Thursday 31 August 2017
Tuesday 29 August 2017
Invest Young Retire Young
Social Security and pensions probably won't be around when your teenager reaches retirement age. In the last ten years we've experienced a large reduction in pension plans offered to employees. Employers are replacing pension plans with contributory retirement programs. Unfortunately, according to a report of the National Association of State Boards of Education, "most workers with access to these contributory programs are not participating sufficiently to allow them to retire in their sixties without suffering a great decrease in their standard of living."
This may mean that everyone under age 30 will need to self-fund their own retirement. In order to be financially prepared, it is important they start investing young and avoid financial pitfalls that plague many of their peers. This requires they learn the basic financial education skills so they are financially prepared.
To be financially prepared for retirements today's youth will need to have over a million dollars to be fully financially prepared for a self-funded retirement. After calculating the long-term inflation rate, a young adult today will need over a million dollars in order to retire on an annual income of around $35,000 (today's dollars, adjusted for inflation and salary increases). This is assuming that they live to be ninety years old. However, with the improvements in medicine, many experts feel we will live beyond that mark, so just planning to live to 90 may not be enough. And $35,000 annual income per year is not a lot of money to enjoy the golden years.
What's the answer? One answer may be a simple investment of $100 per month starting at age 18. If that investment earns a return similar to the S&P 500 average over the past 82 years, they would have over a million dollars many years before they reach retirement age.
Have fun and retire young by following these simple steps.
1) Invest Young -There are powerful financial forces on your side when you start investing young. One of the most beneficial to young investors is compounding interest.
Compounding interest occurs when you invest money and earn a return on what you invest. The amount your investment returns then starts to earn you money. This forms a snowball affect that will make your money grow bigger the longer you are invested.
To break it down, you're making money off the interest your investment already paid you. Then you continue to make money off the interest that you made each year. That means your investments can grow faster and larger each year.
2) Consistent, young, investment plan. Investing on a consistent basis may allow you to generate long-term gains over time. For most, simplicity equals consistency; and consistency over time leads to financial security. Follow a consistent investment plan immediately; then as your investment knowledge grows you can add other forms of potential higher-return investments.
3) Use investment vehicles that offer tax benefits -Roth IRA may allow you to withdraw money at retirement tax-free. Most are unaware that forty percent of a persons income goes to pay taxes. You will keep more of the money you earn by investing in an IRA.
4) Diversify your portfolio - Initially, the stock market can be a great place to start investing young. As your account size grows you could take some of that money and move it into real estate or business ventures.
Diversification lowers risk. For example, if you have 'all' your money invested in the stock market when prices are declining then 'all' your money may decline in value as well. Now if you diversify your holdings and had a portion of your money invested in the stock market, some in the real estate market and some in businesses you might avoid a big loss.
The thought of funding one's own retirement makes some people nervous but if people start young and stay consistent, today's generation will be able to afford the lifestyle they want now and through out their life.
Vince Shorb
Friday 25 August 2017
Tuesday 22 August 2017
Why Internet Financial Freedom Is Within Your Reach
Many people dream of achieving internet financial freedom with an online business of their own. Some actually reach this goal and are successful starting and running an internet business.
However, there are many people that struggle and don't make their business a success. The difference between the people that succeed and the people that struggle is that the successful people understand what it takes to achieve internet financial freedom and how to make it happen for them.
So how do they know what to do and a lot of other people don't? Here is what they understand that you haven't figured out yet when it comes to an internet business.
One: You have to educate yourself.
This will always be something that you will have to do even after you become successful because there are always new things coming out for home businesses. If you ever want to achieve internet financial freedom then you can't skip this.
You have to become smart on all of the different ways to promote your internet business. Learn them one at a time and when you are comfortable with one then add another. Don't try and learn everything at once or you will quickly get frustrated and confused.
Two: Advertise your business constantly.
You have to advertise in a lot of different ways if you want to make money and be successful. If people can't find your internet business then you will never see success. This is why educating yourself is so important. So advertise, advertise and advertise some more.
Three: You have to want success bad enough.
That may sound weird when it comes to how you can achieve internet financial freedom but it is imperative to your success. You are the only one that can make your internet business successful.
No one will be there to tell you what needs to be done or when to do it. You have to be willing to work hard, learn all you can, go over, under, around or through any obstacles that get in your way and don't ever give up no matter what. You will achieve financial freedom, and never fail, if you do this.
In order to achieve internet financial freedom these three things are not the only things that you will need to do or have. They are however the most important ones.
If you don't do or have these then you will always struggle to succeed. So make the choice that no one and nothing is going to stop you from being successful with your internet business and before you know it you will have financial freedom.
by Lee Scutchings
Source
Saturday 12 August 2017
Wednesday 9 August 2017
10 Habits to Develop for Financial Stability and Success
Just like any goal, getting your finances stable and becoming financially successful requires the development of good financial habits. I’ve been researching this topic extensively in the last few years in my quest to eliminate debt, increase my savings and increase financial security for my family. I’ll talk more about these habits individually, but wanted to list them in a summary (I know, but I’m a compulsive list-maker).
Here they are, in no particular order:
1.Make savings automagical.
This should be your top priority, especially if you don’t have a solid emergency fund yet. Make it the first bill you pay each payday, by having a set amount automatically transferred from your checking account to your savings (try an online savings account). Don’t even think about this transaction — just make sure it happens, each and every payday.
2.Control your impulse spending.
The biggest problem for many of us. Impulse spending, on eating out and shopping and online purchases, is a big drain on our finances, the biggest budget breaker for many, and a sure way to be in dire financial straits. See Monitor Your Impulse Spending for more tips.
3.Evaluate your expenses, and live frugally.
If you’ve never tracked your expenses, try the One Month Challenge. Then evaluate how you’re spending your money, and see what you can cut out or reduce. Decide if each expense is absolutely necessary, then eliminate the unnecessary. See How I Save Money for more. Also read 30 ways to save $1 a day.
4.Invest in your future.
If you’re young, you probably don’t think about retirement much. But it’s important. Even if you think you can always plan for retirement later, do it now. The growth of your investments over time will be amazing if you start in your 20s. Start by increasing your 401(k) to the maximum of your company’s match, if that’s available to you. After that, the best bet is probably a Roth IRA. Do a little research, but whatever you do, start now.
5.Keep your family secure.
The first step is to save for an emergency fund, so that if anything happens, you’ve got the money. If you have a spouse and/or dependents, you should definitely get life insurance and make a will — as soon as possible! Also research other insurance, such as homeowner’s or renter’s insurance.
6.Eliminate and avoid debt.
If you’ve got credit cards, personal loans, or other such debt, you need to start a debt elimination plan. List out your debts and arrange them in order from smallest balance at the top to largest at the bottom. Then focus on the debt at the top, putting as much as you can into it, even if it’s just $40-50 extra (more would be better). When that amount is paid off, celebrate! Then take the total amount you were paying (say $70 minimum payment plus the $50 extra for a total of $120) and add that to the minimum payment of the next largest debt. Continue this process, with your extra amount snowballing as you go along, until you pay off all your debts. This could take several years, but it’s a very rewarding process, and very necessary.
7.Use the envelope system.
This is a simple system to keep track of how much money you have for spending. Let’s say you set aside three amounts in your budget each payday — one for gas, one for groceries, one for eating out. Withdraw those amounts on payday, and put them in three separate envelopes. That way, you can easily track how much you have left for each of these expenses, and when you run out of money, you know it immediately. You don’t overspend in these categories. If you regularly run out too fast, you may need to rethink your budget.
8.Pay bills immediately, or automagically.
One good habit is to pay bills as soon as they come in. Also, as much as possible, try to get your bills to be paid through automatic deduction. For those that can’t, use your bank’s online check system to make regular automatic payments. This way, all of your regular expenses in your budget are taken care of.
9.Read about personal finances.
The more you educate yourself, the better your finances will be.
10.Look to grow your net worth.
Do whatever you can to improve your net worth, either by reducing your debt, increasing your savings, or increasing your income, or all of the above. Look for new ways to make money, or to get paid more for what you do. Over the course of months, if you calculate your net worth each month, you’ll see it grow. And that feels great.
By Leo Babauta
SOURCETuesday 1 August 2017
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