Your Antlers Are Bigger….So What?

I was reminded of the topic of ‘who has bigger balls’ the other day as I drove down a local road and passed an oncoming pickup truck with antlers mounted to the grill.

And I do admit that I have donned something or put some sticker on my vehicle to display my pride or identity.

How does this relate to finance?

Many conversations about finance are high jacked by someone taking the role of the ‘know-it-all’ bragging about some investment or strategy. I believe I learned my lesson several years ago that this type of talk neither impresses anyone nor does it provide any clarity for someone’s personal financial well being. I witnessed one of these conversations was with a financial adviser in the area. I can only hope that this fellow knew about what he was talking about because I tuned out a few minutes into his lengthy monologue.

Here is the danger. Whoever is doing the explaining should be the one to read your body language and ask if you are tracking along. Don’t be like one of my clients who told me they were too embarrassed to ask their bank professional for clarification because they understood so little about what was going on. This is the security of your family we are talking about here. We did not allow one client who was ready to put a substantial amount of wealth towards a plan we had presented to him because he could not clearly explain how the work we had done would benefits his estate. Subsequently, we scheduled another teaching session to reteach the financial literacy required for understanding.

You may also be getting scammed. You should never invest in something you do not understand. If someone is unwilling to dedicate time to teach and explain it to you then it is too good to be true. Even if what is being said is valid, as for an article, book or do more research on your own. Ask for the contact information of a client who was satisfied with their work – and not just a year out. Ask for a 10-year track record.

So, it really shouldn’t matter if someone has bigger antlers or more money than you. If they can’t respect your dignity by teaching you, or prove beyond a shadow of a doubt that their strategy is solid…then who cares?

To forfeit less money either to the government or financial institutions, one must understand the interconnected effect of their financial decisions. If you have the resolve then you are a welcomed guest. Free reviews are available as schedules permit at 717.471.2910

Thanks to david-mcmahon.blogspot.com for the photo for this article.

$tunted Growth!

Reading comic books for the rest of your life would likely stunt your intellectual growth. What if you never read a book after that? Relationships, career, parenting…all would suffer.

Wikipedia defines Financial literacy as the ability to understand finance. More specifically, it refers to the set of skills and knowledge that allows an individual to make informed and effective decisions through their understanding of finances[1]

For enriching relationships, career advancement, and effective parenting, one knows the value in reading for improving his or her effectiveness.[2]

We encourage you to sharpen your awareness and explore the various aspects of financial literacy. For those readers in the greater Lititz, PA area I invite you to consider ordering competitively priced books online and picking them up at Aaron’s Books. My clients Sam and Todd would be happy to serve you.[3]

To forfeit less money either to the government or financial institutions, one must understand the interconnected effect of their financial decisions. If you have the resolve then you are a welcomed guest. Free reviews are available as schedules permit at 717.471.2910

1. What is Financial Literacy?

2. What Others Are Saying…

3. Aaron’s Books in Litiz, PA

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40 Year-Old Virgin….Investor

Many folks hitting middle age are virgins in the area in which we educate. Here is a typical example we come across compliments of Garrett Konrad, a colleague of mine.

Let’s say we have a 40 year old investor. He wants to retire at age 65 and we are going to give him a life expectancy of 84. He makes $150,000 right now and has $50,000 in a savings vehicle earning 6% annually. He adds an additional $8,000 to this savings vehicle every year. This investor decides he can live on just $130,000 per year after he retires. I am going to use an inflation rate of 2.73% annually which is the average from 1990 to 2010 (I picked 1990 because that would be around the time he started working out of high school).

The Results:
 At age 64 this client as amassed a whopping $819,018. If you recall he decided he could survive on $130,000 a year beginning next year after retirement… Well with inflation it would actually take $254,815 to match the purchasing power $130,000 had back when he was 40. This investor will hit $0 at 68 in his 4th year of retirement. He can’t make it 16 more years on nothing…

The Point:
 This investor is going to require a very different approach. An adviser would say he needs to get a higher rate of return, save more, work longer, or spend less. I say he needs to figure out where that $150,000 per year income is being cut down by unnecessary or unknown wealth transfers. This approach doesn’t cut down on the investor’s lifestyle and often moves him years closer to his retirement goal by itself.

To forfeit less money either to the government or financial institutions, one must understand the interconnected effect of their financial decisions. If you have the resolve then you are a welcomed guest. Free reviews are available as schedules permit at 717.471.2910

Garrett Konrad: http://www.ifcins.com/Home.html

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Pushing our buttons does not offend us!

We’ve added buttons that link you to our other online resources. Click our buttons and check ’em out!

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To forfeit less money either to the government or financial institutions, one must understand the interconnected effect of their financial decisions. If you have the resolve then you are a welcomed guest. Free reviews are available as schedules permit at 717.471.2910

 

The ‘Arrival Syndrome’… A Silent Killer

A mentor once told me of the Arrival Syndrome, whereby professionals who had attained great achievement in their field absolutely refused to accept they were not proficient other areas.  Since they’d ‘arrived’, they felt there was no need to defer to other professionals. They thought they knew everything there was to know about finance.

To their detriment and ignorance, it was obvious they were forfeiteing great wealth either to the government or financial institutions.

Robert Kiyosaki, author of Rich Dad Poor Dad explains the opposite of the Arrival Syndrome, explaining that “…[responsible investors] have a personal board of directors to help them manage their assets. They take advice and learn. This informal board is comprised of a team of bankers, accountants, attorneys and brokers…[t]hese people are often called ‘stewards of money’…”

Innoculate yourself. The ‘Arrival Syndrome’ silently stalks our time and wealth.

To forfeit less money either to the government or financial institutions, one must understand the interconnected effect of their financial decisions. If you have the resolve then you are a welcomed guest. Free reviews are available as schedules permit at 717.471.2910

Oxymoron: The Decaf 5-Hour Energy Drink.

Oxymora are all around us and some are more humorous than others: honest liar, relative truth, job security.

The other day I heard the latest radio ad for 5-Hour Energy Drink and had a good laugh. One of their latest choices was decaf. Decaf?

I suppose the marketing team gave plausible evidence that this choice would appeal to the ideal customer profile. And if you drink the decaf version is the expected result the same as a regular 5-Hour Energy Drink?

So how does this relate to the financial education of clients? The clients we teach are looking for a product that meets their needs. They are looking for what is advertised without confusion or question.

Our goal is simple – to help you understand how your money works; if it working efficiently or inefficiently in every area of your estate; and how it could work most powerfully without adding to the monthly amount you divert to savings.

To forfeit less money either to the government or financial institutions, one must understand the interconnected effect of their financial decisions. If you have the resolve then you are a welcomed guest. Free reviews are available as schedules permit at 717.471.2910

Cost of this article: $260,000.00. It’s Yours For Free.

A recent conversation with a client brought up an interesting point. The client’s employee had found a $900,000 mistake where money had been overpaid in taxes. While the client’s business had had it’s best year in its 18-year history, there was nearly a million dollars missing from the net profit.

Let’s say that your net worth is $700,000 at this point as you are in the middle of your career. What amount of money would you consider acceptable to forfeit to reach that net worth? In other words, would it be worth a loss of $260,000 to achieve your overall net worth?

Or would you rather pay nothing? This past year I came across another article in a local publication that illustrated this very point. It had to do with what mortgage is best and led one to make a mistake that could possibly cost someone $260,000.

Take for example a couple that can easily make a mortgage payment on a 15-year loan. Instead, they choose to get a 30-year loan and put the difference into a savings vehicle. The monthly difference that the couple saves is $478 and the yearly amount comes to $5,736. Over 40 years the amount placed in the savings totals $172,080.

$5,736 invested each year for 30 years at an interest rate of 5% grows to $424,939. Considering the couple must pay interest on the 30-year mortgage, we subtract the interest and come up with a gain of $260,124.

The selling point for banks and mortgage brokers is to emphasize the savings on interest by selling mortgages with the shortest possible period. Following this recommendation may cost the couple’s estate over $260,000. Buying a shorter-term mortgage is in the best interest of banks because they can quickly get their money back to loan out yet again.

So…how much would you be willing to forfeiting to achieve your desired net worth?

To forfeit less money either to the government or financial institutions, one must understand the interconnected effect of their financial decisions. If you have the resolve then you are a welcomed guest. Free reviews are available as schedules permit at 717.471.2910

Try out the numbers here for yourself:

http://www.calcxml.com/do/inv05?teaser

Three ‘Wise’ Men: Lazy, Surly and Mo’?

….more like The Three Wise Stooges!

2012 is around the corner and people are starting to think about planning for the new year. Here are some personages we have come across as they approach financial planning.

Lazy. He has his head-in-the-sand. He feels that retirement is so far away that there is nothing to worry about. He’ll get to it when he gets to it. Some day. The problem is that Lazy doesn’t realize that small incremental steps should be taken immediately.

Surly feels that there is nothing more to learn about finance. These people know it all. Our senior partner at accruWealth calls it the ‘Arrival Syndrome.’ We have met many wise stewards of money. However we have met many more folks that have at least some symptoms of this syndrome: quietly sullen, irritable and sometimes arrogant. There is an unwillingness to learn anything more than what the popular media proclaims as the proper approach to financial strategies and options. Frequently the reaction to new learning results in a defensive response.

Mo‘ is short for Mo’ Money.

Mr. Mo’ Money focuses on one thing – making a lot of money. These folks are mesmerized by the excitement of quickly gaining wealth and are oblivious of the risk of losing everything with this approach. If there is acknowledgement of risk it is with the glee of Vegas – that the money can be lost because it is a vacation after all. With patience and reasoning, these folks can come around.

The Three ‘Wise’ Men: Lazy, Surly and Mo’. Perhaps you have some elements of these fellows. Don’t let it cripple your financial effectiveness for 2012.

To forfeit less money either to the government or financial institutions, one must understand the interconnected effect of their financial decisions. If you have the resolve then you are a welcomed guest. Free reviews are available as schedules permit at 717.471.2910

Hogwash? Win every time; never lose a dime.

Win every time; never lose a dime.

Sounds like a lottery commercial or a muti-level marketing gimmick.But what if you learned about a strategy that was conservative but full of the greatest possible historical guarantees?

Let’s apply this to the game of Tic-Tac-Toe.

For those of you who don’t know how to win every time playing Tic-Tac-Toe you should not feel too bad. I don’t know who taught me but I can assure you I did not figure it out on my own. At the least, I sure hope I listened and at least tried the strategy out the first time it was offered to me.

I was reminded of this the other day as I played yet another game of Tic-Tac-Toe with my 5 year-old. I can’t recall how many times I have told her that she will win if she places her first turn in the center. I think it has taken over 20 losses for her to take my suggestion to heart. But the look of satisfaction on her face was worth the wait.

And so I bring this thought around to finance.

What does the industry tell us about the game of finance? They tell us the objective of the game -to accumulate as much wealth as possible- but they do not tell us how to win. The game of life is to figure out the strategy.

If someone tells you how to win I want to encourage you to at least try it out in theory. Is the strategy a far-fetched promise or are they providing the math and scholarship to confirm their premise?

Win every time; never lose a dime.

To forfeit less money either to the government or financial institutions, one must understand the interconnected effect of their financial decisions. If you have the resolve then you are a welcomed guest. Free reviews are available as schedules permit at 717.471.2910

Financial Disservice: Why I Do What I Do 5th of 5

I’m a monetary doubting Thomas. The last clue that would reveal what I now do was that when someone made a claim I researched it for myself instead of taking it for fact.

As I entered my masters program in education in New York I was told I couldn’t teach in the US and that I’d have to return to Canada. The choice to dig deeper led me to know for sure if what was being said matched with the facts. Lo and behold what I found was that I could teach in the US and what was told to me by the authorities was not true.

This is much like the financial world. Taking somebody’s word because they are nice and in a position of authority on the subject can lead to derailment of goals. By engaging in some math and scholarship one can find out if the exchange in money for product or service is true, fair, and beneficial to ones estate. 

We are each separate piggy banks as it were. Nobody else will take care of our piggy banks with the same care and attention as we will.

Clue number five: I found out for myself.

Fifth in a series of five. To forfeit less money either to the government or financial institutions, one must understand the interconnected effect of their financial decisions. If you have the resolve then you are a welcomed guest. Free reviews are available as schedules permit at 717.471.2910