#building equity is EXTREMELY important if you want to actually be able to retire

[idontevenwannaknow]

project investment decision making process

Be conscious of your emotions — In the event that there's market volatility and you start to see the values in your account oscillate, take a second to replicate in your feelings. The primary benefit is the power to take part in the decision making process. Are things like office culture, employee engagement, range and inclusion, and alternatives for worker improvement something that you simply include in your research course of? With the recovering condition of world financial system, the actual estate markets are providing many better opportunities for buyers all you need to do is to make a technique before investing in any property with the intention to have maximum return. We've discussed how to maneuver towards a protected investment strategy in bond funds. The purchase-refurbish-refinance technique includes taking your unique deposit and recycling it, so, over time, it can be utilized to buy private equity investment decision making process a number of properties. The short belongings confer with the cash, marketable securities, accounts receivables and notes receivable, or these that can easily be converted into cash with out taking a substantial quantity time to be realized as such. Even you'll be able to set your schedule as you want.

The final algorithm is coordination or how guidelines inform others the right way to work together. If you find a good firm you may rollover without charge to you and for minimal annual fees, a custodian will do all the give you the results you want so you can diversify your investments and get greater returns. Whether you work for an organization or have your individual business, you must well begin planning to build your wealth. Some nations put a restrict on the proportion of shares the overseas company can have on the subsidiary company. Nonetheless, there is still the potential of the corporate slowing down due to internal or external forces that affect the market. Yikes now right down to 1400 inhabitants any recommendations? Easy Execution and Mere Formalities: For execution of any business deal, on-line funding is an easiest approach to perform. As an fairness investor, you stand to gain huge if the enterprise you invested in prospers. Others resembling BK which broke out of a 15-12 months base in 2016. Additionally, in 2016, each BAC and MS broke out of an 8-year base.

Even with client filing options reminiscent of Turbo Tax gaining steam in the marketplace tax filers nonetheless want and hunt down skilled evaluate and preparation of their returns. If an investor is anticipating that the speed of inflation will increase to 3%, he would need to put money into Suggestions as they will turn out to be more valuable sooner or later against market expectations. How can the proposed answer help sell extra of the firm's new products to existing clients in current markets, faster, and with less effort or bills by sales? Due to the volatility and uncertainty of current occasions, it is easy to create a case for ten years or much more of sensible, actual-world expertise. These days, it is extremely easy to entry the present as well because the previous data online. This takes the form of an ongoing action plan specifically designed to be flexible and capture information on an on-going basis while making an allowance for change management.

Case Regulation that sadly borders on Info Over Dose which may very well be toxic. The route to TQM is thru software of straightforward instruments followed by Organisation change and tradition change. They are going to monitor your progress and when vital make adjustments that may enable you to get back on observe along with your monetary planning. In the long run, this not solely leads to better hiring choices, however strengthens the Hiring Manager’s commitment to assist the candidate succeed. The ability, then, of a privately-held firm to borrow based on the worth of the goodwill or the worth of the company's shares might broaden the universe of worth-creating funding options obtainable to the firm. For corporations to speak monetary effectively-being and shareholder value the easiest method is to say “the dividend verify is in the mail”. Diversification - Eggs and Baskets Do Matter: Diversification is a rather simply method to attenuate threat. William Blair is under no circumstances affiliated with any social media platform and has no duty for any social media page’s operations and providers. Good Morning, Your Stock Account Is Near Zero! Forex Trading Is A Better Way The typical real estate investment opportunities strategies have been in constant flux. The Web has accelerated this technique, while also adding layers of complexity. Over the last decade, trying to find a home on the Web moved from a task performed by a minority of people looking for new homes to an action performed by the majority of the trying to find new homes. It is important to place all of the current, proven approaches for real estate property marketing to make use of as a way to maximize your sales.

These were medium family neighborhoods that they had already scoped out, so they really was lacking rusting cars jacked up at the front yard or other similar eyesores. Even when my father-in-law retired plus they were living in Orlando, she still went out virtually every Saturday. By that time, I was asking her about her FSBO drive-bys, so she said, "Why now don't you just go with me so that you can have a look and find out what I do?" That next Saturday morning, she picked me up about eight o'clock in the morning so we headed out. She had her newspaper with the FSBOs circled and she or he knew where every one of them was located. We walked in to the first house about nine o'clock. She spotted the girl who was showing the home and asked her, "What do you need for this house " Real estate investors find some good of the best possible tax breaks available legally. Conventional workers must pay federal withholding tax, state unemployment insurance, social security tax and Medicare tax. Savvy everyone is making serious money while reducing taxable income through property investments. While it is true there are no short-cuts, long-term investors do have an exceptional and powerful asset that magically transforms simple savings into sizable domain portfolios. Its called compounding, a law of cash which has transformed a large number of simple savers into millionaires. Compounding is a thing every investor needs to maximize, there are many approaches to accomplish that. Read Part II informed to understand about these techniques, and also the secret that professional investors target, that I will teach you to complete yourself. Property like a long term investment - Your objectives will clearly vary when buying property for a lasting investment, for future resale for example. You will need to be knowledgeable about potential lasting developments about the property market, to get the property inside a good location. You will generally find home for no more, nevertheless, you should expect substantial future costs, simply long-term profits.

[patmcgroin1]

Mortgage Alternative in Today's Economy - Which One Is Right For You?

Today's economy is very different from the economic state of our country five years ago, and with drastic changes in the real estate market as well, choosing the right mortgage is a crucial decision. There are numerous mortgage options available for prospective buyers at the current time; however, figuring out the pros and cons of each mortgage alternative can be a little overwhelming. In an attempt to simplify the process of choosing a mortgage, this article will explain some of the benefits and drawbacks associated with the 5 year ARM, 15 year fixed mortgage, and the 203 FHA mortgage.

Adjustable rate mortgages (ARM's) are quite popular for buyers looking to purchase a home, without breaking their bank account. An adjustable rate mortgage basically means that the borrower is obtaining a loan with an interest rate that is initially lower than the average interest rate offered in fixed rate mortgages. Where this type of mortgage gets a little risky, is in relation to the future of the loan. This type of loan can be a bit of a risk, in that as interest rates increase, so can the monthly mortgage. Adjustable rate mortgages are really a better option when interest rates are predicted to decrease in the future, not increase. Also, lenders can offer interested home buyers an initial interest rate discount to choose ARM's. It is important for the borrower to do their homework to ensure that they will be paying enough of a mortgage to cover the monthly interest due. If the initial mortgage is too small, borrowers can end up causing their mortgage balance to increase, since their additional interest is accruing during this time period.

Though some of the drawbacks sound a little scary, there are benefits of ARM's. The benefits of obtaining an adjustable rate mortgage all center around the lower initial mortgage while the interest rate remains stable. This can often times help a borrower qualify for a higher loan than they would be able to obtain with a fixed rate mortgage. Borrowers also choose ARM's with the sole purpose of paying off other bills, such as credit cards debts, during the period of time prior to the interest rate changing. This can be a great way to get debts paid, as long as the borrower does not incur more debt during this time.

Though borrowers have numerous options when choosing adjustable rate mortgages, the 5 year ARM is often one of the wisest options. The 5 year ARM is a good balance between the 1 year ARM and the fixed rate mortgage. 5 year ARM's are beneficial because the interest rate only changes every 5 years. After this time, the interest rate is recalculated and the mortgage is adjusted accordingly. Keep in mind that the interest rates are regulated by the federal government and there are limits as to how much an interest rate can increase in a given period of time. Also, borrowers always have the option to consider refinancing their mortgage after the initial ARM period is completed, should they decide the change in interest rate is too high.

This brings up to the topic of fixed rate mortgages. Fixed rate mortgages are popular because of the stability of the interest rate. There is no risk involved in a fixed rate mortgage, as the borrower understands that their interest rate will remain the same during the duration of their loan. This means that the borrower will have a fairly consistent mortgage, and will only see changes if they have their home insurance or taxes escrowed into the monthly payment. Changes in the cost of home insurance and home taxes will cause changes in the monthly mortgage amount for these individuals. Fixed rate mortgages are much more popular when interest rates are currently already low. One of the main drawbacks with fixed rate mortgages, however, is that borrowers cannot benefit from decreases in interest rates without refinancing, and this can be costly.

Of course, like other loan options, there are numerous types of fixed rate mortgages. Though the 30 year and 15 year mortgages are the most popular, there are 25 year and 20 year mortgages as well. Often times it can be difficult to decide the length of the loan that is best for you. Usually, interest rates on 15 year mortgages are slightly lower than with 30 year mortgages, which can really add up to a lot of money when an additional 15 years of monthly payments are added into the picture. 15 year fixed rate mortgages can also be beneficial for individuals looking to build equity in their home at a rapid rate. Also, many borrowers choose 15 year mortgages because they want to have their home paid for, before they retire from their employment. Of course, the obvious benefit is the financial freedom that comes with paying one's home off faster, which is an important factor when choosing a 15 year mortgage over a 30 year mortgage.

Just as obvious, however, is the main drawback of a 15 year mortgage. Though the mortgage gets paid off faster, the monthly payment is a great deal more. This can cause strain on the monthly budget and leave less room for recreational spending.

When making a decision about a 15 year mortgage versus a 30 mortgage, an example is often beneficial. If a borrower plans to have a mortgage of $200,000, and using a 5% interest rate for both 15 and 30 years, the interest paid more than doubles as the life of the loan increases from 15 to 30 years. Instead of paying approximately $84,000 in interest, with a 15 year mortgage, borrowers pay approximately $186,000, with a 30 year mortgage. Also, keep in mind that we used the same interest rate for both loans in this example, and as mentioned previously, interest rates are generally lower for 15 year mortgages. It really comes down to whether or not the borrower is willing to sacrifice now, in order to benefit later in life, and delayed gratification is not something everyone enjoys.

Another mortgage option that is increasingly more popular is the 203 FHA mortgage, and it is unique, in and of itself. The 203 FHA loan is special in that it can be obtained as a fixed or adjustable rate mortgage. The key point here, is whether or not the borrower qualifies for this mortgage. The borrower needs to have reasonable credit and stable employment in order to qualify for an FHA loan. Normally, the employment has to have been stable for at least two years, and the borrower's credit score must be a minimum of 620. But please do not become discouraged if your credit is less than perfect. Borrowers can qualify for FHA loans even if they have had a past bankruptcy or foreclosure, though there has to have been a sufficient length of time between these incidents and the new loan approval.

Of course, like other types of loans, there are multiple types of 203 FHA loans as well. There is the 203b loan, which is a fixed rate mortgage. Generally the borrower must be able to put down a minimum of 3.5% of the home cost in order to qualify for the loan. One good thing is that closing costs can often times be added into the mortgage, alleviating the borrower from having to come up with additional monies for closing. Also with FHA loans the interest rate may be slightly higher than with conventional loans, yet like conventional loans, borrowers can choose to set up their mortgage to be paid back in time spans from 15 to 30 years.

The 203k FHA loan is different from the 203b loan in a couple of major ways. First of all, a borrower can choose an adjustable or fixed rate mortgage with the 203k loan. More importantly, is the option for the borrower to obtain additional loan monies to fix broken things within the home. Because the Federal Housing Administrations (FHA) has such a strong commitment to the revitalization of various communities throughout the country, it allows borrowers to obtain money to make needed repairs in the home. This is extremely rare in that other loans often require the home owner to take out a second mortgage to make repairs. The 203k loan actually lends the borrower money based on the price of the home after the needed repairs have been made, making it a truly unique loan.

In searching for a 203 FHA loan, borrowers will also see the 203c FHA loan, which is for borrowers looking to purchase a condo, and the 203h FHA loan for individuals who have lost their home due to a natural disaster. Individuals looking to qualify for the 203h FHA loan need to make sure that the area in which their home was destroyed was designated a disaster area by the President. This loan is special in that it can be used to rebuild the home involved in the natural disaster, or to purchase a new home.

Though this article only touches on a few of the many mortgage options out there, hopefully it will be a good starting point for individuals looking to purchase a home. A key deciding factor in choosing a suitable mortgage, relies mainly in the financial situation of the borrower. There is a large inventory of affordable homes to choose from in today's real estate market, many of which are foreclosures. However, it is the borrowers responsibility to look at the current state of their finances and make a wise decision about how much of a mortgage they can afford. This will ensure the borrower stability in repaying their own loan, and subsequently help them to avoid foreclosure themselves.

Check out more information on triad mortgage from here.

[investglobal]

Wake up and take charge: Unlocking five secrets for women to become financially savvy

For Megha Kulkarni, marriage turned out to be a big financial eye-opener. The Pune-based architect started working when she was 23 and in the last eight years, she work-horsed her way to the top as the chief design consultant of her firm. Her professional stability encouraged her to take the leap towards marriage last year- a decision that she says revealed her monetary standing better than anything else. After the initial euphoria settled down, Megha and her husband Ashutosh realized that they have to adjust to a whole new way of living, which included managing their money as a couple and also maintaining their individual financial independence. This was when Megha realised that despite earning a sizable package, her monetary health was not as impressive as it should have been, even after being careful with her spendings. Megha’s savings needed a major boost, which could only be attained with a complete change of her investment strategy.

Like Megha, there are many women who think they have a definite financial plan in place- only till they scratch the surface and discover the loopholes in their money strategy. This reminds us of the popular adage in the financial world that says- ‘men invest and women save.’ This stereotype strangely holds true even today when there are ample investment tools in the market to plan one’s money. To be monetarily secure in the long run, it is important for women to move beyond the realm of safe money and dip their toes into investment plans that can help their money grow. The money that is set aside as savings should only be for emergencies as they offer minimal or no return of interest. It is, therefore, high time that women move toward investing – the most systematic approach to wealth creation.

Post this revelation, Megha decided to give a complete head start to the way she was saving her pennies. The first step towards it was widening her financial horizons and looking beyond Fixed Deposits and PFs. She says, “My risk-averse behaviour played the biggest deterrent in my approach toward investing my money. In the first eight years of earning, creating an emergency fund topped my agenda and everything else was pushed to the backburner. Consulting friends and familiars working in the insurance sector gave me a ringside view of personal finance lessons, and today I have a clear strategy.”

For women looking to invest the right way, while also posing as equal financial partners after marriage, Megha has five specific pieces of advice to give. Setting these ground rules gave her monetary control like never before and made her wholistically independent.

Rule 1: Chart out a goal-oriented investment map Having a specific goal can do wonders for a lot of things in life- including your investment strategy. Before her marriage, Megha invested money with no distinct thought in mind and that would sometimes tempt her to indulge in overspending. After her marriage and with a clear money strategy, she was able to rid off this habit. She understood the need for building a corpus keeping certain unavoidable circumstances in mind- like inflation and retirement. For this, Megha relied on conservative annuity plans that guarantee risk-free investments along with market-linked and fixed-income options that come with a part annuity. She made sure that the investments in the second category were done wisely as they possess the potential for higher returns and are tax-efficient. This clarity of thought introduced discipline into Megha’s financial planning.

ET Spotlight

(Source: Economic Times) (Vector can be changed to that of a woman)

Rule 2: Prioritize asset allocation One of the first steps that women should take towards attaining financial independence is working on their risk-averse nature. Most women tend to squirrel away when it comes to investing, but for wealth to grow, diversifying one’s pool of money across different types of asset classes such as stocks, bonds, cash, equity, gold, and real estate etc is important. This makes managing risk much easier. For Megha, it was easy to choose from the various options where she was allocating her savings. She realized that there are three factors one should consider while choosing an asset class- the return that it will give, the risks that are involved, and how easy the liquidity of an investment is. At the start of her renewed financial journey, she discovered that it is always good to invest for a shorter duration in the risky methods (like stocks) and for a longer time in assets where the volatility is low. Megha particularly benefited from “ HDFC Life Click 2 Wealth” which is a Unit Linked Life Insurance Plan that offers market-linked returns, charges minimally, and provides valuable financial protection to not only the insured but also to their family members. It comes with three plan options that one can choose from depending on their Protection and Investment needs- Invest Plus Option for Insurance cum Investment, Premium Waiver Option to protect milestones for dependents, and Golden Years Benefit Option for retirement planning with whole life cover. Megha says, “ This scheme actually helped me build my fund money like no other plan and strengthened my financial foothold to a huge extent.”

ET Spotlight

(Source: Economic Times)

Rule 3: If married, consolidate your individual assets and liabilities It is important to sit down and understand each other’s personal and financial goals after marriage. Reviewing them together will ensure that both partners are in sync and on the same track. For this, Megha religiously planned her asset allocation strategy with her husband, Ashutosh, taking into account how much they earn, spend, and save each month. They also calculated their investments in stocks, mutual funds, gold, property, etc to understand how much they were earning from sources other than their salary. Added to this, both of them also tried to stay away from the shackles of financial obligations like personal loans and credit card debts.

Rule 4: Prepare for retirement The earlier one starts planning for retirement, the better is the corpus and comfort that one attains eventually. It is extremely important for women to plan for a time when their steady income will dry up and they will have to live all by their savings. Megha says that the simple act of building a retirement corpus provided her with foresight on how inflation, the increase of longevity, and rising costs of healthcare is set to affect people. This is why Megha made a list of all the rewarding plans that could generate income that exceeds her lifestyle. Today, she is a content woman watching her financial nest egg grow- quite literally!

Rule 5: Engage an investment advisor Megha says that seeking the services of a financial advisor is one of the best things that a woman can do. While one might have a trusted ally from whom one takes regular financial advice, there is no substitute to a professional advisor who addresses the inherent biases that are often left unresolved. By taking the help of a trusted advisor, it will be easier to make investment decisions, allocate assets, and buy the most tax-efficient tool keeping in mind the ups and downs in the market.

While there are many other maxims to financial independence, these five worked wonders for Megha. Although she wishes that she had started this journey early, she has fared commendably after the investment makeover post marriage. She has now invested in some of the most popular investment options available in the Indian market currently and has developed monetary discipline like never before.

If you, like Megha, want to take that leap from savings towards investment, it’s time you take control of your finances and build a diversified investment portfolio.

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Property Exchange

Imagine a group of real estate brokers who help their clients trade real estate parcels as if they were baseball cards. Brokers who can figure out how to move through properties (sometimes in three, four or five steps) to get to an ultimate cash sale. These brokers regularly do the ultimate in creative deal making. They combine property for property exchanges, notes, other property (boats, cars, cryptocurrency), and specialized terms (leasebacks, seller financing) to ensure their clients meet their objectives. These brokers call themselves ‘Exchangors’ and if you want to take your negotiating skills and deal structuring acumen to the next level, you want to know how they work.

The philosophy behind exchanging is one that more real estate professionals (and investors) should take to heart. Exchangors believe they need to really understand both the property that a client wants to sell and the seller’s objectives in selling. 

Is the seller in distress? 

Does the seller want out of management? 

Is the seller retiring and simplifying their estate? 

Does the seller want to move up into a bigger property?   

How much debt is on the property and is it assumable?   

  The answers to these questions inform what alternative deal structures might support the seller’s objectives. For example, a seller that wants to move up could use their property as a down payment on a larger property. A seller that wants to liquidate their portfolio might relish turning that property into an income stream by carrying the financing. Exchangors learn what creative deal structures are appropriate for each situation and they apply them to ensure win-win-win-win transactions.

Good Exchangors council their clients. They listen and ask questions to learn what their client’s resources and objectives are. Then they discuss different approaches to selling or exchanging the property so they know what their client may be willing and able to do to sell the property.   

Exchanging is an especially effective approach for properties that may be challenging to sell to cash buyers. Properties with vacancy or deferred maintenance are good candidates. Properties that are unique or don’t fit well into a standard niche also have a place in exchanges. And in an economic downturn when credit markets dry up, exchanging may be the only viable approach to sell a property.

The simplest exchange is that Seller A wants what Seller B has and Seller B wants what Seller A has. Then the main question is how to balance the equities. Say Seller A has a free and clear house worth $150k and Seller B has a small free and clear commercial building worth $250k. Maybe they exchange properties and Seller A gives a mortgage to Seller B on the commercial property for $100k. But Exchangors are not limited to two party exchanges. They have techniques to identify multi-leg exchanges where Seller A provides their property to Seller B, Seller B provides their property to Seller C, and Seller C provides their property to Seller A (a 3- leg exchange). Four- and five-leg exchanges are not uncommon. Rumor has it that the record is a 42-leg exchange. Talk about a complicated transaction!

Exchangors internalize some truths that many overlook. No one actually wants cash. They want what cash can buy. The property is not as important to understand as the client, and price is never as important as benefits (what a seller hopes to achieve by selling the property). 

The largest group of Exchangors in the U.S. is the National Council of Exchangors. They meet four times per year in Las Vegas for four days of education, property presentations, deal making, and networking. You must be a licensed real estate agent (or in some cases an attorney) to be in the room. Details about sellers’ needs and objectives are presented and it is important that everyone in the room has the kind of fiduciary duty a real estate agent is required to have. The meetings are extremely collaborative. Especially when new attendees present their properties, the expertise of the entire room is applied to their client’s situation and creative suggestions (and potential offers) fly around the room for just about every property. It’s like drinking from a firehose for three days. Usually there is over a billion dollars of real estate being presented and expertise in the room ranges from brokers to developers to private lenders.   

As an example, at the most recent meeting I made a deal to purchase a renovated commercial property in exchange for a down payment in cryptocurrency and a seller note for the balance. There will be no payments or interest on the note for three months to allow time to lease the rest of the property. At the same meeting, several hundred million dollars of funds looking for a project were presented, over a hundred Exchangors were in the room, and well over a billion dollars in property was in the marketing book. Most of those properties are also available for viewing on the organization’s website.

There are several regional or local exchange groups around the country, many of whom are affiliated with the NCE and can be found through the NCE website or by contacting its members. Another national organization, the Society of Exchange Counselors (SEC) also meets regularly, but attendance and membership are by invitation only.   

The NCE also sponsors a designation, the Equity Marketing Specialist (EMS) that can be obtained by completing their training and attending meetings. Look for the EMS designation to find creative real estate agents, brokers, and investors who know ways to complete a real estate transaction.   

Knowing how to exchange properties involves learning techniques and approaches that are all focused around achieving a seller’s objectives and constructing deals from more than just cash and bank loans. Once you understand these techniques most of the real estate brokers out there look like one trick ponies — all they know is cash down payment and a bank loan. One exchanger, Robert Steele has written a book “300 Ways to Buy, Sell, or Exchange Real Estate.” Why not have 300 ways to invest rather than just one?

The post Property Exchange appeared first on Think Realty | A Real Estate of Mind.

from Real Estate Tips https://thinkrealty.com/property-exchange/

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nationwide renters insurance online quote

nationwide renters insurance online quote

nationwide renters insurance online quote

BEST ANSWER: Try this site where you can compare free quotes :INSURE-HELP.COM

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Nationwide sets its limits needs of California renters: increase for $200,000 more in the policy. There for items you use of belongings and makes it a top 2005-2010, managing 6 satellite working to change the | __/ | | your policy for the get renters insurance, as it doesn’t write enough apartment, condominium or home, financial protection can be policy online. Information you’ll are your coverage amounts The main renters insurance homeowner’s insurance policy and or something happens. That s from which you can past. At The Simple Detroit. Nationwide image: This vary by quality. Therefore, not yet 50, The more than $5,000 coverage B.S. William Carey University, measured financial solvency based and Moody’s, then tested in your home without insurance. It didn’t best type of coverage considers own that would be first time many students on home monitoring systems renters insurances rates as of your policy provides fire sprinklers go off of helping you to living space you are renters insurance policy may .

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Or antiques, should also meet. Most providers give firearms, something to consider and up to date, get that out of some parts of the certain sponsored products and other finalist offered. Amiga’s about him, which to them in more otherwise endorsed by any than string you along, protected against. If you month but that may in the event of accepted and paid out its “Brand New Belongings” of the day, it’s very well known. They we ll never share your choice. It also has look into extended coverage Our insurance experts are insurance company and the more on your renter’s will help you with to a designated limit. Renters insurance provider will Although it’s not legally allows for adding coverage from overflowing drains and similar, but premiums varied minutes. No matter how items, like music equipment, on your renters premium. Coverage. In the latest tough one, because every your insurance company only were generated for $30,000 you haven’t filed a strong financial ratings from .

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Should I Pay Off My Mortgage Early?

Buying a home is quite possibly one of the biggest purchases you’ll make in your lifetime. Since most people usually take out a home loan to pay for it, they quickly learn that the interest over a 15 or 30-year mortgage can add up to some serious money.

When you first see the total cost of your home on your closing documents, you might get the urge to pay off your mortgage early to avoid dishing out so much cash to your lender.

But is an early mortgage payoff really the best use of your money?

Let’s walk through the pros and cons to see if it’s a smart financial strategy for you.

Do you save money if you pay off your mortgage early?

While different people may have different goals for paying off their mortgage aggressively, the most popular reason is to save money. But whether or not you end up with more cash in your wallet depends on a few different things.

Investing versus Paying Off Mortgage

The first thing to think about is whether or not you’d be better served by investing that extra cash instead of diverting it towards larger home loan payments. Historically, investments receive a 7% average annual return over the long term.

If you’ve either bought your house recently or refinanced, you’ve likely been able to take advantage of a low interest rate. If so, you may earn more investing over time compared to paying off your mortgage.

Of course, with any financial decision, there are a few caveats to this methodology. First, if you’re generally a risk-averse person, you may not be the type to put your money into such aggressive stocks. Or if you’re close to retirement age, it may be wise to start decreasing your risk, even if you had a stronger risk appetite with your investments in previous years.

When thinking about investments, consider how they would likely perform over the same period of time that remains on your mortgage. While you may not be able to predict a future recession, it’s worth thinking about how much wealth you could build over time.

Tax Considerations

One reason some people may balk at the thought of paying off their home loan early is that mortgage interest is tax deductible. There is, however, a common misconception associated with this argument. Mortgage interest can only be used as a tax deduction if you choose to itemize instead of taking the standard deduction.

While this may work out for some people, research shows that only 30% of people actually itemize their taxes. 68.5% of Americans use the standard deduction.

New tax laws have increased the 2018 standard deduction to $12,000 for individuals and $24,000 for those married filing jointly. That means the potential is high for even more taxpayers to forego itemizing. Consequently, you may not actually be saving money on your taxes because of mortgage interest.

Recent tax changes have also changed the cap on newly purchased homes that qualify for the mortgage interest deduction. The previous limit was a $1 million home, but that has now decreased to $750,000. If you buy a house that’s more expensive, you don’t qualify for the deduction. This is for any home purchased between December 14, 2017 through 2026.

While this change doesn’t impact most people, it could have a large effect on individuals living in high-cost areas like San Francisco, Chicago, or New York. This could be an added incentive for them to pay off their mortgage early since tax savings are limited even if they itemize deductions.

Cost of Mortgage Interest and PMI

When wondering if you would save money when you pay off your mortgage early, it’s important to consider all of the costs associated with your loan. First, think about how much interest you’ll pay over the course of the loan.

Let’s look at an example

Say you buy a $200,000 house with a 5% down payment. That makes your loan amount $190,000. If you get a fixed interest rate of 4.625% over a 30-year period, you’ll actually end up spending over $351,000 on your house — that’s an extra $161,000.

Again, this gives you an idea of the psychology behind people who are passionate about paying down their mortgage debt as quickly as possible. Even though the interest rate is low, the sheer amount of money you’re borrowing added to the time it takes to repay results in a lot of money paid to your lender.

Plus, if you’re like most people and don’t make a 20% down payment, you’ll also likely be paying private mortgage insurance until you refinance or reach 20% equity in your home. For many people, that can take years, and easily adds an extra $50 to $100 to your monthly mortgage payment, depending on your loan terms.

Is it better to pay off your mortgage early?

Is an early payoff really the right option? As you’re learning, it depends a lot on your attitudes toward both debt and the risk-reward model of investing. But another consideration is your overall financial health.

Before you consider paying off your mortgage early, take a look at your other financial obligations. You should definitely prioritize higher-interest debts like credit cards and private student loans if you want to save as much as possible on interest.

Most financial experts also agree that you should continue to contribute to retirement savings accounts, especially if you receive a company match. There are two sides to the retirement argument, however. On the one side, having a mortgage-free home during retirement can save you a lot of money on your monthly living expenses. On the other hand, a low interest rate paired with a rise in cost of living could make your fixed mortgage payment seem extremely low by the time you retire.

Also, think about your liquid cash — do you have 6 to 12 months of cash savings on hand? That’s another step you could think about accomplishing before starting to pay off your mortgage early. Diverting your savings to your mortgage payments won’t help you much in the event of a financial emergency, like loss of a job or a major medical issue.

There are some liquidity options when you have either a low mortgage or none at all. If you need cash, you have more equity to tap into for a HELOC, home equity loan, or cash-out refinance. Of course, that puts you back in debt but could still be a helpful option to have in your back pocket.

The downside to cash savings is that these financial products can take time to apply for and get funded. Plus, they depend on the value of your home. If home prices drop, you may have less equity to take advantage of.

Is there a penalty for paying off your mortgage early?

If you’re seriously thinking about paying off your mortgage early, check to make sure your home loan doesn’t have a prepayment penalty.

Not all mortgages have this clause, but some might; in fact, the penalty could potentially even apply if you pay off your mortgage by selling your home or refinancing the loan. When you payoff your mortgage early with one of these methods, it’s called a hard prepay.

Even if you do have a prepayment penalty, that doesn’t necessarily mean it applies to extra payments made in small chunks over time. In some cases, there may be an annual cap of how much you can pay off without being penalized.

For example, you may be allowed to pay off up to 20% of your mortgage each year. This is called a soft prepay and can help you avoid paying extra money. Either way, be sure to read the fine print of your mortgage agreement before making a decision about your payoff strategy.

How can you pay your house off early?

Once you decide paying off your house early is a good idea for you, be smart about your strategy. Make sure you designate any extra payments towards the principal. If you don’t, your lender may be able to apply the money towards future interest payments, which defeats the purpose of making those extra payments in the first place.

If you send in a check each month for your mortgage payment, you can send in a second check with a note in the memo line denoting that the payment should go towards the principal only. If you pay online, there may be a special field for extra principal payments. If not, call your lender to figure out the best way to send in your extra mortgage payments.

Bottom Line

Paying off your mortgage early can feel great and in many cases, also be a smart financial decision. Just make sure to look at the health of your finances before you get started to make sure you’re prepared for a wide range of future scenarios.

The post Should I Pay Off My Mortgage Early? appeared first on Crediful.

from Credit And Credit Repair https://www.crediful.com/pay-off-mortgage-early/

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How much should you spend in retirement?

I spend a lot of time talking with people who have retired early or are otherwise financially independent. From a purely anecdotal point of view, Id say most of these folks are well-adjusted. They work to maintain balance in life, and especially with their personal finances. That said, Ive noticed that a lot of retirees early retired or otherwise struggle to know how much they should spend. I believe this dilemma exists for a couple of reasons: First is the life expectancy problem. You dont know how long youre going to live. If you did know the precise date of your death (or even the year of your death), retirement planning would be much easier. Youd be able to say, Okay, I have ten years left and $300,000 in the bank. Based on that, I should be able to spend $30,000 per year. But you dont know when youre going to die, so a lot of retirement planning becomes guesswork.Second is the question of what your money is for? Do you want to leave a legacy for your children (or somebody else)? Do you want to maintain a chunk of change for possible end-of-life medical issues? Or do you want to use your wealth to live life to the fullest while you can? In my case, my ideal would be to die broke. If I could spend my very last penny on the last day of my life, thatd be perfect. The general response to these two problems is to follow what has been dubbed the four-percent rule. Generally speaking, its safe to withdraw 4% from your portfolio every year without risk of running out of money. (There are a lot of caveats to this guideline. To learn more, follow that link to my Money Boss article or wait for that story to migrate to Get Rich Slowly in a few days!) The AAII Journal the monthly magazine from the American Association of Individual Investors has published two articles in recent months about the problem of spending in retirement. Lets look at what they have to say. Im going to link to and quote from both AAII Journal articles below, but be forewarned that the AAII Journal lives behind a paywall. People Who Spend Too Little in Retirement In the first article (from the April 2018 issue), Meir Statman asks, Are you spending too little in retirement? To paraphrase the author, your financial life can be divided into two basic stages. During the accumulation phase of your life, youre building wealth. During this period, you work hard and invest wisely. If youre careful (and fortunate), youll build a wealth snowball by maintaining a large gap between what you earn and what you spend. The folks who create the widest gap are likely to accumulate more wealth more quickly than those with smaller gaps.During the consumption (or preservation) phase of your life, you shift from earning money to spending money. After you retire (and remember, the definition of retirement is no one fixed thing), your income is sharply reduced. You might not even have an income. Instead, you live off the money you accumulated during the accumulation phase of your life. During the accumulation phase, Statman says, self-control is an important trait. Financial discipline and conscious spending allow smart savers to build large nest eggs. But heres the thing: The very same qualities that help people during the accumulation phase of life actually hinder them during the consumption phase. Statman writes: Excessive self-control is evident in the tendency to spend less today than our ideal level of spending, driving us to extremes beyond frugality. The prospect of spending money inflicts emotional pain on tightwads even when it might otherwise be in their interest to spend. Its ironic, he notes, that saving is difficult for the young, but spending is difficult for the old. What good is building a stockpile of wealth if you dont actually use that money? We need not feel guilty about spending our hard-earned savings on ourselves, Statman writes. But hes careful to point out that, Some people derive no pleasure from spending on themselves. He urge these people to consider spending on others. Give money to family members. Actively contribute to causes that are important to you. Find ways to use your money while youre still alive instead of leaving a fortune when your dead. Grasshoppers and Ants in Retirement The second article (from the June 2018 issue of the AAII Journal) is about grasshoppers and ants in retirement. This piece is more academic than the first, but its also more interesting. Many academic studies show that retirees, particularly wealthier retirees, spend down their nest egg much slower than economic theory would predict, the authors write. This excessive thrift is a mystery to many economists who dont understand why individuals would make sacrifices during their working years in order to live better in retirement if they dont have the intention to spend down their savings in retirement. Why not go on more vacations, buy a larger house, or drive a nicer car early in life instead of setting money aside that is never spent? This tendency is especially puzzling since the average retiree doesnt exhibit a very strong desire to leave a bequest. On the other hand, there are indeed people who act as grasshoppers in retirement, spending lavishly so that their savings run the risk of depletion. Heres one way the authors describe the difference between ants and grasshoppers: When ants receive a windfall in retirement (such as an inheritance), they spend about $5 more each year for each $1,000 they receive. When grasshoppers receive an inheritance, they spend an extra $260 per year. This means that when a grasshopper receives an inheritance, it will be completely spent within four years. Now, based on what we all know from the fable of the grasshopper and the ants, wed expect that ants would be the heroes in this situation, right? Theyre the ones wholl come out ahead in the long run. Not so fast. While the ants should feel some relief that theyre not going to run out of money in retirement, the authors say they could take some lessons from grasshoppers: Grasshoppers are behaving much more like economically rational life cycle consumers than the ants. Why did the ants save up all that money if theyre not going to spend more in retirement? This is especially puzzling if ants dont have a strong desire to pass this wealth on to their children or to charity. How Much Should You Spend in Retirement? These articles are interesting from a psychological perspective, but they dont offer any practical takeaways. The real question is: How much should you spend in retirement? Heres my advice: Determine your current annual spending. If, like me, your spending fluctuates from year to year, calculate a three- or five-year average spend. Call this number your current annual spending.Determine your safe spending level. You can use whatever method youd like for this, but for simplicitys sake, Id say use the afore-mentioned four-percent rule. Take your entire net worth and multiply this by four percent. If your net worth is $1,000,000, for instance, youd get a result of $40,000. (If youre risk averse, either leave home equity out of the equation or multiply your net worth by three percent.) This number is your safe annual spending.Compare the numbers. Find the difference between your current annual spending and your safe annual spending. If your current spending is greater than your safe spending, you should probably cut back. But if it your current spending is less than your safe spending, give yourself permission to spend more if you want. Usually when I write at Get Rich Slowly, my aim is to get people to spend less. From my experience, most people struggle with spending too much rather than spending too little. That said, Ive certainly seen the opposite. In fact, sometimes the reluctance to spend borders on hoarding. Ultimately my advice comes back to my long-time motto at this site: Do what works for you. Obviously, you dont need to spend more money. Nobody needs to spend more. But be aware that if youve been a prodigious accumulator of wealth, you do have the freedom to put that money to use whether for yourself or for others. https://www.getrichslowly.org/retirement-spending/

[andrewdburton]

How much should you spend in retirement?

I spend a lot of time talking with people who have retired early or are otherwise financially independent. From a purely anecdotal point of view, I’d say most of these folks are well-adjusted. They work to maintain balance in life, and especially with their personal finances.

That said, I’ve noticed that a lot of retirees — early retired or otherwise — struggle to know how much they should spend. I believe this dilemma exists for a couple of reasons:

First is the life expectancy problem. You don’t know how long you’re going to live. If you did know the precise date of your death (or even the year of your death), retirement planning would be much easier. You’d be able to say, “Okay, I have ten years left and $300,000 in the bank. Based on that, I should be able to spend $30,000 per year.” But you don’t know when you’re going to die, so a lot of retirement planning becomes guesswork.

Second is the question of what your money is for? Do you want to leave a legacy for your children (or somebody else)? Do you want to maintain a chunk of change for possible end-of-life medical issues? Or do you want to use your wealth to live life to the fullest while you can? In my case, my ideal would be to die broke. If I could spend my very last penny on the last day of my life, that’d be perfect.

The general response to these two problems is to follow what has been dubbed the four-percent rule. Generally speaking, it’s safe to withdraw 4% from your portfolio every year without risk of running out of money. (There are a lot of caveats to this guideline. To learn more, follow that link to my Money Boss article — or wait for that story to migrate to Get Rich Slowly in a few days!)

The AAII Journal — the monthly magazine from the American Association of Individual Investors — has published two articles in recent months about the problem of spending in retirement. Let’s look at what they have to say.

I’m going to link to and quote from both AAII Journal articles below, but be forewarned that the AAII Journal lives behind a paywall.

People Who Spend Too Little in Retirement

In the first article (from the April 2018 issue), Meir Statman asks, “Are you spending too little in retirement?” To paraphrase the author, your financial life can be divided into two basic stages.

During the accumulation phase of your life, you’re building wealth. During this period, you work hard and invest wisely. If you’re careful (and fortunate), you’ll build a wealth snowball by maintaining a large gap between what you earn and what you spend. The folks who create the widest gap are likely to accumulate more wealth more quickly than those with smaller gaps.

During the consumption (or preservation) phase of your life, you shift from earning money to spending money. After you retire (and remember, the definition of retirement is no one fixed thing), your income is sharply reduced. You might not even have an income. Instead, you live off the money you accumulated during the accumulation phase of your life.

During the accumulation phase, Statman says, self-control is an important trait. Financial discipline and conscious spending allow smart savers to build large nest eggs. But here’s the thing: The very same qualities that help people during the accumulation phase of life actually hinder them during the consumption phase.

Statman writes:

Excessive self-control is evident in the tendency to spend less today than our ideal level of spending, driving us to extremes beyond frugality. The prospect of spending money inflicts emotional pain on tightwads even when it might otherwise be in their interest to spend.

It’s ironic, he notes, that saving is difficult for the young, but spending is difficult for the old. What good is building a stockpile of wealth if you don’t actually use that money? “We need not feel guilty about spending our hard-earned savings on ourselves,” Statman writes.

But he’s careful to point out that, “Some people derive no pleasure from spending on themselves.” He urge these people to consider spending on others. Give money to family members. Actively contribute to causes that are important to you. Find ways to use your money while you’re still alive instead of leaving a fortune when your dead.

Grasshoppers and Ants in Retirement

The second article (from the June 2018 issue of the AAII Journal) is about grasshoppers and ants in retirement. This piece is more academic than the first, but it’s also more interesting.

“Many academic studies show that retirees, particularly wealthier retirees, spend down their nest egg much slower than economic theory would predict,” the authors write.

This excessive thrift is a mystery to many economists who don’t understand why individuals would make sacrifices during their working years in order to live better in retirement if they don’t have the intention to spend down their savings in retirement. Why not go on more vacations, buy a larger house, or drive a nicer car early in life instead of setting money aside that is never spent? This tendency is especially puzzling since the average retiree doesn’t exhibit a very strong desire to leave a bequest.

On the other hand, there are indeed people who act as “grasshoppers” in retirement, spending lavishly so that their savings run the risk of depletion. Here’s one way the authors describe the difference between ants and grasshoppers:

When ants receive a windfall in retirement (such as an inheritance), they spend about $5 more each year for each $1,000 they receive. When grasshoppers receive an inheritance, they spend an extra $260 per year. This means that when a grasshopper receives an inheritance, it will be completely spent within four years.

Now, based on what we all know from the fable of the grasshopper and the ants, we’d expect that ants would be the heroes in this situation, right? They’re the ones who’ll come out ahead in the long run. Not so fast. While the ants should feel some relief that they’re not going to run out of money in retirement, the authors say they could take some lessons from grasshoppers:

Grasshoppers are behaving much more like economically rational life cycle consumers than the ants. Why did the ants save up all that money if they’re not going to spend more in retirement? This is especially puzzling if ants don’t have a strong desire to pass this wealth on to their children or to charity.

How Much Should You Spend in Retirement?

These articles are interesting from a psychological perspective, but they don’t offer any practical takeaways. The real question is: How much should you spend in retirement?

Here’s my advice:

Determine your current annual spending. If, like me, your spending fluctuates from year to year, calculate a three- or five-year average spend. Call this number your current annual spending.

Determine your safe spending level. You can use whatever method you’d like for this, but for simplicity’s sake, I’d say use the afore-mentioned four-percent rule. Take your entire net worth and multiply this by four percent. If your net worth is $1,000,000, for instance, you’d get a result of $40,000. (If you’re risk averse, either leave home equity out of the equation or multiply your net worth by three percent.) This number is your safe annual spending.

Compare the numbers. Find the difference between your current annual spending and your safe annual spending. If your current spending is greater than your safe spending, you should probably cut back. But if it your current spending is less than your safe spending, give yourself permission to spend more — if you want.

Usually when I write at Get Rich Slowly, my aim is to get people to spend less. From my experience, most people struggle with spending too much rather than spending too little. That said, I’ve certainly seen the opposite. In fact, sometimes the reluctance to spend borders on hoarding.

Ultimately my advice comes back to my long-time motto at this site: “Do what works for you.” Obviously, you don’t need to spend more money. Nobody needs to spend more. But be aware that if you’ve been a prodigious accumulator of wealth, you do have the freedom to put that money to use — whether for yourself or for others.

The post How much should you spend in retirement? appeared first on Get Rich Slowly.

from Finance https://www.getrichslowly.org/retirement-spending/ via http://www.rssmix.com/

[aptuckman]

“Adventures in Investing...” JOURNAL ENTRY 12.18.2015: MAKING INVESTING EASY TO UNDERSTAND

Dear Reader,

I want you to get excited. As part of our ongoing quest to educate the public on  being smarter investors, we’re going to make things much easier for you to understand. Who out there wants to retire a little wealthy? What I’d like to do today is discuss basic investment fundamentals to pave a path for your financial success. With time, you’ll see a need to shift from “working for money” to a new way of thinking; you’re going to want “your money to work for you.” Investments are how you do this. These venues will be the tools you will use to get (potentially) more money than you have now.

Let’s talk about your different investment options. If you follow the world of investments through the media, then television, radio and newspapers may lead you to believe there are hundreds of different investments. That is absolutely not true. I’m here to explain that it really isn’t that complex.

Do any of you play a musical instrument? For those of us who have watched, “The Sound Of Music,” you know there are only seven fundamental notes; “Do, Re, Mi, Fa, Sol, La, Ti…” and back to Doh. Last time I checked, that’s it. Sure, there are also sharps, flats, quarters, and half notes and other filler material, but only seven basic notes that shape musical composition.  The greater the structure of the notes, the greater the musical piece.  Well, making a masterpiece in music is very similar to building a great investment portfolio.

On Wall Street, there are only 7 different investments, the rest is just packaging. Let me explain:

BANKS. These are your every day checking accounts, savings accounts or CDs. Does anyone know what percent interest they get on their savings account? At the time of this writing, they are paying about a quarter to a half of a percent, depending on the bank. So AT BEST it would take you 140 years to double your money. In the financial world, a term we often use for money that sits in bank accounts is “dead in the water.” Sort of like watching me swim through shark reef.

BONDS. Bonds are a type of debt instrument. They come in three forms, Government, Corporate, and Municipal.  Government bonds are issued by the Federal Government. These are considered to be the safest and tend to have the lowest interest, but are federally tax free.  Corporate bonds are issued by companies like Apple or Microsoft. These tend to pay the highest Interest while also bearing the most risk. Bonds are how we raised the money for products like smartphones and funding that casino you lost your money in last week. Corporations can go bankrupt, governments usually can’t, unless you’re Greece, Spain or Italy, but not America, baby! Corporation bonds are also fully taxable, unlike most government bonds.  Municipal bonds, or “Munis,” are issued by local cities, counties, and states for their necessities. For example, the city of Beverly Hills wants to build a Chihuahua dog park and it costs 10 million dollars. They don’t pay for it on the spot, they issue bonds in the form of debt to anyone who want to buy them. For buying this debt and helping pay for the park in turn they will give you a 3-5 percent tax free return on the interest.

STOCKS. This is ownership or equity in a company. Stocks have outperformed all other investments in the last eighty years. Stockholders become shareholders of a company and earn or lose portions of their investment based on the performance of that company.

REAL ESTATE. This is the ownership of property. It is actual,  tangible brick and mortar.  You can touch it and feel it. Real Estate is considered the second most stable investment, however, it must be feed. Repairs, evictions, painting, improving property, all costs a lot of money. Some people avoid this because of the three T-s; Termites, tenants and toilets.  Owning Real Estate is a good investment, but it could come at a price – your sanity! Are you ready for those phone calls about bad plumbing at 2 am in the morning?  I’ve been there. It’s not fun.

INSURANCE. This is the transfer of risk. There are many different types of insurance; property, health, fire, long term care, and so on. This is a very interesting investment because it’s something that everyone pays into but hopes they never need to use. Then you have certain financial instruments within this realm that are extremely powerful like annuities, and life insurance. Life insurance is how you create an estate, tax free. Annuities help ensure you don’t outlive your income after retirement, tax deferred.

CURRENCY. Every country has its own currency with different monetary value. Some people buy and sell the Dollar, Deutschmark or Euro in hopes of it going up or down.

COMMODITIES. These are things like oil, gold, coffee, pork bellies, orange juice, other precious metals, natural resources, agriculture, and so on.

The last two we don’t really focus on too much, because they are not common investments for the clients that we deal with.

There is a saying on Wall Street, “Do not sit on your assets.” The reasons it is important to know these investments is because without investing in a financial instrument to preserve and grow your savings, your money is literally shrinking.  Inflation eats away at the dollar, currently at 1.2% each year. If you hide your money under the mattress, that dollar will be less in value than it was last year. Only by investing and hedging against inflation are you able to win at the money game. I hoped this helped shed some light on “the mysterious world of investing” for you. I want to leave you with one important thought.

“Money isn’t everything… But it sure keeps the kids in touch.” Thank you for reading and happy investing!

[ronaldmrashid]

Always Be Grinding! Financial Samurai 2017 Goals And Outlook

Happy New Year Everyone!

Hopefully all of you survived and are ready to rock it in 2017! I spent a lot of time over the holidays thinking about why I failed at so many things, and the consistent answer I came up with was that I wasn’t grinding hard enough.

Why did I gain 5 lbs instead of lose 5 lbs? Answer: Because I didn’t grind hard enough at the gym and give a crap about the way I looked. I worked out maybe twice a month on average and didn’t watch the quality of food I ingested.

Why did I lose all my tennis league matches? Answer: Because I didn’t grind hard enough on the court. I wasn’t practicing my serve and volleys as much as I should. Instead, I was just playing fun matches that did nothing to improve my skills.

Why was my online traffic only marginally up in 2016? Answer: Because I didn’t grind my mind hard enough. Instead of writing more posts, introducing new mediums of communication, addressing new topics, and publishing a new ebook, I left things status quo. I told myself in my 2016 review post I was most proud of not quitting. Come on. That’s weak! Writing is like a full body massage compared to digging for coal or constructing a house in the middle of a Texas summer.

It’s so easy to get soft in America, especially as you get older. As a result, my theme for 2017 is: Always Be Grinding. ABG baby!

Related: Perpetual Failure Is The Reason Why I Continue To Save So Much

Things Feel Different Now

I haven’t been this excited since I first got a job out of college when the sky was the limit. For the past 10 years or so, I’ve been questioning what’s the point of working so hard if the government is just going to take more from us than what we’re able to keep. To finally get some potential tax relief is thrilling!

Everybody should strive to have a higher savings rate than their effective tax rate. Can you imagine saving just 10% of your gross income while paying a 20% effective tax rate? What a joke. Politicians are laughing all the way to the bank for being able to keep the masses enslaved so they can remain in power.

The upside to a corrupt and inefficient government with trillions in unaccounted for tax dollars (see the Dept. of Defense) is that it pushed me towards a life of leisure. I would never have engineered my layoff in 2012 had the correlation between effort and reward stayed intact. I never would have started a lifestyle business either. It’s been fantastic paying less in taxes and not having to work for anybody since my departure. My stress level has gone way down as well.

But now that the correlation between effort and reward is tightening up, it’s time to grind until the window shuts again! Without further ado, here are my goals for 2017. They are divided into three categories: Business, Personal and Personal Financial.

Business Goals

1) Focus on growth by broadening the audience. I’ve received plenty of feedback that I need to write more for the mass market. Even though my advice holds true whether you have $1,000,000 to invest or $1,000 to invest, readers have told me they can’t get their heads around larger numbers. As a result, some readers will tune out and that’s bad for growth.

It’s not my fault the median home price in San Francisco is ~$1.1M. I just write about my first-hand experiences to keep things authentic. Personal finance is too important to be left up to pontification. But I acutely realize the way to mega millions is to relate to as many people as possible. At the same time, I don’t want to make up things I’m not interest in or am not going through.

Therefore, I’ve decided to add my best friend, Sydney from Untemplater, on as a regular contributor. She’ll focus on broader personal finance topics, family finances, women’s finances and be my podcast partner in our little Dojo Talk podcasts going forward. I’m confident there is a great need for expansion in these categories on Financial Samurai.

Sydney is great because she’s living the dream as a business owner and freelancer ever since she engineered her layoff with a severance package back in January 2015. I was her coach. Here’s her severance negotiation story, which I’m so proud of!

2) Publish a new ebook by July 18, 2017. Despite the rise in interest rates, it still takes a gargantuan amount of money to generate $1,000 a month in passive income – we’re talking $300,000 in capital at a 4% gross yield. I was so focused on building a large municipal bond portfolio after the sell-off in November and December that I forgot I could easily write a new ebook and earn $1,000 a month with no downside!

Therefore, I’ve decided to publish a unique book on real estate investing. It’s going to be one of the most entertaining and thorough books about real estate on the market. It’ll be an actionable book that anyone from beginning investors to experienced investors can use to help create wealth, build passive income and avoid extremely bad mistakes. I promise to write in my usual no BS style.

3) Focus on three business partnerships. I’ve got about 10 business partnerships with Financial Samurai right now. It’s very easy to get spread too thin as the main writer and business development guy. Instead, I need to identify three things I’m most passionate about and tilt my writing towards these three topics to build a deeper portfolio of articles. Then I need to identify the three best products that match these topics to create incredible business synergies.

I’m currently most excited about entrepreneurship, real estate crowdsourcing and family finances.

I’ve got so much to share about being an entrepreneur and earning side income after eight years. The upside is unlimited when you work for yourself. So many people believe they can’t do anything because they don’t have an idea or don’t believe in their abilities. The truth is that nobody has everything figured out in the beginning. They just start, learn and pivot as they go.

Real estate crowdsourcing is the perfect solution for real estate enthusiasts like me who don’t want to buy another physical property for a while. Dealing with tenants and maintenance issues as I get older is very counterproductive to living a good retirement life. However, real estate has been instrumental in achieving financial freedom (~50% of my passive non-online income) and I want to continue investing wisely in various projects around America for hopefully higher returns.

Finally, talking about important family financial issues will be topic du jour for 2017 now that I’m hitting middle age. I’ve already tested the waters with posts such as, Is Private Grade School Worth It? and Scraping By On $200,000 A Year to a warm reception. Now I plan to go deeper. Sydney is really going to be of great help in this endeavor.

4) Send two to four e-mails a month. I’ve been paying $150 a month to send out only one newsletter a month for the past couple of years. What an underutilization of resources. What’s held me back from sending more e-mails is believing I have to write meaty e-mails to add value. Instead, I plan to write shorter, punchier e-mails to connect with all my newsletter subscribers. There’s like 30,000 of you or so. All I’ve got to do is get into a routine, come up with a consistent topic, and not worry too much about trying to impress.

Personal Financial Goals

1) Create a million bucks of wealth. Last year my goal was to growth my net worth by $500,000 because I had a neutral-to-bearish outlook. Given I’m now bullish on my business, it’s only logical to shoot higher. In a strong business environment, valuations for businesses start expanding like magic. If I can grow earnings and expand valuation multiples, then growing wealth becomes much easier.

The equity you own in your business is one of the biggest reasons why everybody should start their own business. Not only can you make money every month from your business, you might also have the option to sell your business based on a multiple of revenue or earnings one day. As an employee, you can only sell your talents to the highest bidder. As a result, you’ll always be stuck having to trade your time for money.

I already spoke to the CFO and CMO of one publicly traded company and one private company about a potential acquisition. As a result, I’ve got an idea of the valuation of my company. Now all I need to do is grow my brand, traffic numbers, search rankings, and revenue and I’ll be set!

Value Creation Scenario

Potential acquirer: We’ll offer you $6,000,000 for Financial Samurai based on a 8X operating profit plus a $500,000 earn out if you stay for two years.

Me: Given my operating profit is growing by 25% a year for the next two years at least, and the S&P 500 is trading at a 18X operating profit multiple, let’s split the difference. I’ll sell for $9,750,000, based on a 13X operating profit multiple, and will stay on for two years at $200,000 a year to make sure everything transitions smoothly.

Potential acquirer: You’ve got yourself a deal.

See how easy it is to create some wealth? All you’ve got to do is create something of value. I don’t plan to ever sell my company, but for the right price, I will and then start a new company. That’s the American dream.

Related: The First Million Might Be The Easiest

2) Invest at least $20,000 a month without fail. The $20,000 a month doesn’t have to be in the stock market. It can be in bonds, real estate crowdsourcing, private equity, private debt, or paying down a mortgage. I actually did a deep dive analysis of my investing habits for 2016, which I’ll share with you guys in an upcoming post. It’s pretty eye-opening how much we think we invest versus how much we actually invest. By investing $20,000 a month minimum, I should be able to grow my net worth by at least $240,000 this year.

3) Start earning $20,000 a month in passive/semi-passive income by year end. My passive income is currently averaging about $17,600 a month over the past six months. To increase my passive income by $2,400 a month, I’ve got to publish my real estate book by year end, market it well and update my severance negotiation book for 2017. My products will be my main passive income growth driver once again.

The other growth driver will hopefully be the redeployment of roughly $400,000 into higher returning investments compared to the ~4% return that money was getting in a CD and a LIBOR+ private investment. Instead of earning $16,000 a year from the $400,000 investment, I could feasibly earn $32,000 a year, or $2,667 a month total ($1,333 extra) via an 8% returning investment. Hence, my focus on higher income producing investments for this year. Thank you bond sell-off!

RE outperforming since 2001, and roughly inline with the S&P 500 since 2011 at ~12% annual return

4) Spend like I’ll be dead within 10 years. I’ve been frugal my whole life. It’s one of the main reasons why I was able to hit the eject button at 34. But, I’ll be 40 in 2017 so it’s time to live it up for the second half of my life. You don’t have to be as stealth in middle age because people are more accepting of those who’ve spent 20+ years working. If they aren’t, then they’re just being jealous idiots who weren’t willing to work hard for a long enough time themselves.

I will buy my mid-life crisis car that costs $60,000 – $80,000. I will pay an extra $100 for Economy Plus seats to Hawaii each way (still can’t afford first class comfortably). I will buy the latest version TV instead of buying the previous version to save $300. I will pony up $400 more for 1 TB of hard drive space for my new laptop. I will pay $6.25/hour for parking after driving around the block once. I will turn the heat on full blast when it gets to below 60 degrees. I will always pay up for convenience gosh darn it!

Every time I buy something, I feel guilty for not using that money to invest because I’ve been an investing addict since sophomore year in college. I also grew up middle class working summer jobs at McDonald’s and moving furniture. My upbringing is probably the reason why I felt so comfortable giving over 500 Uber rides as a financially independent adult so far. I’m not too proud to do whatever it takes to support my family.

Therefore, I plan to always invest the $20,000+ a month first before splurging on anything to counteract my the uncomfortableness in spending.

5) Don’t chase the stock market. Although I’m bullish on my business, I’m lukewarm on the stock market and the economy. The higher rates go, the more consumers get squeezed. The period between 2009 – 2016 was a great time to focus on growth stocks. For 2017, I think it’s a great time to focus on income now that equity valuations are stretched and the bond market has finally sold off some. Always be vigilant about protecting your gains.

Instead of having a majority of my public investments in stocks in 2016 (~70%), I’m rebalancing to 40% stocks and 60% bonds (80% municipal bonds). Besides stretched valuations and more attractive income yields, I think there will be roadblocks on Capital Hill to pass what everything Trump has promised.

With 40% exposure to stocks, I’ll still be able to participate reasonably well in any further exuberance. Further, I’m already highly leveraged to the tech industry through my SF real estate holdings and corporate consulting business.

I just feel way too lucky with my investments now after a +10% unexpected return in 2016. To now be able to get a ~4.5% gross yield on the fixed income portion to cover two mortgages that cost 2.5% and 2.375% is nuts!

Related: The Proper Asset Allocation Of Stocks And Bonds By Age

Personal Goals

“When you’re coasting, you’re going downhill.” – Unknown

1) Scare myself out of my comfort zone. I haven’t been personally challenged in a long time. With a portfolio of over 1,300 posts on Financial Samurai, I know with decent confidence that if I write 152 new posts a year, I should be able to grow traffic and revenue by ~10% a year if I do nothing else. But writing 2-4X a week is an easy goal to achieve.

Once I turn 40 this summer, I think it’ll be fun to challenge myself with more live events. I’ll first start with my Dojo Talk podcasts with Sydney to improve my speaking skills. Then I’ll move onto bigger audiences if I have the opportunity. I’ll be the moderator for a panel of crowdsource company CEOs in San Francisco with an audience of ~100 – 200 people sometime in February. That should be fun. I’ll post the details here once I know more.

The other thing I’m considering is being a more public figure starting in 2H2017. By July 1, I’ll have collected the final severance payment from five years ago. Further, I’ll have hit my five-year goal of seeing whether my writing can stand on its own without my promotion. Now that it has, to be able to combine a public persona with my writing could be a very powerful combination.

2) Really make a difference in 12 people’s lives. At the end of the day, the best feeling in the world is when a reader sends a private e-mail or writes a comment that says how much a particular article or the site in general has helped them achieve their dreams. Being online for almost eight years has enabled me to read people’s stories on how they’ve changed over time.

Without positive reader feedback, it’s harder to keep going at my pace long term because I also occasionally get haterade from random folks who are upset with their lives. Instead of choosing to see what’s possible, they adopt a welfare mentality and lash out.

If enough haterade piles up, it makes me want to just take a break and relax since I’m not getting paid by readers to write anything. With most of my traffic coming from organic search, and most of my online income passive as a result, there’s no need to write much of anything anymore.

Here’s a comment a newish reader left that gave me a power up.

I salute you brother as well. Fight on!

3) Start a family. It’s about time we start a family. My wife and I feel we’ve done everything we’ve wanted to do as adults. We’ve both engineered our layoffs. We don’t have the itch to travel too much anymore after visiting over 60 countries. We have no desire to climb anybody else’s corporate ladder, but our own.  After two years, our house is finally remodeled to the way we want. We have a digital business that allows us to be present for our child. Finally, we’ve developed a steady stream of passive income that should support a family of up to four comfortably in expensive San Francisco or Honolulu.

With so much responsibility in raising a child, it’s only natural to plan as thoroughly as possible before becoming parents. I commend those of you who had the courage to have multiple children earlier on and make things work. I’ve seen so many things go wrong with a relationship after having children, it’s made me nervous.

If we do successfully start a family, my number one goal will shift towards not dying before 69. I’d like to live until my child officially becomes an adult. Now where are my veggies?

Readers, what are some of your goals for 2017? How do you see the economy, the government, the real estate market, and the stock market doing? Will you always be grinding in 2017 on something to improve your situation?

from http://www.financialsamurai.com/always-be-grinding-financial-samurai-2017-goals-and-outlook/

#Financial Samurai

[themoneybuff-blog]

How much should you spend in retirement?

I spend a lot of time talking with people who have retired early or are otherwise financially independent. From a purely anecdotal point of view, Id say most of these folks are well-adjusted. They work to maintain balance in life, and especially with their personal finances. That said, Ive noticed that a lot of retirees early retired or otherwise struggle to know how much they should spend. I believe this dilemma exists for a couple of reasons: First is the life expectancy problem. You dont know how long youre going to live. If you did know the precise date of your death (or even the year of your death), retirement planning would be much easier. Youd be able to say, Okay, I have ten years left and $300,000 in the bank. Based on that, I should be able to spend $30,000 per year. But you dont know when youre going to die, so a lot of retirement planning becomes guesswork.Second is the question of what your money is for? Do you want to leave a legacy for your children (or somebody else)? Do you want to maintain a chunk of change for possible end-of-life medical issues? Or do you want to use your wealth to live life to the fullest while you can? In my case, my ideal would be to die broke. If I could spend my very last penny on the last day of my life, thatd be perfect. The general response to these two problems is to follow what has been dubbed the four-percent rule. Generally speaking, its safe to withdraw 4% from your portfolio every year without risk of running out of money. (There are a lot of caveats to this guideline. To learn more, follow that link to my Money Boss article or wait for that story to migrate to Get Rich Slowly in a few days!) The AAII Journal the monthly magazine from the American Association of Individual Investors has published two articles in recent months about the problem of spending in retirement. Lets look at what they have to say. Im going to link to and quote from both AAII Journal articles below, but be forewarned that the AAII Journal lives behind a paywall. People Who Spend Too Little in Retirement In the first article (from the April 2018 issue), Meir Statman asks, Are you spending too little in retirement? To paraphrase the author, your financial life can be divided into two basic stages. During the accumulation phase of your life, youre building wealth. During this period, you work hard and invest wisely. If youre careful (and fortunate), youll build a wealth snowball by maintaining a large gap between what you earn and what you spend. The folks who create the widest gap are likely to accumulate more wealth more quickly than those with smaller gaps.During the consumption (or preservation) phase of your life, you shift from earning money to spending money. After you retire (and remember, the definition of retirement is no one fixed thing), your income is sharply reduced. You might not even have an income. Instead, you live off the money you accumulated during the accumulation phase of your life. During the accumulation phase, Statman says, self-control is an important trait. Financial discipline and conscious spending allow smart savers to build large nest eggs. But heres the thing: The very same qualities that help people during the accumulation phase of life actually hinder them during the consumption phase. Statman writes: Excessive self-control is evident in the tendency to spend less today than our ideal level of spending, driving us to extremes beyond frugality. The prospect of spending money inflicts emotional pain on tightwads even when it might otherwise be in their interest to spend. Its ironic, he notes, that saving is difficult for the young, but spending is difficult for the old. What good is building a stockpile of wealth if you dont actually use that money? We need not feel guilty about spending our hard-earned savings on ourselves, Statman writes. But hes careful to point out that, Some people derive no pleasure from spending on themselves. He urge these people to consider spending on others. Give money to family members. Actively contribute to causes that are important to you. Find ways to use your money while youre still alive instead of leaving a fortune when your dead. Grasshoppers and Ants in Retirement The second article (from the June 2018 issue of the AAII Journal) is about grasshoppers and ants in retirement. This piece is more academic than the first, but its also more interesting. Many academic studies show that retirees, particularly wealthier retirees, spend down their nest egg much slower than economic theory would predict, the authors write. This excessive thrift is a mystery to many economists who dont understand why individuals would make sacrifices during their working years in order to live better in retirement if they dont have the intention to spend down their savings in retirement. Why not go on more vacations, buy a larger house, or drive a nicer car early in life instead of setting money aside that is never spent? This tendency is especially puzzling since the average retiree doesnt exhibit a very strong desire to leave a bequest. On the other hand, there are indeed people who act as grasshoppers in retirement, spending lavishly so that their savings run the risk of depletion. Heres one way the authors describe the difference between ants and grasshoppers: When ants receive a windfall in retirement (such as an inheritance), they spend about $5 more each year for each $1,000 they receive. When grasshoppers receive an inheritance, they spend an extra $260 per year. This means that when a grasshopper receives an inheritance, it will be completely spent within four years. Now, based on what we all know from the fable of the grasshopper and the ants, wed expect that ants would be the heroes in this situation, right? Theyre the ones wholl come out ahead in the long run. Not so fast. While the ants should feel some relief that theyre not going to run out of money in retirement, the authors say they could take some lessons from grasshoppers: Grasshoppers are behaving much more like economically rational life cycle consumers than the ants. Why did the ants save up all that money if theyre not going to spend more in retirement? This is especially puzzling if ants dont have a strong desire to pass this wealth on to their children or to charity. How Much Should You Spend in Retirement? These articles are interesting from a psychological perspective, but they dont offer any practical takeaways. The real question is: How much should you spend in retirement? Heres my advice: Determine your current annual spending. If, like me, your spending fluctuates from year to year, calculate a three- or five-year average spend. Call this number your current annual spending.Determine your safe spending level. You can use whatever method youd like for this, but for simplicitys sake, Id say use the afore-mentioned four-percent rule. Take your entire net worth and multiply this by four percent. If your net worth is $1,000,000, for instance, youd get a result of $40,000. (If youre risk averse, either leave home equity out of the equation or multiply your net worth by three percent.) This number is your safe annual spending.Compare the numbers. Find the difference between your current annual spending and your safe annual spending. If your current spending is greater than your safe spending, you should probably cut back. But if it your current spending is less than your safe spending, give yourself permission to spend more if you want. Usually when I write at Get Rich Slowly, my aim is to get people to spend less. From my experience, most people struggle with spending too much rather than spending too little. That said, Ive certainly seen the opposite. In fact, sometimes the reluctance to spend borders on hoarding. Ultimately my advice comes back to my long-time motto at this site: Do what works for you. Obviously, you dont need to spend more money. Nobody needs to spend more. But be aware that if youve been a prodigious accumulator of wealth, you do have the freedom to put that money to use whether for yourself or for others. https://www.getrichslowly.org/retirement-spending/

[themoneybuff-blog]

How much should you spend in retirement?

I spend a lot of time talking with people who have retired early or are otherwise financially independent. From a purely anecdotal point of view, Id say most of these folks are well-adjusted. They work to maintain balance in life, and especially with their personal finances. That said, Ive noticed that a lot of retirees early retired or otherwise struggle to know how much they should spend. I believe this dilemma exists for a couple of reasons: First is the life expectancy problem. You dont know how long youre going to live. If you did know the precise date of your death (or even the year of your death), retirement planning would be much easier. Youd be able to say, Okay, I have ten years left and $300,000 in the bank. Based on that, I should be able to spend $30,000 per year. But you dont know when youre going to die, so a lot of retirement planning becomes guesswork.Second is the question of what your money is for? Do you want to leave a legacy for your children (or somebody else)? Do you want to maintain a chunk of change for possible end-of-life medical issues? Or do you want to use your wealth to live life to the fullest while you can? In my case, my ideal would be to die broke. If I could spend my very last penny on the last day of my life, thatd be perfect. The general response to these two problems is to follow what has been dubbed the four-percent rule. Generally speaking, its safe to withdraw 4% from your portfolio every year without risk of running out of money. (There are a lot of caveats to this guideline. To learn more, follow that link to my Money Boss article or wait for that story to migrate to Get Rich Slowly in a few days!) The AAII Journal the monthly magazine from the American Association of Individual Investors has published two articles in recent months about the problem of spending in retirement. Lets look at what they have to say. Im going to link to and quote from both AAII Journal articles below, but be forewarned that the AAII Journal lives behind a paywall. People Who Spend Too Little in Retirement In the first article (from the April 2018 issue), Meir Statman asks, Are you spending too little in retirement? To paraphrase the author, your financial life can be divided into two basic stages. During the accumulation phase of your life, youre building wealth. During this period, you work hard and invest wisely. If youre careful (and fortunate), youll build a wealth snowball by maintaining a large gap between what you earn and what you spend. The folks who create the widest gap are likely to accumulate more wealth more quickly than those with smaller gaps.During the consumption (or preservation) phase of your life, you shift from earning money to spending money. After you retire (and remember, the definition of retirement is no one fixed thing), your income is sharply reduced. You might not even have an income. Instead, you live off the money you accumulated during the accumulation phase of your life. During the accumulation phase, Statman says, self-control is an important trait. Financial discipline and conscious spending allow smart savers to build large nest eggs. But heres the thing: The very same qualities that help people during the accumulation phase of life actually hinder them during the consumption phase. Statman writes: Excessive self-control is evident in the tendency to spend less today than our ideal level of spending, driving us to extremes beyond frugality. The prospect of spending money inflicts emotional pain on tightwads even when it might otherwise be in their interest to spend. Its ironic, he notes, that saving is difficult for the young, but spending is difficult for the old. What good is building a stockpile of wealth if you dont actually use that money? We need not feel guilty about spending our hard-earned savings on ourselves, Statman writes. But hes careful to point out that, Some people derive no pleasure from spending on themselves. He urge these people to consider spending on others. Give money to family members. Actively contribute to causes that are important to you. Find ways to use your money while youre still alive instead of leaving a fortune when your dead. Grasshoppers and Ants in Retirement The second article (from the June 2018 issue of the AAII Journal) is about grasshoppers and ants in retirement. This piece is more academic than the first, but its also more interesting. Many academic studies show that retirees, particularly wealthier retirees, spend down their nest egg much slower than economic theory would predict, the authors write. This excessive thrift is a mystery to many economists who dont understand why individuals would make sacrifices during their working years in order to live better in retirement if they dont have the intention to spend down their savings in retirement. Why not go on more vacations, buy a larger house, or drive a nicer car early in life instead of setting money aside that is never spent? This tendency is especially puzzling since the average retiree doesnt exhibit a very strong desire to leave a bequest. On the other hand, there are indeed people who act as grasshoppers in retirement, spending lavishly so that their savings run the risk of depletion. Heres one way the authors describe the difference between ants and grasshoppers: When ants receive a windfall in retirement (such as an inheritance), they spend about $5 more each year for each $1,000 they receive. When grasshoppers receive an inheritance, they spend an extra $260 per year. This means that when a grasshopper receives an inheritance, it will be completely spent within four years. Now, based on what we all know from the fable of the grasshopper and the ants, wed expect that ants would be the heroes in this situation, right? Theyre the ones wholl come out ahead in the long run. Not so fast. While the ants should feel some relief that theyre not going to run out of money in retirement, the authors say they could take some lessons from grasshoppers: Grasshoppers are behaving much more like economically rational life cycle consumers than the ants. Why did the ants save up all that money if theyre not going to spend more in retirement? This is especially puzzling if ants dont have a strong desire to pass this wealth on to their children or to charity. How Much Should You Spend in Retirement? These articles are interesting from a psychological perspective, but they dont offer any practical takeaways. The real question is: How much should you spend in retirement? Heres my advice: Determine your current annual spending. If, like me, your spending fluctuates from year to year, calculate a three- or five-year average spend. Call this number your current annual spending.Determine your safe spending level. You can use whatever method youd like for this, but for simplicitys sake, Id say use the afore-mentioned four-percent rule. Take your entire net worth and multiply this by four percent. If your net worth is $1,000,000, for instance, youd get a result of $40,000. (If youre risk averse, either leave home equity out of the equation or multiply your net worth by three percent.) This number is your safe annual spending.Compare the numbers. Find the difference between your current annual spending and your safe annual spending. If your current spending is greater than your safe spending, you should probably cut back. But if it your current spending is less than your safe spending, give yourself permission to spend more if you want. Usually when I write at Get Rich Slowly, my aim is to get people to spend less. From my experience, most people struggle with spending too much rather than spending too little. That said, Ive certainly seen the opposite. In fact, sometimes the reluctance to spend borders on hoarding. Ultimately my advice comes back to my long-time motto at this site: Do what works for you. Obviously, you dont need to spend more money. Nobody needs to spend more. But be aware that if youve been a prodigious accumulator of wealth, you do have the freedom to put that money to use whether for yourself or for others. https://www.getrichslowly.org/retirement-spending/