you will have to use other arrangements to pay using cheques, cash etc.

The credit card company that you use will investigate any suspicious transactions in part to make sure that you didn’t make any of the purchases and just forgot about it, and they might be capable of plotting out a pattern of transactions from somebody that is travelling from region to region while using your card.

You should ask that your credit company send you out an amended account of your transactions and that they don’t ask you to pay on you disputed credit card bills.

One last thing, you might receive some calls from someone who claims to be from your credit card company, and they want to check your newly issued credit cards for security reasons. If they ask for any secure information, don’t let them have it, it could be the criminals calling you, and they know that you have probably been issued with new cards. They do this in an attempt to obtain entry to your new accounts.

Remember; just make sure that you can account for everything on your next bill.

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Credit Card Users & Financial Planning

At some point you will need to make changes to your investment portfolio. Often, investors and their advisors make wholesale changes all at once.

But that’s not really in your best interest. Read on to find out how to successfully adjust your portfolio. Using the wrong strategy at the wrong time can be devastating.

Perhaps you’ve decided to make changes to your portfolio. It may be to take advantage of some strategies or it could be because your life situation and needs have changed. Or it might be that you’ve neglected your portfolio garden and there are as many weeds as vegetables.

Regardless of the reason, keep these steps in mind. They’re the ones I follow when transitioning a client’s portfolio.

You need to analyze your existing portfolio. Take a close inventory of your investments and research their performance. The last thing you want to do is to cut down the wrong plants while you are weeding your garden!

It takes more work but it’s better to calculate your actual return. Subtract what you invested into a particular holding from what it’s worth now. Look at that return in relation to the length of time you’ve held it to determine whether or not it needs to go.

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