Archive for September, 2012

12 Things Every Investor Should Quit Doing

Written by Sam on . Posted in Investing, Investing for Beginners, Personal Finance, Retirement. 3280 views.

Things Investors Should Quit DoingI’m sorry to tell you, but nature has programmed you to be a bad investor.  It’s true, investing is counter-intuitive.  Your brain wants you to sell when a stock is going down and buy when it’s going up.   Even worse, some of the best investors in the world have learned this fact and actually make money by betting against what retail investors like you are going to do.  Warren Buffet said it best: “Be greedy when others are scared and scared when others are greedy”.

Don’t worry, there’s hope for you.  Here are 12 things you should quit doing when it comes to investing and how to fix them:

  1. Quit chasing sexy investments.  As humans we want to be part of the “In Crowd”.  Whether it’s the latest gossip, the hottest style, or definitely the hottest stock – we want in.  Facebook was a great example of this.  Most retail investors ignored (if they even looked at) the fundamentals and shockingly low earnings to be apart of the hype.  How to fix this:  Simple, if your uncle, co-working or momma, tells you to buy a stock just because they did – get as far away from the stock as you can.  I promise, you’ll hear all about their sexy stock…until the bubble bursts.
  2. Quit buying or selling after it’s too late.   Most of us remember when we had the idea to buy a stock, only to see it go up after we passed on buying it.  Then some of us made the critical mistake of buying it after the move already occurred.  Fight this urge, it’s too late.  How to fix this:  If you’ve missed your opportunity, take note but move onto the next investment.  However, it’s ok to continue to monitor the investment to see if it drops back down to your attractive buying range.
  3. Quit 0wning individual stocks.  Unless you are an employee of the company and involved in their stock purchase/option program, don’t own individual stocks!  Plain out crazy right?  No. Individual company stocks have something called “Diversifiable Risk”, or risk that can be eliminated by diversifying your assets.  Think of a scandal within the company or their key patent expiring.  How to fix this:  Target sectors as a whole.  Say you like ConocoPhillips because you think think energy will go up.  Instead of buying the stock, buy an energy ETF which tracks multiple stocks in that sector (Vanguard Energy ETF, ticker VDE, in this case).
  4. Quit paying too much in fees.  Investing really pays off when your returns start to compound upon the returns you’ve earned the previous years.  Every percentage you pay in fees will result in less of a return, ultimately lessening your compounding effect. How to fix this:  Only pay a fee when you can answer exactly what you’re getting.  Paying a fee to a mutual fund for their expertise in the bond market can be ok.  Paying for a mutual fund which replicates the S&P 500, when you can just buy an ETF which accomplishes the exact same thing, is not ok.  This is one of the 18 Things I Wish Someone Told Me When I Was 18.
  5. Quit being too proud to sell.  This is a common one so pay attention…Just because a stock went down does not mean it is going to come back up.  Pause and ponder this.  I’m not saying to emotionally sell when your investment goes down, I’m saying to recognize when the environment has changed and it’s time to get out.  How to fix this:  If you bet wrong or were hit by an unforeseeable event, cut your losses and move on.  There are plenty of other investments out there, don’t let emotion take influence over your money.

6 Companies That Will Inspire You To Be Better

Written by Sam on . Posted in Inspiration. 3642 views.

Many of us are content with the comforts of an eight-to-five job. It’s hard to imagine quitting it all for a passion or cause. Yet, there’s a subliminal believe that life is more than just trading your hours for dollars. Because of this, I find it so inspiring to learn about individuals who weren’t afraid to put their product or cause out there for the world to see.

Here’s a list of 6 stories which will hopefully motivate you to put yourself out there and be someone:

  1. Teach for America.  Wendy Kopp proposed the idea for Teach For America in her Princeton University undergraduate thesis in 1989.  Her program requires a two year commitment (usually from a recent college graduate) to teach in underprivileged areas of the United States.  The teacher gets paid a modest salary, but more importantly is trained how to teach effectively and become a leader in the community.  After the program is through, the teach is given access to the program’s vast leadership database – providing a great network to pursue careers in other industries.  In 1990, a charter corps of 500 committed recent college graduates joined Teach For America and began fueling the movement to eliminate educational inequity.  The program is designed to train mainly recent college graduates to be lifetime leaders in their industry and the community. After completing the two year commitment, Teach for America helps alumni build leadership skills, develop networks, and connects them to opportunities where they can make an impact throughout their careers.

    Why you should be inspired:  Since starting in 1990, nearly 33,000 participants have reached more than 3 million children nationwide during their two-year teaching commitments. They have sustained their commitment as alumni, working within education and across all sectors to help ensure that children growing up in low-income communities get an excellent education.
  2. Susan G. Komen for the Cure. Nancy Goodman Brinker watched her sister Susan Komen die from breast cancer at the age of 36.  Convinced that her sister could have survived if there was more awareness for the disease, she founded Susan G. Komen for the Cure.  Whether or not you agree with their recent stances on abortion and planned parenthood funding, it’s hard to deny the unbelievable amount resources and attention they continue to provide for research and support.

    Why you should be inspired:  Starting as a promise to a sister, the foundation has donated over $2 billion, working to end breast cancer in the U.S. and throughout the world through ground-breaking research, community health outreach, advocacy and programs in more than 50 countries.
  3. Toms Shoes. In 2006, American traveler Blake Mycoskie befriended children in Argentina and found they had no shoes to protect their feet. Wanting to help, he created TOMS Shoes, a company that would match every pair of shoes purchased with a pair of new shoes given to a child in need. One for One. Blake returned to Argentina with a group of family, friends and staff later that year with 10,000 pairs of shoes made possible by TOMS customers. Interestingly enough, the “Buy One – Give One” business model turned out to be extremely profitable and motivated others to do the same thing (funny how that works…).  Warby Parker Glasses , Bobs by Sketchers and OneMillionLights are just a few of the successful start-ups utilizing buy one give one –  It’s nice when capitalism and philanthropy align.

    Why you should be inspired:  It’s fascinating to hear about individuals who are so affected by others in need that they start companies focused on being profitable, not to further the founder, but to further (and hopefully eliminate) their cause.  Since starting in 2006, Tom’s has given away over 2 Million pairs of shoes.  What are you so passionate about that you’d dedicate your life to raising money for it?

9 Reasons Why a Woman Should Be Managing Your Personal Finances

Written by Sam on . Posted in For Women, Inspiration. 4334 views.

Sorry men, we were just passed by women as the better manager of family finances.  Recent studies are showing that personal finances are shifting from a primarily male dominated responsibility to one now being managed (effectively) by females. We all know that money problems can ruin a marriage.  Conversely, having joint involvement and ownership of accounts decreases the chances of miscommunication and misinformation – transparency in family finances is essential.

Yes (OF COURSE!), there are exceptions to all of these somewhat sexist statements, but until societal norms diverge toward equality, these reasons apply to more situations than they do not.  If you’re a woman who isn’t currently involved in family finances or a man too proud to ask for help, maybe the following will persuade you to try a new approach.  Here are 9 reasons why a woman should be involved in the management of your family’s personal finances:

  1. Women run the day-to-day of the household.  Whether working full time or not, most women oversee the daily operations of the household.  Subsequently, amounts spent on some of a family’s biggest expenses such as groceries, maintenance and entertainment are left to them.  It only makes sense that the overseer of these matters be exposed to and involved in the budgeting/financial aspects.
  2. Women are more afraid of debt.  The latest studies tell us that women are more intimidated by debt than men.  Women tend to save up for big purchases instead of putting them on credit.  Debt is the #1 killer of family finances, it’s good to put someone who is leery of debt in charge of spending/budgeting.  Avoiding debt is also one of the 18 Financial Tips I Wish Someone Told Me When I Was Younger.
  3. Women have less of an ego when it comes to investing.  Any successful investor must exercise both patience and discipline when seeing investments go up and down – especially in today’s market.  Ego, pride and over-confidence (traits more likely found in males) must be removed from the equation. Women are typically less likely to show these emotions and panic sell if an investment goes down.
  4. Women are better at finding value.  U.S. News reports that, on average,  men dramatically outspend women on things like holiday shopping.  Being able to identify value and needs (as apposed to wants) is valuable in both investing and budget management.  A dollar saved at Target is a dollar earned!
  5. Women bring a unique perspective.  A family unit should be a partnership with each spouse having an equal say.  Women need to be equally involved in spending and investing decisions, offering a checks and balances approach to the partnership.

25 Things to Stop Doing Today at Work

Written by Sam on . Posted in Career Advice, Inspiration. 37633 views.

Often times we can fall in a rut at work.  We start accepting unhappiness as our destiny and quit fighting it like we did in our twenties.  Make it a point today to identify some of the hindrances you’re facing with your company or position and take a step to get past them.

Personal growth should be something you’re looking to accomplish each and every day. No one likes change, but how many of these 25 things can you stop doing at work today?

  1. Stop bottling up your talent.  The 21st century is perhaps the most exciting time in history to possess unique knowledge and talent.  There are so many outlets for you to showcase your talent.  Whether it’s a blog, eBook, podcast or other form of expression,  get your knowledge out there – it’s one of the 7 ways to be seen as an expert in your industry.
  2. Stop being afraid to fail.  I know it’s become a cliche, but failure can be extremely valuable.  Do you really think that successful people never fail?  Of course this is not the case, they’ve just worked through failure and ended with success.  No one should strive for failure, but I’d rather swing and miss than never be in the game.
  3. Stop being unorganized.  Start making lists and setting goals for yourself.  It’s easy to lose sight of what you want to accomplish if you don’t keep in front of you.  Try to organize the tasks you must complete today as well as those which are not priorities – your day will be more efficient and less stressful, guaranteed!
  4. Stop shrugging responsibility.  You should be the first to volunteer for a new project.  Not only will you probably learn something new, you’ll gain the respect of those around you.
  5. Stop being afraid to socialize with upper management.  Manager’s want to promote and hire well rounded, likable people.  While it’s always important to be respectful, don’t wait around for executives to notice you, put yourself out there to be noticed.  Take the initiative to setup a happy hour or group lunch – it will be noticed.

6 Effective Ways to Ask For a Pay Raise

Written by Sam on . Posted in Career Advice. 6711 views.

How to ask for a raiseKnowing how to ask for a raise is a skill that can be perfected.  Like other forms of negotiation, having a set plan is essential to a favorable outcome – so get prepared.

Now that the economy has started to stabilize, most of us should realize two important things.  First, you’re still here, so you must be valuable to the company.  Second, you haven’t received a pay raise in at least 3 years.  Depending on your situation, now may be a great time to ask for a pay raise.  Take the following six steps into consideration when formulating your plan on how to ask for a pay raise:

  1. Evaluate the situation.  Ask yourself: Is this a good time to ask for a raise?  Obviously if your company is in the middle of layoffs, it may not be a good time.  However, a lot of companies are now back in the black and reporting good quarterly earnings.  Know that these earnings are available to be paid out to valuable employees, like yourself.
  2. Frame the conversation/request.  Never ask for a pay raise because you need it, rather because you’ve earned it.  Framing the conversation by setting up a review or evaluation to discuss your accomplishments since your last pay increase is a very effective way to start the conversation.  Be prepared to answer questions on why you deserve it and if you’re willing to take on additional responsibilities.
  3. Stay confident.  The downturn in the economy lead to layoffs and hiring freezes.  Chances are if you’re still at your company, you’re valuable and would be missed.  Your competitors, who are also now making money, would love to lure away under appreciated (but valuable) employees.  Have confidence that your company realizes your value and does not want to lose you over a (deserved) pay raise – don’t be afraid to ask for something you deserve!

50 Ways to Be Smarter With Your Money While You’re Still Young

Written by Sam on . Posted in Inspiration, Retirement. 17150 views.

Be Smarter With Your MoneyThe personal finance habits you develop when you’re young will determine the standard of living you enjoy (or regret) when you’re older.  Take it from me, adding just a couple of these to your financial routine can make a big difference at the end of the year when you look at your bank statements.

How many of these 50 ways to be smarter with your money do you commit to (most admit to less than half):

  1. Maintain only two forms of debt:  Mortgage and (minimal) car payment.
  2. Donate your time, not your money.  Getting involved is far more valuable to yourself and the organization.
  3. Don’t panic when good investments go down.  Investing should not be based on emotion, stick with your strategies.
  4. Avoid any fees – they take from principal and reduce compounding.
  5. Get your spouse involved in family finances – it’s better for your marriage and for future financial decisions.
  6. Renting is cheaper than owning – we have a good 10 years of this staying true.
  7. Have a 3 month cash reserve for unexpected emergencies.
  8. Save up for your big purchases, don’t put them on credit – helps determine what you need/want and what was just an impulse buy.
  9. Lend family members your time and expertise, not your money – sorry.
  10. Max out company matching/contribution to 401(k).

12 Reasons Your Boss Should Be Begging You To Work From Home

Written by Sam on . Posted in Career Advice. 13652 views.

Just the fact that you came to work today means you’re going to get less done than you could have.  That’s right I said it, you’re less efficient working at the office than at home.  More and more businesses are coming to the realization that it’s not just a great fringe benefit, it’s in everyone’s best interest to allow an employee to work remotely.

Both employers and employees should consider these 12 reasons to cut loose from the company office building:

  1. Add time to your day.  The average employee commutes 1 hour per day to and from work.  That’s 20 hours a month of wasted time.  Just think what else you could accomplish if you had an extra hour per day added to your life!
  2. Increased creativity from better surroundings.  Having the choice to work in a park, coffee house, library or from the comfort of your own home helps to relax and inspire you.  Most design firms have already realized this and encourage their employees to experience new surroundings.  Working from your deck is a lot more stimulating than your cubicle.
  3. Avoid distractions.  Escaping chatty coworkers and office politics will help you to recapture a significant portion of your work time.  Most of us have become so used to distractions that we don’t realize how debilitating these constant interruptions can be.  Anyone who has had the opportunity to work remotely knows just how much more they get done in a shorter time.
  4. Work harder and smarter.  Those who work remotely have to make it a point to show their productively.  Now ‘working’ is transparent.  There’s no room for manipulating perception by simply showing up early, leaving late or running around with your hair on fire – now your accomplishments/actions/results will define you.  This is a good thing and one of the 7 Ways to Be Seen As An Expert In Your Industry.
  5. Global Reach. Now even small businesses are able to have ‘offices’ worldwide. Forget about just the local potential, imagine the perspectives (and resources) that employees located throughout the state, county or globe could bring to the company.  Pretty neat if you think about it.

(The First) Two Investments Everyone Should Own

Written by Sam on . Posted in Education, Investing, Investing for Beginners. 4901 views.

The First Two Investments Everyone Should OwnThe following is intended to be a very general financial overview and is meant to whet the appetite of potential/beginning investors.  Learning about investing in it’s simplest form is a great first step to financial independence and saving a boat-load in fees.

Any investor, whether beginner or expert, will typically own two general asset classes:  Stocks and Bonds.  The proportional mix of stocks and bonds is known as one’s Asset Allocation.    Those with less experience should keep a simple asset allocation and start off owning only two things:

  1. A Total Stock Market Index Fund.
  2. A Total Bond Market Index Fund.
To rewind a little, the first rule for beginning investors should be “Don’t own individual stocks”.  Why?  Owning an individual stock exposes you to “Individual or Diversifiable Risk” (the risk of price change due to the unique circumstances of a specific security, as opposed to the total market).  An investor can avoid the risk associated with individual companies (such as the CEO being involved in a scandal) by investing in a Total Stock Market Index Fund which owns thousands of individual companies (decreasing the risk of one company affecting the Fund price).