Get Financially Fit!
Stock Market Investing
Can Investment Newsletters Help Me Earn More $$?
Mar 27th
I saw an interesting Q&A post on CNNMoney.com. Here’s the teaser:
There are plenty of gurus out there claiming they can beat the market, and they’re willing to show you how for a newsletter subscription fee of a few hundred bucks. Are they worth it?
Click here for the answer to this question.
The Forbes List
Mar 6th
Forbes just released it’s “World’s Billionare” list. Guess who is ranked #1 this year? If you guessed Bill Gates, you would have been right in previous years.
The first place honor belongs to Warren Buffet. Buffet’s fortune, according to Forbes, has swelled to $62 billion thanks to the performance of Berkshire Hathaway stock. I salute Mr. Buffet considering he is giving most of his wealth to non-profit and charitable organizations.
Speaking of Berkshire Hathaway, the company released it’s 2007 annual report. Buffet’s letter to shareholders is a definite must read for any entrepreneur or investor.
Assessing Your Risk Factor
Aug 28th
by Eric Heckman
If you are like most Americans, you plan to retire sometime in the future. You may have a retirement account established through your employer, or be placing a portion of your savings into investment vehicles, hoping they will grow in value.
Wherever you have placed your money, the smart investor should always be aware of his or her own particular “risk factor.”
In the personal investment world, ‘risk’ is defined as any possibility of loss, usually due to market volatility.
Age is certainly a major consideration. People in their 20s and early 30s tend to be aggressive because they have plenty of time to recover from a severe loss. I call this the “Reckless Cowboy” stage. People in their late 30s and early 40s are in the “Mature Cowboy” stage and tend to strike a better balance between aggressive and conservative choices. Folks in their late 40s and 50s feel that they still want to ride the rodeo, but with a little more caution. Lastly, there are the people in their 60s and beyond. These people have reached the “I’ll still attend the rodeo, but sitting in the bleachers is looking better every day” stage.
In working with clients, I employ six typical profiles that help most people determine their risk factor and retirement goals.
1. Aggressive Profile: Fits long-term savers who want high growth and do not need current income. With 5 percent in cash and the other 95 percent in stocks, these individuals find the substantial volatility as acceptable in exchange for long-term upside potential.
2. Moderately Aggressive: With 5 percent in cash, 15 percent in bonds and 80 percent in stocks, this profile fits long-term investors who want good growth potential, don’t need immediate income and are comfortable with some risk.
3. Moderate: This profile fits long-term investors who don’t need current income, but want reasonable growth potential. With 30 percent in bonds, 10 percent in cash and 60 percent in stock, it tolerates some market fluctuations, but is less risky than just the stock market.
4. Moderately Conservative: This fits those who do need current income, but also want stability and potential growth with 45 percent in bonds, 15 percent in cash and 40 percent in stocks.
5. Conservative: Investors who want income and long-term stability in place of increasing value. It calls for 55 percent in bonds, 25 percent in cash and 20 percent in stocks.
6. Short Term: These individuals typically need current income and a high degree of stability. It suggests 40 percent in short-term instruments and 60 percent in cash. Investors with very short time horizons (one to two years), and where preservation of capital and liquidity are the primary goals, should consider 100 percent money market accounts or a combination of both money market accounts and short-term certificates of deposit.
Note that these are general descriptions. A qualified financial professional can help you determine your individual profile and find the solutions that fit your particular situation.
Becoming a Sophisticated Investor
Apr 26th
Reprint of original article posted on Zeromillion.com.
By Ryan P. Allis
There are many types of investors. There are traders and there are speculators. There are small-cap, mid-cap, and large cap investors. There are day traders and those that bet on the long term. There are those in mutual funds, those in public equities, and those investing in early-stage private companies.
In Rich Dad’s Guide to Investing author Robert Kiyosaki goes into the different levels of an investor. He notes that the most advantaged investors are those that are also business owners, for by building their business they are also investing, have more information than outside investors, are building an asset, and are learning everything they will need to know to invest in other companies.
In the book Kiyosaki lists thirteen characteristics of the ‘Average Investor’ and thirteen characteristics of a ‘Sophisticated Investor.’ I would encourage you to study the following chart in depth before you put any of your money into other companies.
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Source: Rich Dad’s Guide to Investing
About Ryan P. Allis
Ryan P. Allis, 20, is the author of Zero to One Million, a guide to building a company to $1 million in sales, and the founder of zeromillion.com. Ryan is also the CEO of Broadwick Corp., a provider of the permission-based email marketing software and CEO of Virante, Inc., a web marketing and search engine optimization firm. Ryan is an economics major at the University of North Carolina at Chapel Hill, where he is a Blanchard Scholar. Learn more about Ryan.
10 Ways to Get Off the Investment Roller Coaster
Apr 16th
By Eric Heckman
Remember your first ride on an amusement park roller coaster? I will never forget mine. The painfully slow climb, the anxiety-building wait at the top and the inevitable terrifying plunge into the abyss. The exhilarating speed and the unexpected turns that flung me headlong into that black tunnel of unknown length was the worst part. The rushing highs and lows, the fun, the fear and the panic, all of these emotions are all created by a complex structure under the control of someone else.
Today’s stock market is a lot like that roller coaster ride, the same ups and downs, the same terror. The difference is the stock market ride never ends and the stakes are far greater. Many retirees have lost a portion of their retirement savings in the stock market during the past few years. In the aftermath of Sept. 11, many took a swift ride they’ll never forget and for some, may never recover from. We all remember the Fed’s eleven interest rate cuts in 2002, which reduced some retiree’s incomes by as much as 90 percent. Interest rates on savings and CD accounts have never been lower.
The good news is it’s possible to get off that financial roller coaster and enjoy the confidence that comes from stepping back onto solid financial ground. It’s not difficult and it’s a lot less risky than staying in the “you never know” stock market game. Here are 10 simple steps for getting off that roller coaster quickly and regaining control:
1. Assess your situation. What are your assets? Gather all your financial documents including: your stock certificates, bank statements, brokerage statements, tax returns, social security information and insurance statements and documentation on all other assets you may have. Make a list of each asset.
2. Evaluate your investments. Review and determine the true rate of return on each investment in your portfolio. Rate the return for each asset as high, medium or low.
3. Determine your state of risk. Review how risky your investments are. What percentage of your overall savings is in conservative investments and what percentage is at risk? Rate the risk factor for each asset as high, medium or low.
4. Review your needs. Are you already retired, close to it or far away? Do you have sufficient monthly income? Rate each asset as yes or no.
5. Investigate other investments that would better support your goals and help provide the security you need. If your portfolio over-emphasizes high risk investments, consider balancing it with conservative alternatives.
6. Reallocate. If you find better options, then act. Don’t be afraid to make adjustments.
7. Establish or update your estate plan. If you have a plan, review and update it. If you don’t, then evaluate your need for one. Anyone with any assets should protect them through an estate plan.
8. Activate your estate plan. Ensure you have the proper estate planning tools in place and utilize them. Your assets should be protected from probate taxes, estate taxes and other taxes that can reduce their value.
9. Remain “savvy” and avoid scams. The fact is financial scammers are everywhere. Remember the following points whenever approached: Reputable financial firms don’t solicit you. Companies should always have available references. Banks don’t send representatives door-to-door. Credible financial professionals have no vested interest in a particular product. And if it sounds too good to be true – it is!
10. Check in regularly with a financial advisor you trust.
The worst move you can make is to wait. The stock market rollercoaster is unpredictable. Yes, it will go up and come down, but no one knows when. If you’re like most retirees, you don’t have the time or money to make that gamble. Retirement is about enjoying life. Besides, the only roller coasters you should be on are the ones at Disneyland.
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Bonus: Financial Fitness Pro Readers can now request a free CD ROM on financial planning or a free consultation. In addition, Heckman Financial is also offering 60% off ($600 savings) a year of planning between now and June 30, 2006.
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Eric Heckman is president of Heckman Financial & Ins. Services, Inc. Eric is a CFP®, ChFC, CLU brings a wealth of knowledge and over 13 years of experience to the field of financial planning. You can contact Eric at (408) 297-9800.