People Who Made Their Wealth Later in Life

When Do People Make Their Wealth?

We all know the success stories of prodigies and young billionaires who made their wealth at an early age. However, the compiled research shows that it takes approximately 32 years to become a billionaire. This means most billionaires did not find immediate success. In fact, the average age of business founders is about 40. So, if you are still hoping to join Forbes’ list of billionaires, there is still time. Here are 10 people who made their wealth later in life.

10 People Who Made Their Wealth Later in Life

1. Donald Fisher (37) – $3.3 billion

Donald Fisher claimed his success as the founder of Gap Inc. after a career as a real estate developer. At 37, he launched the company in San Francisco by selling music and clothing. Eventually, he branched out across the United States, and introduced affiliated stores Old Navy and Banana Republic. At the time of his death in 2009, his net worth was $3.3 billion.

2. Vera Wang (40) – $270 million

Vera Wang

This former figure skater turned fashion icon made her wealth later in life as well. After Vera Wang failed to qualify for the Olympics, she started at Vogue after college. She eventually became editor-in-chief of the magazine. Not only did she maneuver her way to the top of the corporate world, but also became a highly influential voice in directing fashion trends.

However, she made her fortune after she started designing her own gowns at age 40. Today, Vera Wang couture and clothing are highly sought after by the Hollywood elite. Moreover, they regularly appear on runways around the world. According to the Forbes list, Wang is currently worth $270 million.

3. Martha Stewart (40) – $400 million

Martha Stewart

In her early years, Martha Stewart was a stockbroker on Wall Street. After she discovered her true talents, she began building her brand. First she owned a catering business, then published cookbooks, and founded her own magazine. Martha Stewart became a billionaire when her company went public in 1999.

However, things quickly went south for her. She served 5 months in prison for obstruction of justice and making false statements. Since then the company has been sold twice. However, she has rebuilt her reputation and her brand since then. According to Celebrity Net Worth, she is estimated to be worth about $400 million today. Martha Stewart is an unusual example of someone who made their wealth later in life, lost it, and managed to reclaim success.

4. Sam Walton (44) – $15 billion

Sam Walton

Everyone knows the Walmart name, but not many know that Sam Walton didn’t strike it rich until well after 40. He claimed his spot on this list for founding the retail giant in 1962. After a successful career at JC Penney, he left to manage his own store at 44. One thing that set him apart from his competition was his emphasis on logistics. He took a single sporting goods store and created a global empire. Today his family is among the wealthiest people in the world. Their net worth far surpasses Sam Walton’s $15 billion when he died in 1992.

5. David Duffield (47) – $13 billion

David Duffield is the creator of several software companies including PeopleSoft, Integral Systems, and Information Associates. He made his fortune when his company grew to one of the largest software application companies worldwide. Eventually, Oracle bought out the company in 2005. Duffield is currently estimated to have a net worth of about $13 billion.

6. Henry Ford (49) – $200 billion

Henry Ford

Henry Ford founded Ford Motors and became one of the richest men in history. He began as an engineer for Edison Illuminating Company where he met Thomas Edison. When he discussed his idea, other engineers encouraged him to build the automobile. He eventually started his own business in 1899 introducing the Model T car. Since then, the Ford empire has expanded exponentially. At the time of his death in 1947, he had accumulated a fortune equivalent to about $200 billion today.

7. Charles Darwin (50) – $400 million

Charles Darwin

Charles Darwin is one of the most revered names among scientific community. As a famous biologist and geologist, he had several significant contributions to academia. Although, the moment he set sail on the HMS Beagle his life changed forever. His findings during his voyage led to the theories of evolution and natural selection.

However, he didn’t make his fortune until he published the “Origin of Species” at the age of 50. Charles Darwin is also among the people who made their wealth later in life. He was worth approximately $16 million when he died in 1882, which is valued at slightly more than $400 million today.

8. Taikichiro Mori (51) – $13 billion

Before Taikichiro Mori became a real estate mogul, he served as Dean of Commerce in Yokohama City University. Once he retired from the university, he used his knowledge to become a real estate investor. He went on to found the Mori Building Company which became wildly successful. Between 1991-1992, Taikichiro Mori was the richest man in the world. When he died, Mori’s net worth worth was estimated to be about $13 billion.

9. Ray Kroc (52) – $600 million

Ray Kroc

When Ray Kroc saw his golden opportunity, he was selling milkshake machines. After he met the McDonald’s brothers, he joined their company in 1954. There is much controversy surrounding his rise to success. However, no one can deny Ray Kroc’s influence in making McDonald’s a household name.

When he gained the company, he took it to heights that had never been imagined. McDonald’s is now worth more than $33 billion today and has locations in nearly every country. Ray Kroc was pivotal in launching the brand and was amply rewarded for his efforts. At the time of his death in 1984, Kroc was worth approximately $600 million.

10. Arianna Huffington (55) – $100 million

Arianna Huffington

Our last person on the list of people who made their wealth later in life continues on an upward slope. Arianna Huffington began her career as a successful author, columnist, and political commentator. Some have even called her one of the most influential and powerful women in the world because of her media platform and global reach. She founded the news publication Huffington Post which later sold to AOL for $315 million. Since then, she has been heavily involved in other successful companies such as her Thrive and Uber. Today, her personal worth is about $100 million. However, her new endeavors could launch her to even greater heights.

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How to Live Below Your Means

With rising prices and ever increasing consumer demands, it becomes more challenging for many individuals to live below their means. Credit card bills, keeping up with the Joneses, and other unnecessary expenses are among some of the reasons it is exceedingly hard to stick to a budget. Some find themselves unable to spend less than the amount of money they are able to make each month. Here are a few suggestions to help you live below your means and improve your financial health.

Living Below Your Means
Living Below Your Means

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How to Plan for Retirement When You Lost Your Savings

The sad truth is that most Americans are not properly prepared for retirement. According to a 2019 survey, 64% of Americans expect to retire with less than $10,000 in their accounts. Whether this is a result of medical expenses, poor investments, or outstanding debts, you must remember it is never to late to plan for retirement. It is also possible to start over and rebuild your nest egg. Here are five things you can do to get back on track when you have lost your savings.

How to Plan for Retirement When You Lost Your Savings

5 Ways to Help You Plan for Retirement

1. Ramp Up Your Savings Plan for Retirement.

While it may seem obvious, the first step to plan for retirement after you have lost your savings is to begin again. You must also be realistic and admit that your current savings plan is likely not enough to rebuild your nest egg. It will require a great deal of sacrifice, discipline, and lifestyle changes to regain what you lost.

First, carefully evaluate your monthly budget and see what you can do without. This means cutting out unnecessary expenses like entertainment expenditures, buying the latest electronics, and going out to eat. Create a minimum budget where you are only spending money on what you need to survive. Once you know what you need to meet your monthly bills, put every extra penny towards your retirement funds. Additionally, utilize employer-sponsored 401k plans and max out your IRA contributions. This includes catch-up contributions for those over 50. Make no mistake; it is difficult to do without the things you enjoy. However, supporting yourself after retirement is a much more important goal.

2. Delay Your Retirement.

Another option is to delay your retirement date. Not only does it allow more time to save, but also to see more gains on your investments. If you are still living off your wages, it will postpone when you must begin drawing from your retirement funds. Furthermore, it reduces the number of years that your savings must sustain you. Working a few more years may  prevent you from running through your savings too early.

Prolonging your retirement also increases your Social Security benefits. You are able to claim retirement benefits from 62, but you can maximize the amount if you work until 70. Your monthly check increases approximately 7-8% every year you hold off retiring. The income you earn during those years is also calculated into your monthly benefits which could increase the amount you receive. Unfortunately, there are no increases beyond age 70. Keep in mind that most workers retire sooner than expected due to layoffs, health issues, or caring for a family member or spouse. Although this is a good strategy to help plan for retirement, don’t bank on working till 70. You never know what surprises life may throw you that could put your savings plan off course.

3. Adjust Your Retirement Lifestyle.

Another hard pill to swallow after losing your savings is that you may not be able to live as lavishly as you had planned for retirement. You must create a new retirement budget by trimming the fat. This means tightening the purse strings and finding ways to lower monthly expenses after you retire. Some suggestions would include downsizing your home, eliminating travel plans, or moving to an area with a lower cost of living. Living on a restricted budget will help you stretch your savings and catch up to your retirement goals.

4. Understand How You Lost Your Savings.

Another important step when starting over is to understand where things went wrong. Some matters are beyond your control, but other lost their retirement savings due to poor investing decisions. If this includes you, you should evaluate your investing strategy and examine why your portfolio suffered such extensive losses. If you invested too heavily in one area, diversifying will reduce future market exposure and personal risk. Many are tempted to invest more aggressively to regain their savings, but this could backfire and cause a second major loss.

5. Seek Professional Advice.

The most important thing is to remember there is always hope. However, if you are unable to find your own solution it is very easy to fall into despair. If you feel like there is no way out, seek professional advice from a financial planner. They will assess your situation, explain the options available to you, and find solutions you may have overlooked. Also, choose someone who is fee-only. This means they only earn a commission if you make money. It may eliminate any concerns over conflicts of interest or doubts that they are making the best decisions for you. Even when you must go back to square one, there is always a path forward.

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Buying Part of a Business: Is it Worth It?

Buying Part of a Business

When seeking to continue to build your financial portfolio, adding investments is one idea that many choose to pursue. One way that such investments are typically made is by buying part of a business. Buying into an existing business means that you become one of the main stakeholders, owning a portion of the business itself. While this is something that is done frequently, business owners are often unaware of the many factors that are related to making this significant financial decision. Here are a few serious considerations before buying part of a business.

The Rewards of Buying a Business

Of course, buying part of a business may sound overwhelming, but there are many factors that make it a beneficial decision.

  1. There is an established company client base. One of the benefits of owning part of an established business is that the client base is already set. A new business has to attract customers and build a group of returning clients. However, one that is already functioning will have this taken care of. This will allow the business owners to focus more on customer service, client retention, and increasing the number of clients.
  2. You have greater ease of expansion. If you happen to buy part of a business that is looking to expand, it will be much easier with a company that has already made a name for itself. Look to see if the company has a good reputation and gets good feedback from its clients. It’s also easier to get an unsecured small business loan for expansion when the company has a proven track record of sales.
  3. You can focus on business improvements. You may like challenges and, thus, purchase part of a business that requires a few changes to improve. Luckily, the company should have a plan of operation in place. Then, you can focus on how to improve it for the company’s overall success.
  4. You have access to current owners’ knowledge. One of the greatest advantages of buying part of a business is that the current owners will be very familiar with the company. They can show you what has and hasn’t worked for business operations thus far. You, equipped with this knowledge, can then come up with innovative ideas to benefit the business.

The Risks of Buying a Business

As there are many pros to buying part of an existing business, there are just as many risks of shared ownership of a company. It is best to keep these factors in mind as you make your decision.

  1. You disagree with the current owners’ practices. It would be an absolute nightmare to purchase part of a business where the owners mismanaged funds. Upon learning more about a business you may want to purchase part of, be sure to research all financial records.
  2. The company has a bad reputation. Good use of customer feedback is to learn how the company fares amongst past clients. A company with a bad reputation will likely struggle with being successful.
  3. It has high turnover. In addition to clients being indicative of a company’s progress, the employees can serve the same purpose. It is a red flag if there have been numerous employees during the business’ lifespan, especially due to multiple resignations. This would be something to keep in mind as a problem area if you decide to take on the company.
  4. There are differences between owners. If the current owners are not open to change or new ideas, you could run into difficulties. You may meet resistance trying to take the company to the next level in terms of expansion, increasing profits, or employee and client satisfaction.

Checklist Before Buying Part of Business

Before you make any large purchases or investments, you should always do your homework. The Westmoreland Checklist of Due Diligence provides a great set of guidelines as you vet out potential investment options.

First and foremost you want to make sure the company is in good standing with government, financial, and community organizations. This includes issues about all the companies operations. It means you should look at all the company’s financial information. This includes everything from permits and tax compliance to its reputation with employees and clients.

The choice to buy part of a company should only be made after carefully considering all factors, good and bad, that are involved. It can also be helpful to seek the help of a business adviser who can answer your questions and give guidance as you take this big step.

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The Pitfalls of Foreign Mutual Funds

When comparing the returns of equity mutual funds, many foreign mutual funds outperform domestic ones. This has caused some investors to buy more securities in international companies in the hopes of huge returns. While these funds offer great diversification, you must also be aware of the pitfalls of foreign mutual funds.

The Pitfalls of Foreign Mutual Funds

What Are Foreign Mutual Funds?

Foreign mutual funds are international funds that invest in securities of foreign companies that are listed in foreign markets. Some mutual funds invest directly in international stock markets. Others serve as feeder funds that invest in specified mutual funds in international markets.

They can be categorized geographically or by the markets they invest in. Some international funds choose to focus on a single sector, commodity or emerging market.

Why Do People Invest in Foreign Markets?

One of the greatest advantages when investing in foreign markets is the instant diversification you receive. With these funds, you are buying a piece of larger portfolios than you couldn’t assemble on your own. Investing in foreign markets also diversifies your holdings into different currencies. Monetary depreciation between currencies increases your returns on investments in foreign markets as well.

Another benefit of foreign investment is exposure to new markets and economies. Varying markets and economies do not necessarily move in tandem with one another. Investing in foreign mutual funds allows you the chance to invest in other economies that are performing better at that particular time.

Finally, you get professional management for your portfolio backed by a full financial team. Fund managers have extensive experience in the global markets. Additionally, research analysts located worldwide are constantly looking at new investment opportunities for their firms.

What are the Pitfalls of Foreign Mutual Funds?

However, there are many pitfalls of foreign mutual funds. Before you run off and invest in an international fund, consider these drawbacks.

1. They charge annual management fees. The average international fund charges about 1.5% of the total assets, but some are much more expensive. This figure seems like a small amount but it can add up over time.

2. You have less control over decisions since your fund manager chooses where to invest. They may choose to focus on a different region than you prefer, or invest in different companies that you would not choose for yourself. Since they are only required to report holdings twice per year, you may not know the details of what your manager is buying until long after the fact. This is not always a bad thing, but many things are out of your hands

3. Not all international funds perform well. Furthermore, currency exchange rates could work against you as well. If the foreign currency appreciates instead, this can reduce your returns.

4. U.S. tax payers who invest in foreign mutual funds more heavily taxed for foreign mutual funds. Since the Tax Reform Act of 1986, investors can no longer cash in on the loophole related to tax-free foreign mutual funds.

Should You Invest in Foreign Mutual Funds?

In the end, the argument for global diversification in your portfolio is a compelling one. However, you must carefully weigh it against the pitfalls of foreign mutual funds. Should you choose to invest in foreign markets, it is always wise to proceed with caution. Don’t sink all your money into an unfamiliar market or ignore the risks of forex investments. As with all financial matters, never invest money that you can’t afford to lose and seek professional advice when you feel out of your depth.

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How to Become Independently Wealthy

Become Independently Wealthy

Becoming wealthy is a goal many of us hope to achieve in our lifetime.  Some want to be wealthy to have unbelievable lifelong experiences or to validate success. However, the goal is often dreamed of but rarely achieved.  Ken Fisher, the author of The Ten Roads to Riches, discusses the many ways people can achieve wealth throughout their lifetime, ten to be exact.  All of these roads have proven to make someone independently wealthy in their lifetime.  Some are more common than others.  So, if the question of how to become independently wealthy has crossed your mind, I will discuss two of the ten roads Ken illustrates in his book.

What Does It Mean to Be Independently Wealthy?

To determine whether you are independently wealthy, you must ask yourself a few basic questions. First, do you rely on financial support from anyone? If not, then consider yourself financially independent. Second, do you depend on your employment income? If you answer no to the second question, you would be considered independently wealthy. When you have become independently wealthy, you have either saved enough or earn sufficient passive income to give up your day job.

How to Become Independently Wealthy: Save and Invest Wisely

I usually sign off my posts with a simple phrase: Budget Smart, Invest Wise.  Budgeting allows you to allocate your funds to various categories. Hopefully one of those categories is savings.  Whether your savings vehicle is an IRA, Roth IRA or other type of investment, saving money is critical to building wealth.  However, saving is only half of the battle to building wealth this way.

The other key ingredient is investing wisely.  Investing wisely means creating a smart investment plan. This may be with a financial advisor or through acquired knowledge that creates a return on your investment.  For example, I have found that investing on a monthly basis in a mutual fund is of most benefit to me because it covers the broad range of the U.S. Stock Market.  This investment, although it has risk involved, prevents me from being susceptible to the failure of one company or one sector of the market.  Saving and investing wisely is the road most traveled. But, it also provides the greatest chance of reward.

How to Become Independently Wealthy: Invent Income

Inventing income can cover a wide spectrum of earning additional money.  For example, if you are a songwriter or musician, you can create an ongoing stream of royalties from your lyrics or music.  If you purchase a rental property, you could turn it into a cash flow positive stream of income.  The possibilities are endless.  Maybe you have a specific skill that people are willing to pay you to teach them.  Perhaps your area of expertise at work can lead to consulting other companies on the side.  Do you have something you’re passionate about that you can create into a blog or website and charge for ad revenue?  Many of us have the tools, knowledge, and talent to create additional income. However, do you have the drive to reach your goal?

Becoming independently wealthy or successful all boils down to the level of commitment.  If you are committed to becoming independently wealthy, then  you can find a way.  Some individuals, like Bill Gates or Mark Zuckerberg, created an enormous amount of wealth.  Maybe you want billions like these company creators. On the other hand, maybe you will be satisfied with millions or even a million.  Only you can determine what being wealthy is to you.

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Which States Do Not Tax Retirement Income?

Choosing where to retire will be one of the most important decisions you make. One factor that impacts this decision is local taxation law. How much your retirement income is taxed may have you considering a move in your golden years. After a little research, you will soon learn that local taxation varies greatly from state to state. In fact, there are some states that don’t tax retirement income at all. Here are a few financial factors you should include when choosing where to put down roots in your retirement years.

States That Don’t Tax Personal Income

If you want to maximize you savings during retirement, there are currently nine states that don’t tax retirement or personal income. Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington and Wyoming do not have income taxes. However, New Hampshire and Tennessee do tax dividends and interest for the time being. But, both states have plans to phase out these taxes. Tennessee will see these changes in 2021 while New Hampshire will phase it out by 2025.

States That Don't Tax Income

 

Taxation of Retirement Income by State

The taxation laws and treatment of retirement income in the remaining states vary greatly. Therefore, you should familiarize yourself with the local laws before you make any decisions.  Some states will allow partial exemptions for pensions and social security income. However, others will tax the entire amount of your retirement income. If you are unsure how local tax laws in your state apply to Social Security benefits, you can read more here.

Pension Exemption

If you live in Illinois, Mississippi, or Pennsylvania, then there is some good news! These states exempt all your pension income from taxes. Although, this 0nly applies to qualified individuals.

Partial Exemptions and Credits

Another common structure for tax on retirement income is to allow a partial exemption or provide a credit for part of your pension income. If you settle in one of the following states, you will receive some relief since these states don’t tax your full retirement income: Alabama, Arkansas, Colorado, Delaware, Georgia, Hawaii, Iowa, Kentucky, Louisiana, Maine, Maryland, Michigan, Missouri, Montana, New Jersey, New Mexico, New York, Ohio, Oklahoma, Oregon, Rhode Island, South Carolina, Utah, Virginia and Wisconsin.

An alternative structuring in other states is when pension income is tax included. This applies to residents of Arizona, California, Connecticut, District of Columbia, Idaho, Indiana, Kansas, Massachusetts, Minnesota, Nebraska, North Carolina, North Dakota, Vermont and West Virginia.

The Most Tax-Friendly States for Retirees

Tax Friendly States

In 2019, Kiplinger compiled a list comparing the tax burden for retirees state by state. To complete the analysis, they used the same hypothetical household as the constant variable.  The purpose is to compare how the burden of income, property and sales tax varied across the country.

The rankings are based on a family of four with a yearly income of $150,000 and $10,000 in dividends. Additionally, Kiplinger included $10,000 in mortgage interest on a home valued at $400,000. It then applied each state’s local income tax to these figures. Based on these metrics, here are the top 10 states that are the most tax-friendly towards retirees:

1. Wyoming
2. Nevada
3. Delaware
4. Alabama
5. South Carolina
6. Tennessee
7. Mississippi
8. Florida
9. Georgia
10. Arizona

Keep in mind that these rankings are based on a hypothetical model. Although, it may be different for your personal financial situation. If you are considering a move in your retirement years, be sure to do your homework. Lastly, don’t be afraid to seek out professional advice to help you plan for retirement. Choosing where to retire is a huge decision. Moreover, it is not one that should be made lightly. Moving to one of the states that don’t tax retirement income could help stretch your retirement savings through your golden years.

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Blue Apron Free Trial Review

Blue Apron Free Trial Review

Let’s be honest, many of us lack the time or the money to cook unique, cost-efficient meals today.  Whether you are a couple or a family, it is sometimes easiest to just eat out.  Eating out on a regular basis can get very expensive.  So, it’s easy to see how meal delivery services have become so popular, especially with their attractive introductory offers. I recently received a Blue Apron free trial.  I was eager to try and cook my way through a new and adventurous meal, something I wouldn’t normally eat.

As this was a Blue Apron free trial, I had nothing to lose.  I had three meals delivered right to my door.  All of the packaging was recyclable, and it came with a couple of nice reusable freezer packs.  Here is my experience:

Blue Apron Meal: Chipotle-Glazed Meatloaf

Blue Apron Free Trial: Chipotle-Glazed Meatloaf

What I expected:

Blue Apron said the prep time for this meal was just 10 minutes with the cooking time of the meal being between 35-45 minutes.  The card (included in the picture) came with a quick description of the meal along with all of the ingredients for the meal.  Each ingredient listed even came with a picture in case you weren’t sure.  The flip side of the card also came with step by step instructions on how to prepare the meal. Additionally, there were some pictures to assist you along the way.  I laid out all of the ingredients on top of my counter along with the card and began.

The Good: 

You have all of the ingredients you need to create a unique dish.  If you tried to go to the grocery store and buy all of the necessary items to create something similar, you would spend way more than $10/meal.  Also, all of the items looked fresh and appeared top notch.  Everything from the beef, to the potatoes, to the garlic looked like it had been prepared just mere days before.  Finally, Blue Apron also pairs each of the dishes with a wine.

The Bad: 

While the meal card said the prep time was just 10 minutes, this was not the case.  It took me about double that time to prepare the meal.  The only way someone could have done the prep in 10 minutes is if they were highly experienced in the kitchen or if they had prepared this meal before.  The meal also lacked a side of vegetables.  While this might seem quite minor in the details, some healthy vegetables to go along with this meal would have made it complete.  I ended up cooking some green beans to go along with the meat and potatoes.  You also needed some cooking experience to help guide you through.  I don’t believe these meals are for the complete rookie.  For instance, you had to mince garlic, slice potatoes, and needed a few kitchen accessories to complete the meal.

Chipotle-Glazed Meatloaf Dish

Final Opinion of Blue Apron’s Free Trial

Ultimately my Blue Apron free trial was a success.  I was able to create a delicious, unique meal all by myself.  At just around $10/meal, it is also a great value because the same ingredients would cost much more if you purchased them at the store.  Downsides would be that it requires some basic kitchen knowledge and elementary kitchen items.  This meal service is great for a couple who enjoys cooking together and wants to spend some time create different dishes and bonding over the experience.

Continuing Beyond the Free Trial

If you decide to continue purchasing Blue Apron meals after the trial, you have a variety of meal options. The website is very user friendly and lets you browse through their selections easily. Furthermore, they cater to specific dietary needs as well. Pricing varies based on the serving size and the plan you choose. However, you receive a discount for your first week and free shipping. If you aren’t quite ready to commit to the program, the Blue Apron free trial is perfect for you. There’s no risk and you’ll have the chance to sample new dishes for free!

Are you interested in Blue Apron? Get $30 off your first week using this link.

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The Biggest Lies About Growing Wealth

The Biggest Lies About Growing Wealth

From an early age, there are several myths and lies about growing wealth that are drilled into our memory. However, some of these misconceptions are based on outdated ideas and limited perspectives. Here is a look at some of the most common lies still being circulated.

5 Common Lies About Growing Wealth

1. Businesses Break Even in the First Year.

There is a common misconception among new business owners that you will be an instant success. However, in reality plans get delayed, unexpected expenses arise, and it takes time to create a market presence.  According to Forbes, the timeline to achieve profitability is closer to 18-24 months. Furthermore, 25% of new business ventures fail in their first year.

The truth is that instant success is very rare. While entrepreneurs are waiting for their breakthrough moment, you must be willing to wait it out, lose money or even walk away from a failed venture. Many successful businessman will tell you that had several failures before they finally prospered.

2. All You Need Is a Good Idea.

This mantra lies at the heart of the American Dream that anyone can get rich with the right idea. This is one of those lies about growing wealth that perpetuates itself because there is some truth in it. Unfortunately, not every great idea meets a market need or consumer demand. Not only must the idea be feasible and practical, but it most importantly it must be profitable.

The execution and timing of your business’s launch are also crucial. When you are first finding your legs, expect to invest a ton of man hours to get it off the ground. You should also make sure you have enough savings to cover your bills and give yourself a cushion. This will allow you to breathe a little as you wait to gain a foothold and break even.

3. You Need High Returns and Savings to Grow Money.

Another myth about growing wealth is that you need high returns and savings to grow your wealth. However, most financial planners will tell you that making steady contributions is a more efficient strategy. Consistent savings is more important than stumbling upon a good investment opportunity. But, don’t ignore a good opportunity when it comes around.

This is also a great lesson to pass on to the next generation. Remember, it is never too early to begin saving and investing. Time is a valuable asset; the sooner you begin the more money you earn from compounding interest. Even if you start small, you can let your money begin working for you.

4. You Need a Loan to Start a Business.

One of the greatest pitfalls for potential business ideas is this idea that you need a loan to start a business. While some entrepreneurs have a significant amount of startup capital, most just start where they are at and build from there. Instead of quitting your job and focusing solely on the new business, perhaps it is wiser to keep your day job. This will provide a safety net while you establish yourself. Once your business can sustain itself, then it may be time to consider making it your sole source of income.

5. You Can’t Get Rich Off Your Salary.

Another lie about growing wealth is that you will never get rich just off your salary. Although it may be difficult to build enough savings for retirement on your salary alone, you can begin using it for steady investments from an early age. If you invest small portions of salary, over time it will grow exponentially. The key is to make consistent contributions at regular intervals to ensure steady, continued growth. Diversification will also protect your nest egg and mitigate long-term risks.

Final Thought About Growing Wealth

When you are making important decisions about your finances, consider your sources. Advice is freely offered with the best of intentions. However, you should take time to do your research and learn to decipher fact from fiction. And remember, when in doubt you can always seek out professional advice to find the best ways to grow your personal wealth.

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Retirement Planning for Expats Abroad

Retirement Planning for Expats Abroad

One option many Americans overlook is the possibility of spending their retirement years abroad. Moving to a new country is the beginning of a new adventure for some retirees. It is also an affordable alternative for those wanting to stretch their savings. However, there are some serious questions you must ask yourself about retirement planning for expats abroad. Which country best suits your needs? How do you ensure access to your retirement funds and draw your social security benefits? What financial policies and tax laws apply to U.S. citizens abroad?

If you already have a destination in mind, relocation guides such as this one can give you all the information you will need. If not, here is some basic information for any expat planning to retire abroad.

Social Security Benefits

Social security benefits provide financial support to the retired, disabled, and dependents or beneficiaries of a deceased worker. They should not be the sole source of income when retirement planning for expats. Instead, your monthly benefits replace a portion of your wages based on your pre-retirement income.

The amount you receive is determined from your indexed monthly earnings over the 35 years. If you worked more than 35 years, they will use the years when you earned the highest income. This can become more problematic for expats, such as myself. Since I have lived and worked outside the U.S. since my early 20s, it is going to be more difficult to accrue 35 qualifying years. In order to receive any benefits, you must have ten years of employment (40 credits) to be eligible.

The federal government uses different formulas and factors to calculate your social security benefits. This means monthly amounts will vary from person to person. The good news is that you are able claim your Social Security benefits from anywhere in the world. As long as you have access to your domestic accounts that receive your checks, you should have no trouble getting your money. Many international banks also accept direct deposit into foreign accounts as well.

IRA Contributions

Traditional and ROTH IRAs are a key component of any investment portfolio. Unfortunately, there are tight restrictions on any contributions you make if you claim the Foreign Earned Income Exclusion. The FEIE is an exclusion credit which reduces your taxable income. Any amount over the yearly adjusted threshold is subject to double taxation.

For my particular case, all my foreign income is excluded. I fall below the qualified amount of $107,600 for 2020. Therefore, none of my foreign income is eligible for IRA contributions. However, the IRS taxes any foreign income above this threshold so it is eligible. Unfortunately, all my contributions must be generated domestically and filed accordingly.

Due to financial policies for foreign banking institutions, there are severe penalties for any violations. Not only must I be careful how I fund my IRA, but I cannot legally make any portfolio changes while I am outside the U.S. This carries heavy fines and legal repercussions no one would want to face.

Online Banking

Probably the most important tool at your disposal is online banking. Before moving abroad, make sure you put all your accounts online and notify your bank. It is also a good idea to switch to digital correspondence. This is especially important if you have monthly bills to pay or Social Security checks to collect.

Moving abroad and retirement planning for expats can seem overwhelming at first. If you are uncertain whether it is the right decision, read through this checklist to see what it would require. You may be closer than you think.

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