Retirement planning is a challenging endeavour. With so much uncertainty in life, it pays to give enough thought to retirement plans. Many events take place which we do not expect. Such events can unfold new opportunities and challenges. The right plan and execution can allow one to leverage on the resources one has to improve their future. Continue reading
Different circumstances arise that call for one to rollover their retirement plan. You may be left with little time and tough decisions to make. The decisions you make on whether you rollover your retirement plan and how you rollover your retirement plan distribution can have profound effects on several areas of your life, including how much you are taxed. Whether or not you rollover your distribution is not a decision to be taken lightly. Continue reading
If you ask NHL team owners what they look for in a General Manager, they’re likely to say they look for strong leadership qualities, superb communication skills, and of course unbreakable commitment to win. These qualities are harder to come by than most people expect. For this reason, General Managers of ice hockey teams make sizeable amounts in take-home pay. Continue reading
Few names in soccer are as popular as that of David Beckham. Despite being retired for so many years, the former Manchester United player has managed to remain relevant in the sporting world, building a brand that transcends the soccer stadium. Around the world, the mention of David Beckham raises ears. Thus, it is no surprise that his net worth of $450 million continues to grow. Continue reading
A new year signals a new start for many people. Whether it is with your health, your relationships, or your finances, it is as good a time as any for a re-birthing. When it comes to one’s finances, there are some relatively easy New Year’s financial resolutions you can do to exit 2018 in a better financial position than when you started. Listed below are 3 easy post New Year’s financial resolutions you can make.
Financial Resolution 1: Build an Emergency Fund
It is estimated that roughly one out of every three American adults has no money stashed away in an emergency fund. This often means that they will have to take on high-interest credit card debt in order to pay for an unexpected expense. No matter your age, any amount of money in an emergency fund will be of benefit. Focus on saving $100 a month into an emergency fund. By the end of 2018, you will have $1200 stashed away for those unexpected expenses.
Financial Resolution 2: Create a Budget
Earning money is important, but also of high importance is tracking your spending. I love the following example:
A teacher making $40,000 in annual post-tax salary, but spending $35,000 of it, has more savings at the end of the year than a doctor earning $120,000 in post-tax salary but spending $130,000.
The point of this example is that if you can make a lot, but if you spend a lot you will never get rich. Budgeting allows you to monitor you income while also keeping track of your expenses. We offer a free monthly budget on our website to help you get this resolution underway.
Financial Resolution 3: Open an IRA
Recent tax reform has lessened the financial burden of taxes on many individuals and families, but another way to reduce taxes while funding retirement is through an IRA. Traditional and Roth IRA’s are both good options to help save for those late years in life. I prefer a Roth IRA; you put in after-tax money now, and it grows tax-free and has tax-free withdrawals. Most people qualify for IRA’s, and the best part is that they are easy to open. Many IRA’s can be started with as little as $100.
Not everyone is a fan of New Year’s resolutions, but that is part of the reason why people make them. They have goals they want to achieve. Those goals may be monetary, personal or health, either way they hope to be in a better place at the end of the year than they were at the beginning. If you haven’t made a New Year’s resolution, it isn’t too late. We aren’t even a week into the new year. I challenge you to try at least one of these 3 easy post New Year’s financial resolutions and make your finances great again.
Budget Smart, Invest Wise
Becoming wealthy is a goal many of us hope to achieve in our lifetime. Whether you want to be wealthy so you can have unbelievable lifelong experiences or to validate your success, 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 throughout their lives. 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 Ken illustrates in his book.
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, and 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, be it with a financial advisor or through acquired knowledge, that creates a return on one’s investment. For example, I have found that investing on a monthly basis in a mutual fund that covers the broad range of the U.S. Stock Market to be of most benefit to me. I recognize that 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 property that you decide to rent out, 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 for 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 capabilities to put our talents towards creating additional income.
Becoming independently wealthy or successful all boils down to one’s level of commitment. If you are committed to becoming independently wealthy, then most likely 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, or maybe you will be satisfied with millions or even a million. Only you can determine what being wealthy is to you.
A new year is fast approaching. While many are finishing up their holiday shopping and setting their New Year’s Resolutions, now is also the best time to lay out your financial framework for 2016.
As is always the case with every new year, it is time to prepare a new budget. Getting your budget off to the right start is the best way to help your financial situation in the new year. Go to the Monthly Budget page on my website and download an Excel version for yourself.
Create your monthly budget for the new year, using your best guess estimates for various income and expense categories. Remember that it doesn’t have to be perfect, and you can always change it as the year goes on.
After you have set up your monthly budget, I highly suggest you check out Kimberly Palmer’s article that was shared on Yahoo Finance. I have provided the link below:
Look at some of the suggestions outlined and see where you can tailor your budget to focus on paying down high interest debt, or finding spare money to invest for your future. You might not be able to relate to or benefit from all 25, but find at least three that you can implement into your 2016 budget.
Budget Smart, Invest Wise
The other night I was pondering what actually classified as retirement. We all think of retirement as falling towards the end of one’s life. You work for a while, save up enough money, then use those savings to enjoy the latter part of your life.
But what if you don’t want to wait until you are 65 or older to retire? Say you want to save up money for 15 years, take 5 years off and then re-enter the workforce. Is this retirement?
I didn’t know the answer, so I did what everyone does nowadays to find such an answer. I Googled it. Webster’s Dictionary defines retirement as the following:
The act of ending your working or professional career; the period after you have permanently stopped your job or profession.
So if you did decide to take 5 years off during the middle of your working career I guess it would be classified as a hiatus. Regardless of when you decide to retire, there are a few things I believe retirement truly is.
- When one’s passive income is greater than one’s expenses.
Your investments, rental properties, royalties or whatever revenue generating sources you have other than trading your time for money are greater than your expenses.
- Finding ways to spend your time with people you love and doing the things you love.
You can have all the money in the world, but if you don’t have ways to enjoy it or enjoy your time then it has no purpose.
- Creating your very own legacy.
Volunteering, raising money for a worthy cause, instilling wisdom in the minds of younger generations. Creating a legacy to be remembered by is the ultimate goal of success.
Budget Smart, Invest Wise
You get a job with a company that offers a 401k with a match. What do you do? You do what you’ve been told to do. You contribute what you need to get the max contribution from the employer. For me, I contribute 6% and get a 3.5% match, totaling 9.5%. I am nearly saving 10% of my salary in my early 20’s. I’m doing a good job of preparing for retirement right?… Well yes and no. ALWAYS, I repeat ALWAYS, contribute what you need to your 401k to get your company match. It’s FREE MONEY.
This is where I will tell you about the easiest way one can double his or her retirement income. It is through a Roth IRA. You see a 401k is pre-tax money, so you will pay taxes on your withdrawals in retirement along with whatever social security you are receiving at the time. Combine social security and your 401k and you will have only 75% (assuming a 25% income tax bracket) of the income you receive during retirement. A Roth IRA allows you to pay taxes on the money now, so regardless of what tax bracket you are placed in the future you can keep all of the income you withdraw!
Check out the spreadsheet I have attached to truly see how a Roth IRA can double your retirement income. Keep in mind also with a Roth you never owe taxes and with your 401k you will.
Actionable step for the day, set up a Roth IRA!
To project your retirement income with a 401k and a Roth IRA, simply enter your salary into the cell along with your contribution and your employer match and watch the pie chart on the left shift! Consider increasing your 401k contribution at work for more income in retirement.
You might say it’s your financial advisor, your parent, a relative or maybe even a mentor who has had great financial success.
Your best friend when it comes to investing is: Compound Interest
People who are new to investing often wonder what is compound interest, or why is compound interest important. I’ve touched briefly on the subject of compound interest in a past post but I feel it is so vital to creating long term wealth that I am circling back to it again.
Money can be made and lost. However, time cannot. Each of us has only a finite amount of time here on Earth to build up a financial wealth. Mr. Time is your next best friend.
Check out the following article which shows a visual representation of how Compound Interest and Mr. Time can work together to create a substantial amount of financial wealth for oneself.