So a few financial tips today.
1. Develop a budget and start saving. Discipline yourself. Many, many people with good jobs end up in debt. Why? They simply want to keep up with the Joneses, they don’t have a budget, with high incomes they get easy credit, and they spend more than they make. When they reach their 60s, they’ve lost that energy of youth and they realize they
must keep working whether they want to or not. The Boomer generation is a good example: most have more debt than assets.
2. Start a power account, which is money you don’t touch, money for retirement, as you transition into another part of your life. I recommend putting 10-30 percent of your income into this
account each month.
3. Learn the investment game and invest in only what you understand. If you like real estate investing, study it and start at the bottom. Maybe buy a small house; fix it up; and rent it. Learn
how to repair it. If you like the stock market, mutual funds, or ETFs, learn about them.
4. You don’t need a Ph.D. to become a successful investor or a millionaire. I like the example of the
millionaire mommy next door. A high school grad, working as a night waitress, she took charge of her life. Google her for the website. She set goals and reached them, even though it took awhile.
5. If you trust your money to an investment specialist, good luck. I’ve known many who have lost serious dollars to these “professionals.” They get paid on how much you invest, not on how much
of a return they make for you. That’s right: if they lose money, they still get a percentage of your portfolio. What a racket! And, most don’t beat the S&P 500 index. You can buy Vanguard’s ETF or their Index 500 fund, with a miniscule charge, and do better than most paid money managers. It’s
6. Avoid investment sharks. If it sounds too good to be true, it probably is. There have been and there will always be get-rich-quick deals. P.T. Barnum commented on “suckers” being born
every minute. Don’t be one. When famous money managers got caught (Madoff, Stanford), their client list became public: well-known celebrities, athletes, prominent citizens. They got greedy, wanting a good return each year, and heard about these guys from their celebrity friends. And, they were “too busy” to manage their own money. Trust me, buying a Vanguard index fund is a no-brainer.
7. Invest monthly and invest well. Read about how Warren Buffet was successful. He wasn’t a day trader. He didn’t sell when the market tanked. He won’t be around forever but his legacy will. Read the book, The Intelligent Investor. Buffet didn’t write it but it’s his favorite.
Good luck. I’ll be back in July or August. It’s been a busy summer.