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Jul 192017

How to Confidently Trade the Financial Markets: The Novice’s Guide

By |July 19th, 2017|Stocks|0 Comments

beginner stock market tips, investment tips, stock market tipsThe financial markets can be somewhat intimidating to a newbie. For starters, there are all those charts, graphs, changing numbers, signals, indicators, trends, analysis and endless data streams that pepper the trading arena. To a neophyte, this can be off-putting. Fortunately, the financial markets are designed for high levels of interaction for traders across the spectrum.

Whether you’re a newbie or a seasoned professional, the steps that you need to take to successfully trade financial instruments are essentially the same. Research, analysis, and decision-making are integral components of the trading process. The most important tip for all traders is the following: understand the macro economic variables that impact the price direction of your chosen asset.

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Jul 172017

What Is The Mega Backdoor Roth?

By |July 17th, 2017|Blog|0 Comments

What Is The Mega Backdoor Roth-The perfect storm, everything has to be just right in order for a storm to be called that. Some financial programs are amazing if you qualify for them. They sound amazing, the tax breaks, the money you make on them, but there is so much that goes in to being able to take advantage of them. The mega backdoor Roth is one of those programs. The “perfect storm” of saving money.

What Is A Roth And A Backdoor Roth?

A Roth plan allows you to pay taxes on money then save that money for retirement. The reason it’s a good idea to have one is that when you retire and take the money out all the gains are tax-free.

Let’s look at an example, say you invest the maximum starting at 25 until you retire at age 65. When you’re done you’ll have invested $235,000 but have $1,201,741. And those gains would be tax-free, meaning you can spend them as you would like.

Now, some make too much to contribute to a Roth IRA and so they have to do what’s called a backdoor Roth. This is where you invest in a Traditional IRA (taxed) and convert it over to the Roth IRA.

What Is The Mega Backdoor Roth?

The tax law allows for a backdoor Roth conversion, but now they also allow for what’s called the mega backdoor Roth. Why is it called that? Well instead of being able to contribute $5,500 a year this will allow more, a lot more.

The maximum you can contribute for 2017 to after-tax differed accounts is $53,000. Meaning if you contribute the max to your 401K ($18,000) then you still have $35,000 allowed to be invested. That money can all be done through a Mega Backdoor Roth.

Who Has Access To The Mega Backdoor Roth?

Before you start trying to get this done, you should realize that very few people have access to this. You have to have the “perfect storm” of a financial situation. First, you have to be a high-income earner, so much so that you don’t qualify to invest in a Roth IRA without a backdoor conversion.

Second, your employer has to allow after-tax contributions. Most of the time they won’t understand that you aren’t asking about a Roth and that you want to make after-tax contributions to your traditional IRA so be very clear when speaking with them.

Third, you also have to be contributing the maximum allowed. If you aren’t already contributing the $18,000 a year, then focus on that first and if you have money left then you can start working on other types of investments.

How The Mega Backdoor Roth Works

Once you’ve met the requirements then you need to make your after-tax contribution to the traditional IRA. After that do an in-service transfer to your Roth IRA. That’s it you’re done.

Sounds Simple But Isn’t

The process of the Mega Backdoor Roth sounds very simple, but actually being able to do it is difficult. First saving $53,000 in a year isn’t easy, even if you’re a high-income earner. Second, as mentioned before many employers don’t allow it.

So yes this “perfect storm” can save you a ton of money, but only if you can actually get it.

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Jul 102017

52 Week Money Challenge

By |July 10th, 2017|Blog|1 Comment

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Saving money is at the top of the list for most everyone. But with all the bills that need to be paid, it can feel impossible to save anything even just a dollar. With the 52-week money challenge it can be easier than ever before.

Traditional 52 Week Money Challenge

The traditional challenge consists of you starting in January and saving $1 week one. The second week you save $2, third $3 and so on until the final week where you save $52. This works because it helps you start a saving habit, and do so slowly. We can all save a dollar, we could go outside and probably find a dollar if we look long enough so starting with that small amount seems easy.

As time goes on it gets more and more difficult, though only by another dollar so it doesn’t seem so bad. If you get behind and try to catch up that’s when the problems start and you feel overwhelmed and give up.

Modified 52 Week Money Challenge

A different way to go about it is the modified 52 week money challenge. Instead of having to save by $1 a week you save what you can every week. So, for instance, say week 1 you have an extra $40, then you put that in the savings and mark off week 40. Then week 2 you only have $5 to put in, that’s fine you simply cross off week 5.

Especially with the holidays near the end of the year, it makes sense for you to try to make the largest payments during the first part of the year rather than the last.

Where Does The Money Come From?

As was mentioned already finding a dollar is an easy task. However eventually you get to $52 in a week making it several hundred dollars in a month. Most of us feel if we had that kind of money to save we wouldn’t need a saving challenge like this.

The first thing to do is cut costs. Do you need that coffee? Do you need to go out to eat all the time? Do you need a new book instead of going to the library? These things are not wrong and in fact, I do them quite often (though the books is a huge weakness of mine) however if you’re trying to save a dollar one week skip one of them. If you’re trying to save $40 in a week then skip several until you’ve actually saved that amount of money.

Another way is to make more money. You can ask for a raise at work but that will only do so much. Instead, it’s better to start a side hustle to make that money. Even if you just drive for Lyft or Uber you can make that extra money. Starting a side hustle takes the sacrifice of time and energy. You will have less time to spend with friends and family and when you’re around them you will have less energy than normal. Expect it, but once you see the savings increasing it may all be worth it.

Disease Called Debt

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Jul 32017

Best Low Maintenance Way To Invest $30k

By |July 3rd, 2017|Blog|2 Comments

Best Low Maintenance Way To Invest $30kWe’ve discussed what living off a million dollars would look like, but what if you receive a smaller amount of money like $30k? What are the best ways to invest $30k?

Pay Off Debts

When it comes to money and investing the number one 100% guarantee is paying down debts, especially credit card debt. If your interest rate on your debt is 5% or lower then investments will make more than paying off the debt, however if it’s more say 15% then paying that off first will save you more money then any passive investing of $30k will do.

Lets say you have $10k in credit card debt at 15% that means you’ll pay $1500 a year in interest. Many people have even higher interest rates so consider that when deciding the best way to invest $30k.

Create An Emergency Fund

This isn’t at all an “investment” producing money but one that produces peace of mind. If you only have your credit cards for emergencies and are unable to pay them off then the interest cost more than any investment.

You may even have to call around and beg friends and family to borrow even small amounts of money if you don’t have an emergency fund in place. Usually 3 to 6 months of pay is good to have but depending on your job it may be more or less to make you feel comfortable.

Buy Low Cost Index Funds

If you’re only interested in investing for a few months to a few years than it’s best to just keep the money in a savings, money market, or CD. However if you are looking at a 10 year or longer outlook then there are far better options.

In my opinion the best way to invest $30k is to start a business, however that’s incredibly active investing. For investing you can do once, check on a few times a year and when you need it has grown you need to invest in low-fee index funds.

Vangaurd is widely known as the best fund manager there is and offers many options. Depending on exactly what you’re looking for. You can invest in the total market index fund, a real estate index fund, a dividend producing index fund, target date funds, and others.

For most people the target date fund will be the best. Figure out the point in which you will want to withdraw your investment whether that’s for retirement or anything else and pick the target date fund the corresponds with that date.

Have A Robot Do It

In the past the only way to invest in the stock market was to call a stock broker and have them place an order for you. Now with the internet you could have a huge portfolio and never once speak with a broker. Even better is the recent increase in robo investors.

If you really don’t want to think at all about your investment and just want to receive the interest then the best way to invest $30k is one of these robo investors.

Places like Betterment and Wealthfront will take some information about you then invest your money for you with you not needing to think about anything. For those trying to invest without having to think about it you don’t get any more hands off.

Disease Called Debt

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Jun 262017

Chesley Sullenberger’s Net Worth

By |June 26th, 2017|Blog|2 Comments

Chesley Sullenberger's Net WorthHistory

Chesley Sullenberger was born on January 23rd, 1951 in Denison Texas. He graduated from the Air Force Academy in 1973 wish a B.S and served for 7 years reaching the rank of captain.

Chesley Sullenberger’s Career

His career in the military started in 1973 and ended in 1980. Afterwards, he began working for US Airways and did so for the next 40 years until his retirement in 2010.

On January 15th 2009 Chesley Sullenberger’s plane ran into a flock of geese forcing him to make an emergency landing in the Hudson. This act not only saved his life but the 155 other people on the plane. This also gave him a certain amount of fame.

Chesley Sullenberger’s Net Worth

Chesley Sullenberger’s net worth stands between $1.8 and $2 million dollars, no small number. However, if you factor in his long career (nearly 50 years) that number seems less impressive.

Add that to the fact that after US Airways flight 1549 he was able to add to his income a book deal Highest Duty: My search for What Really Matters, and then a few years later a second book Making a Difference: Stories of Vision and Courage From Americas Leaders.

If you compare Chesley Sullenberger’s net worth to many of the others we have discussed on this site it seems low. However, he was just a normal guy till a few years ago, and what he did doesn’t make money. He saved people’s lives and though people that do that deserve to be rich few are.

If you think that by selling those two books he was able to make a large amount of income then you overestimate a number of money authors make. No, he saved his money slowly investing it over a nearly 50-year career allowing him to retire completely in 2010.

Lessons Learned

It can take considerable time for wealth to grow. Chesley Sullenberger didn’t simply wake up a millionaire one day, he started as a thousandaire and grew from there.

That’s the best way for all of us to become millionaires someday. Start small, even just a few dollars, then a few more as time goes on that little amount grows to a lot. Compound interest and regular contributions can turn your thousands into millions.

Chesley was able to work well under pressure, saving himself and 155 others. He had years of experience and training under his belt that allowed him to do this, but at the end of the day being able to work under pressure saved all those people.

Though we will likely never be under the same kind of pressure, we can make sure we gain as much experience and training when we start a new endeavor. Want to start a business, start learning everything about the type of business you are getting into. And when you feel the pressure of starting such a business you will do well.

Chesley had saved money for years, but when he got a little fame from saving others he jumped on it and wrote a book. Though it didn’t make him rich it did add to his income.

We need to be ready for when things come our way if we see an opportunity to move up in the company or move across the country or buy an amazing investment, we want to be ready to take advantage.

Disease Called Debt

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Jun 192017

Can I Live Off Interest On A Million Dollars?

By |June 19th, 2017|Blog|Comments Off on Can I Live Off Interest On A Million Dollars?

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.

Disease Called Debt

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