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Jun 192017

Do You Think Retirement is Out of the Question? Think Again!

By |June 19th, 2017|General Personal Finance|0 Comments

retirement tips, retirement advice, retirement planningAs a financial analyst, one of the questions that I regularly get asked is the following: How can I sock away enough money to comfortably retire one day? This is usually followed up with a qualifier: I don’t earn enough now, so how will I ever have enough when I reach retirement age? These are valid concerns, especially at a time where rising prices and a tough labor market make it difficult to save money.

If you are living from one paycheck to the next, you understand these concerns all too well. Everyone will tell you that retirement planning and savings go hand-in-hand. You need to be able to cut your expenses and make your dollars stretch further. But how do you go about doing this if things are tight, to begin with?

It’s time to make a plan!

Back in the 1980s, most every TV series you watched had a feel-good message. Think of the Golden Girls, MacGyver, Airwolf, and my personal favorite –The A-Team. This team of mercenaries – hired guns – were always solving problems in the face of overwhelming odds. The leader of the A-Team – Hannibal Smith – typically ended each episode with the following expression: ‘I love it when a plan comes together.’

This is precisely what we will attempt to do here today with our in-depth insight into how you can make your income work for you. In conventional macroeconomic theory, it is stated that saving is a prerequisite for capital formation. This works on a microeconomic level too. In order to plan for the future, the present needs to be effectively managed. This requires the establishment of careful checks and balances, otherwise known as a budget.

All your debits and credits should be laid out in an easy-to-read format. While we can target fixed expenses, there is significantly less flexibility with those. It’s the discretionary spending that typically detracts from building a retirement nest egg. Discretionary spending includes things like eating out, entertainment, cable TV, mobile phone coverage, auto loans, personal loans, credit card expenditure, and the like.

By significantly curtailing your discretionary spending, you will find that your budget can be wrenched from the red into the black. Financial experts recommend that individuals carefully evaluate their budgets to minimize unnecessary expenses. Your retirement is best served by ridding yourself of encumbrances that do you no good in the present. You may have old machinery, equipment or vehicles in your backyard that you can sell and put the money towards your retirement nest egg.

Evaluate your investments

Once you have evaluated your current situation, you can take the necessary steps to plan for the future. You may find that downsizing will best serve your interests moving forward. Once the kids leave home, you may not have a need for a 4-bedroom house, and a condominium may be better suited to your lifestyle. If the whole is the sum of its parts, you can systematically improve one component at a time until you have streamlined things to perfection. Next up is your current investment regimen.

Believe it or not, many people may be invested in a 401(k), a Roth IRA, or various certificates of deposit, without actually understanding too much about what they’re doing. Many of us tend to blindly follow the investment advice of money managers, financial analysts, and investment gurus. What works for them may not always be in our best interests. Unbeknownst to many, every day investors are that many of these fund managers tack on hidden fees, commissions, monthly management charges and even minimum balance requirements to our financial portfolios. These can quickly add up, especially if markets are not performing to expectation.

Lionexo options trading consultants advise clients to take an active interest in the management of their financial portfolios. ‘It is incumbent upon the individual trader or investor to actively participate in the markets. You can derive tremendous personal benefit from understanding the interactions between macroeconomic variables and individual stocks, indices, commodities, and currency pairs. You can enhance your revenue streams by speculating on future price movements of financial assets, without purchasing them outright.’

While derivatives trading is a niche market, it should be considered as a viable component of an overall investment portfolio. Traditional stocks, treasuries or certificates of deposit will always have a place in a retirement portfolio, but retirees can also enjoy the benefits of speculative activity vis-à-vis derivatives trading too.

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Jun 192017

Can I Live Off Interest On A Million Dollars?

By |June 19th, 2017|Blog|0 Comments

Can I Live Off Interest On A Million Dollars-We often talk about how many cars, houses, and other things we would buy with a million dollars.
We even dream about never working again and just living off that money with a drink in our hands on the beach. But can you really live off the interest on a million dollars?

Maximum Return On Interest?

In a previous article, we found that the largest interest return you could currently get would be around $23,000 a year.

There are however other places you could invest your money that would provide more income. For instance, you could invest in real estate or the stock market. Both would generate income that you could live off of.

Even investing in the Vanguard high dividend fund will provide you with over $30,000 in income per year.

Real estate is more difficult to figure out a percentage, however Paula Pant from Afford Anything says you should find a property that the rent is 1% of the cost of the building. So for a $100,000 house, you would get $1,000 monthly ($24,000 annually) in income. If you invest that million that would generate $240,000 a year of income.

Again these are not interest, but ways to invest your money in producing more money.

What do The Experts say?

A study called the Trinity Study basically says that you can safely withdraw 4% of your investments every year and as long as you have 25 times your annual expenses saved you will never run out of money.

This is based off on average the stock market has done 7%% to 10%, there are some years where the stock market lost money, and years where it has made much more. But if you take the average and then spend less then that, you should, in theory, be able to live off that income forever.

Can I Live Off Interest On A Million Dollars?

The average household income in the United States is around $57,000 a year. Some reading this make considerably less and think that’s a lot of money. Others read that amount and have no idea how you could live on so little.

But can you survive with the interest that comes from a million dollars?

The answer is most people couldn’t, with the maximum amount of interest you could receive of $23,000 through a CD. That’s well below the average income, as well as the poverty line for a family of 4.

That doesn’t mean you can’t live off that money, Jason Fieber lives off much less, but he is the exception rather than the rule.

If you invest in dividend funds, real estate, or the total stock market, you can receive much more income that will also go up year after year.

What Now?

If you can live off $23,000 and you have a million dollars in the bank, you’re done congratulations. If not then it’s a nice start towards your retirement. You could use that money to invest in the stock market, real estate, or even start your own business. Whatever you do enjoy your life and don’t let money be the reason you don’t.

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Jun 192017

Smart Ways to Increase Your Income Even If You Don’t Get a Raise

By |June 19th, 2017|General Personal Finance|0 Comments

increasing your income tips, ways to increase your income, tips to increase your incomeMany people struggle with their finances because of the simple fact that human wants are unlimited while the resources available to meet those needs are limited. If you feel that you don’t have enough money to do the things you’ll love; you can reduce the financial pressure by finding ways to earn more money or finding ways to trim your expenses. However, finding ways to earn more money is not always easy because your employer often determines how much your time and skills are worth.

However, many people are scared to trim their expenses because they don’t want to reduce their standard of living. Here are some ideas to help you free up some money from your monthly expenses without reducing your standard of living or quality of life.

  1. Cut/Share subscriptions

Subscriptions are great for keeping you connected to products and services that you use each month and subscriptions could save you time and energy when they are on auto-renewals. However, you need to check through your monthly statements regularly to identify subscriptions to products/services that you no longer need/use—it doesn’t make sense to pay for such services.

  • If you are not a regular at the gym, you may want to drop the subscription and start running instead
  • Why pay for audio streaming services when you can get it free. The 15-second ads on the free version of the free service won’t kill you
  • Consider a family account for services such as Netflix, Spotify or Amazon Prime instead of paying individual subscriptions
  • You may want to rethink your need for magazine subscriptions especially when digital versions are free or cheaper
  1. Find better deals on fixed costs

You’ll have a number of fixed cost expenses such as rent, mortgage, insurance and cellphone plans. Such expenses don’t change each month and it might be somewhat difficult to alter the costs of such expenses.  However, you can still free up some money by shopping around for better deals on such expenses

  • Auto insurance is one of the biggest regular expenses. If you wonder about auto insurance, shopping around online could find you better deals in terms of extending your coverage or reducing your premiums
  • Paying anything around $100 a month for a smartphone plan is simply too expensive. It might be somewhat stressful to switch carriers but you can save a great deal of money over one year by switching companies
  • Prescriptions medications often cost a great deal of money and the money can burn a big hole in your wallet if your health insurance doesn’t cover such medications. You can get a better deal on prescription medicines by shopping around pharmacies. You can also get your doctor for recommendations on the generic brands of such prescription medications
  1. Save money on groceries

You can save money on food by cooking at home instead of eating out, but grocery expenses when not properly managed can also burn a big hole in your finances. Here are a couple tips for saving money on groceries

  • Use coupon apps to find deals and discounts on grocery shopping
  • Stock up grocery items when they are on sale but make sure you are stocking up on items you really need
  • Buy some items in bulk from warehouse clubs such as Sam’s Club or Costco
  • Let go of your bias and try out some store brands instead of buying name brands – generic brands could be as much as 25% cheaper than name brands.

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Jun 162017

How to Afford a Big Purchase

By |June 16th, 2017|General Personal Finance|0 Comments

tips to afford a big purchase, advice on big purchases, big purchase tipsLet’s say you have to make a large purchase, but you are flat broke,  with so many large purchases essential to everyday life, and so many emergencies that can happen regularly, there’s never enough money to take care of it all.

It’s All Money Earned, Money Spent

If the former is less than the latter there is just no way saving will ever be possible.  But as humans, we survive to thrive, and in the most recent years, we have become quite thrifty with how we do the surviving part.

By no means is this a comprehensive list of ideas below, but hopefully, one to spark some interest or inspiration. Because after all, finances and saving is a case by case situation.  Each of us is a unique scenario with our opportunity to make money and the obligations that demand where our money is spent.

Identify The Big Purchase

The super big purchases, like a house, maybe even a car are so exhaustively overwhelming that when saving cash for larger purchases I like to think of the smaller-big purchases as solid goals.  These are usually things that maybe you have a less quality version of already, an upgrade would be nice, but because there is always something else to spend money on, it can wait.

Let’s say you haven’t been sleeping well and you wake up achy every day.  Your bed is not your preferred sleeping location because of how uncomfortable it is.  Maybe you have osteoarthritis and you’ve been doing your research on the best mattress for arthritis, one that will help you sleep better and more comfortably which will help you move better during the day which will ultimately help you improve your health and overall efficiency as a human being.

Calculate the Last Dollar Price: You’ve found your mattress, it’ll probably run you around $2000 for the mattress, delivery charges, the pillow, a mattress pad or cover, and you’ve decided you want to treat yourself to a new set of sheets and a blanket to complete the package.

Identify the Timeline: Now that you have your item, your cost, and a date to look forward to you should have all of the motivation you need to stay on track.  Do whatever you need to remind yourself daily.

Start Saving: Now how do you pay for it?  Best practice is to pay for cash to avoid possibly overpaying for the item, but there are other options.  Try a weekly savings plan where you slide just a few dollars aside every week for a few months or a year.

Budget: Create a budget plan per paycheck.  Stick to it.  Allow for a little wiggle room for the things that come up unexpectedly (car registration and vet appointments).  Put your extra funds in a savings account for emergencies.  Get crafty with shopping – use all of what you have before you buy more and avoid marketing of “new products” that catch your eye as they intend.  Buy only what you need, remember what you want is at the end of your commitment timeline.

Make it Automatic: It is extremely simple to open an account and have direct deposit land right in it regularly.  Once it is automated, it is easy to forget about which means it’s less likely spend.  Try to pick an account that earns interest, that is a little extra free money every month, (little extras add up to big extras even if it doesn’t feel like it in the moment).  If you aren’t able to have a portion of your funds automatically deposited make sure you stick to a schedule of depositing manually and deposit often… cash in hand is easily spent and not easily replaced.

Know Your Priorities: Things come up, it is okay to rearrange your priorities how you see fit.  As long as it isn’t detrimental to your budget, you can take a break from saving up for that mattress, (don’t touch the funds you’ve already saved), and switch gears to paying for that emergency car repair.

No Cash: When you’ve just exhausted all options or can’t find the opportunity to make or find any more cash, there is always the zero interest financing options that come and go throughout the year.  Check in with your favorite stores and brands for saving opportunities.  Make sure you can afford the payments in your monthly budget!

Last Resort: Credit Cards.  We all know these demons.  Make this the last resort on everything.  In theory, it sounds wonderful, and they really can be if used responsibly.  But unfortunately our need for expendable cash flow, and their willingness to give it to us, usually results in a hole too deep to ever climb out of – and then the thought of saving up the cash just doesn’t seem very daunting compared to the interest fees and monthly payments we’re subjected to.  Again, make sure you can afford the payments in your monthly budget and be mindful of your debt to income ratio and how that looks for future purchases and needs.

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Jun 122017

How Much Interest Will I Earn On 1 Million Dollars

By |June 12th, 2017|Blog|0 Comments

How Much Interest Will I Earn On 1 Million DollarsIf I had a million dollars I would buy… We all have thought about it, talked about what we would do. Notoriously someone in the group will always say “I would just live off the interest” and they’ll use some math that makes the interest sound like a lot of money.

But can you really “live off the interest”? How much interest will I earn on 1 Million dollars?

Interest VS Capital Gains VS Dividend Payments

It’s important to note that there is a difference between what interest actually is, and what people typically think of as interest.

Capital Gains are defined as the profit from the sale of property or investment. So if you buy a house for $50,000 fix it and sell it for $100,000 your capital gains are $50,000 (this is very basic and there’s much more that goes in to it, but for ease of argument bare with me). What most people think of is the stock market, buying and selling for the capital gains. Though yes this is possible to do, especiially if you are starting with 1 million dollars, it isn’t interest.

Dividends are amazing, and dividend paying stocks even give you the dividend yield as a percentage. This may lead to even more confusion when it comes to how much interest you earn, because though it seems like a dividend yield of 3.4% is 3.4% interest that isn’t at all the case. Yes it’s a solid investment and a great way to make passive income, but again not interest.

Interest is money paid regularly at a particular rate for the use of money lent. In other words interest is money paid to you for allowing others to use your money.

How Much Interest Will I Earn On 1 Million Dollars?

With what interest really is in mind, the question now is how much interest will I earn on 1 million dollars? Well that depends on where you put your money, so let’s break down 5 places you can have your money and how much interest you’ll get from each.

Interest From Checking Account

According to NerdWallet’s rating of 17 online checking accounts interest rates range from 0.10% to 1.5%. So getting a calculator out will bring interest on a million to $1,000 to $15,000.

Interest From Savings Account

Savings accounts don’t offer much more then checking accounts ranging from 0.9% to 1.3% or $9000 to $13,000 annually.

Interest From Money Market Account

Money market accounts run right about the same as checking or savings with the highest I was able to find of 1.31% bringing in $13,100 annually from interest.

Interest From Certificate Of Deposit

The highest of the interest rates you’ll find with the highest I was able to find of 2.35% would bring in $23,500 annually. However you would have to invest in a 5 year CD meaning you wouldn’t be able to collect any of the interest for 5 years. The best thing would be to create a CD latter so that every 6 months you could be collecting interest.

There’s Another Way

With the average household income over $52,000 the amount of money you would get from interest on a million dollars wouldn’t allow you to quit. However there are other ways to make money from a million dollars, other ways to care for your bills using that million dollars. In an upcoming article we will discuss how we can live off of 1 million dollars.

Disease Called Debt

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Jun 52017

How To Get Out Of A Timeshare

By |June 5th, 2017|Blog|4 Comments

How To Get Out Of A TimeshareVacations are some of the most important, if not the most important part of our lives. Yes work will make you money, but what’s the point in making said money if you never enjoy yourself?

For many they have decided to buy timeshares, thinking that would be a way to go on vacation more often, possibly saving money in the process. But, they soon find out that not only was it not a good investment, but it’s one that is incredibly difficult to get out of. So here is how to get out of a timeshare.

What Is A Timeshare?

A timeshare is a part ownership of a vacation home, or rather the rights to said home. Most of the time you get 1 week with said property and usually the same week per year, though many have some exchanges of weeks.

On top of the initial investment (which can range from nothing to hundreds of thousands) you also have maintenance fees to pay yearly. Though this aren’t always excessively high, they can be sometimes even more so then the cost of the timeshare in the first place.

Why Would You Want To Get Out Of A Timeshare?

Though for some people having a timeshare is great (my aunt and uncle have had one for as long as I can remember) there are others who would gladly give it away for nothing, why? Because of the fees involved, and the restrictive nature of said timeshare.

Like I mentioned earlier the fees are always excessively high sometimes $500 to $1000 a year. However it can become much much more making it not cost effective to keep the timeshare. Consider staying at an AirBnB with the cost of $75 a night. This would come out to only $525 for a week saving you thousands over the maintenance fees, and more so considering you have to make an initial investment.

How To Get Out Of A Timeshare

If you have just got your timeshare you may still be able to get out of it. Most timeshare contracts has a grace period where you can cancel so the first thing I would check if trying to get out of a timeshare is if I was still in that grace period.

If that isn’t a viable option find out if it’s possible to sell the timeshare. You may call a real estate agent who is familiar with your area or even in timeshares themselves and ask for their advice. They may even have sellers in mind looking for a place.

If selling seems impossible then give it away. This may feel like throwing money away, but it may save you money in the long run since you no longer have annual fees to pay. Be upfront with whoever you are giving it to as to the reasons why. Especially if it is a friend of family member, never sacrifice personal relationships for money it’s to high a price to pay.

Disease Called Debt

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