April 12, 2017

Items in italics are direct quotes from the articles below

http://www.investopedia.com/university/peratio/

Investors often want to compare how the share price of one company compares to that of another. But just looking at the stock price is like comparing apples to oranges since companies have different numbers of shares outstanding, and even if they had the same share float, companies operate in different industry segments or are at different stages in the corporate life cycle. Fortunately, financial analysts have developed a number of tools for such purposes of comparison. The price-to-earnings ratio, or P/E, the most widely used metric. Although it is quite a simple indicator to calculate, the P/E can be difficult to interpret. It can be extremely informative in some situations, while at other times it is difficult to parse. As a result, investors often misuse this ratio and place more evaluative power in the P/E than is sometimes warranted. This ratio measures the company’s stock vs its earnings, which can be measured against other companies. As a basic rule of thumb, a high P/E means the stock price is high compared to earnings which means the company is overvalued and the opposite is true. The link above is an introduction into an in-depth look at the P/E ratio and if you’re interested in learning about how to calculate it and how to and how not to use it in stock price analysis then please follow the link at the bottom of the article. For the sake of brevity, I included just the introduction.

http://www.investopedia.com/university/become-your-own-financial-advisor/

“If you don’t know where you are going, you might wind up someplace else.” – Yogi Berra If you build a house without a plan, what sort of results would you expect? Theoretically, you could get lucky and end up with the house of your dreams. What’s more likely, however, is that the house wouldn’t be anything like what you had wanted. You might need to move the doors and windows, build new walls and take down others – or worse. Investing isn’t any different. Without a plan, you could (again, theoretically) get lucky, but the odds are against it. Without goals – and a well-thought-out plan for meeting those goals – you probably won’t end up where you want to be financially, in either the short- or long-term. You have to make goals to meet goals. Historically investors have tried to beat the market or tried to get the highest rate of return possible. A new approach is goal based investing. This type of investing involves achieving certain life events such as saving for your retirement or buying your first house. The theory is that:

  • Setting goals makes it more likely that you’ll save for – and achieve – every goal.
  • You’ll be more motivated to reach a goal since you can gauge its progress.
  • You can consider the time horizon and risk level separately for each goal, and invest accordingly

Most people work with financial advisors to help achieve their financial goals, but the author advocates that you can be your own financial advisor if you are willing to put in the time and work. Due to the content of this article, I suggest you read the article in its entirety, and I’ve included some more content from the article:

Next, arrange your goals by the time horizon for achieving them:

Short-Term Goals Mid-Term Goals Long-Term Goals
Pay for a wedding Buy a vacation home Build a nest egg for retirement
Take a vacation Have the funds to start a new business Income stream for retirement
Save a down payment for a home Leave a financial legacy to your family
Save for your children’s education

Rather than just doing all this in your head – write it down. Putting your goals on paper makes them more “real” and you’ll be more likely to think about them. Plus, you can share your goals with your spouse, family or friends – which can give you a little motivational push.

The next step is to attach a dollar figure to each goal. With some goals, it’s easy to say how much you’ll need: for example, you plan on giving your daughter $5,000 (and no more!) to help pay for her wedding, or you want to save $10,000 for a trip to Antarctica. With other goals, it’s a bit trickier to nail down a specific amount, so you’ll have to spend some time crunching the numbers. There are lots of online calculators that can help – just search for the type of calculator you need, such as “retirement calculator” or “college savings calculator” to get started.

Once you have a list of goals and financial objectives for each, it’s easier to plan, budget and choose the right investments. In the next chapter, we’ll look at different retirement and tax-advantaged accounts you can use to meet your goals.

Like anything in life, if you want to become an expert at something, you need to practice your skill and learn from others better than you. Personally, I wouldn’t call myself a financial expert. I’m someone that cares about the financial health of myself and others and I share what I know in the hopes for a better future generation. What is your why?

If you need are interested in creating a budget, then contact me for a financial checkup in the contact me section. Also, learn more about the self-lending principle in the mustard seed section.

For this week, I’ve included FIRE WITHIN – Motivational Speech On Success from Motivation Archive YouTube channel.

“If you think you know it all, you’re a fool for sure; real survivors learn wisdom from others.” Proverbs
28:26 MSG‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬

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April 5, 2017

Items in italics are direct quotes from the articles below

http://www.investopedia.com/investing/when-interest-rates-rise-best-investment-strategies/

In December 2016, the Federal Open Market Committee (FOMC) raised interest rates for the first time in a year, and then raised them again in March 2017. Federal Reserve Chair Janet Yellen indicated that the Fed could raise interest rates even further later this year. But what do rate hikes mean for advisors, their clients and investment portfolios? When interest rates increase, bond prices decrease. And while many analysts expect equities to suffer when interest rates go up – which is what many had predicted for markets in 2016 – these more recent rate hikes have not taken the wind out of the U.S. stock market’s sails. Lately, it seems that when rates rise, the value of equities doesn’t take a hit. But there’s no telling how long this trend will last. (For more, see: Fed Increases Interest Rates at March Meeting.) It’s important to keep in mind that when the market suddenly increases or decreases due to the influence of political, civil, or economic forces, then a market correction will happen soon. Due to the high probability of this event occurring, the author encourages the investor to have a financial advisor to consult with to make sure that his or her investment strategy and portfolio is ready to handle this change. Although advisors can’t predict what is going to happen in the stock market and how it will react to future interest rate hikes, they can take measures to ensure their clients benefit from rising interest rates while taking all potential risks into account. In a simplified example, let’s say a client is a balanced investor which usually means a portfolio is a 60/40 mix of equities and fixed-income investments (such as bonds). In a declining interest rate environment, the asset allocation may be 60% fixed income and 40% equity to take advantage of rising bond prices. In a, rising interest rate environment, the allocation can flip to 60% equities and 40% fixed income to benefit from bullish equities. The client’s risk tolerance always remains intact and slight adjustments are made to take advantage of stock market movements. (For more, see: The 4 Most Important Effects of Rising Interest Rates.) A well-diversified portfolio can hold both domestic as well as foreign investments, but how do rising interest rates affect foreign exchange? If $1 USD equals $1.35 Canadian dollars, the U.S. dollar is stronger. This means it’s not a good time to exchange Canadian money into U.S. currency because Canadians will only receive $0.65 USD for every Canadian dollar exchanged. However, it would be a good time for Americans who want to invest in Canadian currency to take advantage of the foreign exchange while the dollar is strong. When investing in any foreign currency, it’s important to remember to buy low and sell high. This basic strategy doesn’t consider a continuous cash flow, so you must balance this strategy against your cash flow principles. Even the author doesn’t recommend trying to time the market to make a quick return, because what you’re doing is basically gambling.

https://www.gobankingrates.com/personal-finance/10-ways-make-first-billion-dollars/

For many, a six-figure salary is the endgame, the true sign that you’ve made it in life. But, among those who top lists like the Forbes 100, a six- or even seven-figure salary is pocket change, just another step toward true riches. If you’re raring to dial up your earnings and be among the world’s richest, you’ll need to emulate the habits and accomplishments of the wealthy. Here’s how you can get started. The seven steps are: start and commit to your business, make smart investments, invent a solution, pursue your passion, take action, collaborate, and adopt a billionaire mentality. On the Forbes list, most of the billionaires are business owners that scaled their business to make a global imprint. It’s important to take risks, but with a full commitment to your business model and philosophy. You must have a vision that will help as many people as possible for as many generations as possible. It’s important to make smart investments not only in assets but also in the greatest asset you have, yourself. Sometimes, the best inventions are not original but instead innovations or improvements on existing products. A prime example of innovation comes from billionaire businessman Sam Walton, who opened the first Walmart in 1962. What made Walmart an innovation was the idea that the business could expand enough to sell products to consumers at lower prices than other retailers, saving them money on basic necessities. This basic premise transformed the way America shopped, while making Walmart one of the biggest retailers in the world — and Walton one of the richest men. It’s important to pursue your passion, but it’s even more important to put that passion into action. I’ve talked to some aspiring business owners and they can’t seem to gain any traction in their business because they don’t have the necessary commitment to act on their passion. It’s important to collaborate, because essentially no man is an island. You’ll need a team to build a business, so why not have a co-founder? A co-founder who both compliments and challenges your points of view but ultimately has your vision at heart. Rich people have a rich mentality, according to Steve Siebold, author of “How Rich People Think.” He has interviewed over 1,200 of the world’s wealthiest people to uncover the secrets to becoming rich. “While the masses believe becoming wealthy is out of their control, rich people know that making money is really an inside job. It’s a cause and effect relationship,” he wrote on Business Insider. “Anyone can become wealthy. It has nothing to do with your education or where you come from. It’s not what you do that guarantees wealth, it’s what you are.” So, focus on making things and crafting solutions. Create new products, improve current products and help people. But most importantly, be resilient and keep pushing forward

If you need are interested in creating a budget, then contact me for a financial checkup in the contact me section. Also, learn more about the self-lending principle in the mustard seed section.

For this week, I’ve included Advice From The Most Successful People On The Planet – Episode 7 from Absolute Motivation YouTube channel.

“If you think you know it all, you’re a fool for sure; real survivors learn wisdom from others.” Proverbs
28:26 MSG‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬

March 29, 2017

http://www.inc.com/jeff-haden/the-awful-truth-about-getting-rich-that-no-one-wants-to-hear.html

Many people want to be incredibly wealthy. (How you define “incredibly wealthy” is of course up to you–my “incredibly wealthy” may seem like pocket change to Floyd Mayweather, Jr.) Many people don’t hope to achieve that goal…but many people do. And there’s certainly nothing wrong with that. But you will never become incredibly wealthy by working for someone else. And you will never become incredibly wealthy by living a “safe” (more on that in a moment), “positive work-life balance,” time-clock-punching professional life. If you want to have a certain amount of money in the bank, then you are less likely to have it if you’re working for someone else. Even people with advanced degrees will earn an average income of less than six figures. When you work for someone else, you implicitly accept a limited upside and unlimited downside. Unless you somehow manage to be the employee version of a unicorn, you will never, ever become incredibly wealthy. In 2014, it took $127 million in adjusted gross income to make the top 400. (That sounds like a lot, but it just barely got you in the door. The average income of everyone on the list was $317 million.) Those are fun stats to whip out at parties, but what matters is how the top 400 made their money:

  • Wages and salaries: 4.4 percent
  • Interest: 4.2 percent
  • Dividends: 10.9 percent
  • Sale of Capital Assets: 65.2 percent
  • Partnership and S Corp Net Income: 16.2 percent

The author points out the way to become incredibly wealthy is to start your own business that can be scaled to a significant size. Unless you’re an actor, or musician, or athlete–in which case you’re still an entrepreneur, because you’re in the business of you–starting a successful business is the only realistic way to become incredibly wealthy. If that is your goal, you’ll need to start yours. Today.

http://www.investopedia.com/articles/fundamental-analysis/09/value-investing.asp

Value investing, and any type of investing, varies in execution with each person. There are, however, some general principles that are shared by all value investors. These principles have been spelled out by famed investors like Peter Lynch, Kenneth Fisher, Warren Buffet, John Templeton and others. In this article, we will look at these principles in the form of a value investor ‘s handbook.
Value investors agree that you should buy businesses and not stocks. Investors should look at the fundamentals of the company and not the trends in the stock price. You wouldn’t pick a spouse based solely on his or her shoes, and you shouldn’t pick a stock based on cursory research. You have to love the business you are buying, and that means being passionate about knowing everything about that company. You need to strip the attractive covering from a company’s financials and get down to the naked truth. Many companies look far better when you judge them on basic price to earnings (P/E), price to book (P/B) and earnings per share (EPS) ratios than they do when you look into the quality of the numbers that make up those figures. It’s best to invest in companies that you understand vs. being attracted to a company’s earnings. To quote Buffett: “look for three qualities: integrity, intelligence, and energy. And if they don’t have the first, the other two will kill you.” You can get a sense of management’s honesty through reading several years’ worth of financials. How well did they deliver on past promises? If they failed, did they take responsibility, or gloss it over? A good manager will be focused on growing the company and not just its market value. Growth in the company increases the value to the shareholders. If you do happen to find undervalue stocks and if you have the liquidity available, then go ahead and buy as much as you can. Keep in mind that the market only matters when you enter or exit a position. When you sell an investment, you expose your portfolio to capital gains and usually have to sell a loser to balance it out. Both of these sales come with transaction costs that make the loss deeper and the gain smaller. By holding investments with unrealized gains for a long time, you forestall capital gains on your portfolio. The longer you avoid capital gains and transaction costs, the more you benefit from compounding. Value investing requires a lot of patience and discipline, but when you do so, the potential payoff is large. Ask yourself how does this fit into my personal investing strategy? Do I like investing in paper assets, real estate, businesses or commodities? What is my concentration level? What is my exit strategy? Most importantly what is my legacy? When you look at your life through the lens of legacy you won’t lose focus on your vision and goals.

Items in italics are direct quotes from the articles above

If you need are interested in creating a budget, then contact me for a financial checkup in the contact me section. Also, learn more about the self-lending principle in the mustard seed section.

For this week, I’ve included Be Powerful –motivational speech video – T.D. Jakes from the Motiversity YouTube channel.

“If you think you know it all, you’re a fool for sure; real survivors learn wisdom from others.” Proverbs
28:26 MSG‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬

February 15, 2017

http://www.investopedia.com/articles/financialcareers/07/portfolio_manager.asp

One of the most coveted careers in the financial industry is that of the portfolio manager. Portfolio managers work with a team of analysts and researchers, and are ultimately responsible for making the final investment decisions for a fund – or asset-management vehicle. While a portfolio manager is a position that a person must work his or her way up to over the course of a career, there are a few initial steps that you can take to help you on your way to being a portfolio manager. The author recommends that if you are in college and are interested in this type of career, then you need to have taken courses in business, economics, accounting and math. Many portfolio managers also possess the Chartered Financial Analyst (CFA) charter. In order to achieve this designation, candidates must demonstrate a proficiency in financial and accounting terms and techniques, economics and quantitative analysis, as well as prove the required work experience. Portfolio managers are usually promoted from the position of research analyst. A research analyst has a framework on buying and selling a security as well as understanding the economic conditions that can affect a security. There are many types of portfolio manager positions determined by the size of a fund, type of investment vehicles, and investing style. A portfolio manager’s day involves checking the status of the financial markets, and keeping on top of current events. The manager will meet with analysts and make final decisions on the direction of securities in a fund. Managers also meet with high-level and or potential investors.

http://www.marketwatch.com/story/5-surprising-things-you-can-deduct-from-your-income-taxes-2015-02-27

“Can I deduct this?” When Americans sit down to fill out their income tax forms on or before the April 15 deadline, that’s the question they’ll likely ask the most. They may be shocked by how often the answer is “yes,” and the sheer variety of expenses they can deduct. Most people know that business-related items are usually tax deductible — no matter how odd. That could include body oil for a masseuse or professional body builder, says Dave Du Val, vice president of customer advocacy at TaxAudit.com, which is based in Sacramento, Calif. Ditto, free beer used for a sales promotion. But a recent survey showed that only 51% of over 1,000 people understood mostly basic questions about their income tax, and the estimated average $2,840 tax refund for 2017 likely does not include the refunds that people did not know they could claim.  Per the author, here are five things you can deduct from your income taxes: swimming pools, abortion, gambling losses, service dogs and dog food, gender confirmation surgery. In the case of the swimming pool, this deduction was allowed because the pool is used for swimming therapy and prescribed per a doctor. “If you have gambling gains, you can deduct a large number of expenses to go to Vegas up to the point where it offsets much or all of the gains,” says Scott Bishop, director of financial planning at STA Wealth Management in Houston. You can deduct your losses, but no more than your winnings in that tax year. Gambling income includes winnings from lotteries, raffles, horse races and casinos, and fair market value of prizes such as cars and trips. “To deduct your losses, you must be able to provide receipts, tickets, statements or other records,” the IRS states. For casinos, you need copies of check cashing records. Some states don’t give deductions on gambling losses, however. In this article, various examples are presented. It’s important to understand that tax avoidance is legal and tax evasion is illegal.  Tax avoidance as defined by www.investopedia.com is the use of legal methods to modify an individual’s financial situation to lower the amount of income tax owed. This is generally accomplished by claiming the permissible deductions and credits. This practice differs from tax evasion, which uses illegal methods, such as underreporting income to avoid paying taxes. It’s about paying the amount in taxes that you owe, and taking advantage of every possible tax deduction that is legally available to lower your tax liability. There are two certainties if you live in the U.S., death and taxes. One of these can be lowered, and the other will come sooner or later. It’s important to keep as much income as possible to create a legacy for your children’s children and the world around you.

If you need are interested in creating a budget, then contact me for a financial checkup in the contact me section. Also, learn more about Mustard Seed in the mustard seed section.

For this week, I’ve included CHANGE YOUR MIND AND BECOME SUCCESSFUL – Best Motivational Videos Compilation for 2017 from the Be Inspired YouTube channel.

“If you think you know it all, you’re a fool for sure; real survivors learn wisdom from others.” Proverbs 28:26 MSG

January 18, 2017

http://www.investopedia.com/financial-edge/0113/the-dangers-of-a-reverse-mortgage.aspx

It’s difficult to turn on the television these days without seeing a slew of commercials for reverse mortgages. They feature past-their-prime celebrities such as Henry Winkler and Fred Thompson, extolling the benefits of “guaranteed tax-free income” for those 62-years-old and over. What they don’t tell you is that reverse mortgages can be dangerous and can put your biggest asset—your home—at risk. A reverse mortgage is simply a regular mortgage where the proceeds are paid out over a series of installment payments instead of all at once. This plan will use the existing equity of your home, and doesn’t need to be repaid until you sell the home or die. This type of loan can be beneficial under a scenario of a senior citizen using the proceeds to stay in his home while using the proceeds for medical expenses vs. selling his home. There are six dangers to keep in mind: complexity, pressure, future health, eligibility for government programs, high fees, and spousal eviction. The article goes into detail on these dangers. Reverse mortgages can be an important source of emergency funds for some seniors who would otherwise have to sell their homes to access their equity. There are several dangers to these plans. However, that can put your home at risk and sap your asset base. In all honesty, this article is presented to bring awareness that this type of product exists, and I personally am not advocating it. I do encourage the reader to pay attention to the fact that the writer of the article used the term asset base. Remember to grow your income-producing asset column to prevent forced into this type of a scenario.

http://www.investopedia.com/news/george-soros-lost-nearly-1b-due-trump-win-gld-nflx

According to a report in the Wall Street Journal, billionaire investor and philanthropist George Soros lost approximately a billion dollars following President-elect Donald Trump’s victory last November. Soros, who donated generously to the Clinton campaign, had bet that a Trump victory would lead to a sustained depression in market performance. However, the markets have responded with enthusiasm to Trump’s election in hopes that he would cut taxes and red tape. Soros also has investments in major technology companies, such as Amazon.com Inc. (AMZN) and Netflix Inc. (NFLX), whose stock prices fell following the President-elect’s shock victory. (For more, see also: How Did George Soros Get Rich?)

In contrast, Stanley Druckenmiller, a one-time Soros protegé, seems to have moved ahead of his old boss. The Wall Street Journal report states that Duquesne Family Office LLC, Druckenmiller’s firm, saw “gains of 10% in 2016.” This is because Druckenmiller, who has voted for Republican candidates in the past, predicted that the markets would swoon initially but rally later on a Trump victory.

Druckenmiller’s bearish stance on bonds and his bullish take on the dollar vs euro did help his profits. Gold prices, which were expected to rise after a Trump win, dropped sharply after the elections. Liberty Broadband Corporation (LBRDA), which was one of Soros’s big buys has rallied 12.5% since election night at the time this article was written.

If you need are interested in creating a budget, then contact me for a financial checkup in the contact me section.

For this week, I’ve included Learning From Your Mistakes – Motivational Video from the Endless Motivation YouTube channel.

“If you think you know it all, you’re a fool for sure; real survivors learn wisdom from others.” Proverbs
28:26 MSG‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬

January 11, 2017

http://www.investopedia.com/articles/personal-finance/123113/why-emergency-funds-are-bad-idea.asp

Along with changing your oil every 3,000 miles and checking your child’s trick-or-treat bag for weaponized apples, the common advice to create an emergency fund is overly prudent. All you need is an objective understanding of risk to realize that there are far better places to put your money than an inert account that can’t enrich you. The most recognizable personal finance mavens are almost unanimous in their advocacy of the emergency fund as a vital part of any common-sense financial plan. (See Why You Absolutely Need an Emergency Fund.) Their recommendations differ only on size – three months’, six months’, perhaps eight months’ worth of living expenses are enough to accommodate whatever misfortune might befall you. But to what end? And do people really listen, or are these just empty dicta written to take up space? The conservative recommendation would be set aside eight months’ worth of living expenses, and assuming an effective tax rate of 20%, and this amount is roughly $30,000. Even at three months’ worth of living expenses the total is $11,000. The author advocates clearing debt away before you begin focusing heavily on creating an emergency fund, because the interest you currently play on your debts could quickly fill your emergency fund. Well, what if you do? There’s this thing called unemployment insurance. Your employers pay into it and it’s for your benefit. We also have a workforce in which (overall, if not in every individual case) 95% of those who want jobs have them. Chronic unemployment, or underemployment, is not the province of that class of people who have the wherewithal to defer spending long enough to save up several months’ of living expenses. An emergency fund is meant to help you handle life, so it’s important to take the time to build it. If you’re interested in my process, then I will be glad to share it with you.

http://www.inc.com/minda-zetlin/4-investments-that-helped-warren-buffett-earn-12-billion-in-2016-and-might-work.html

Warren Buffett has always done pretty well as an investor. But even for him, 2016 was an exceptional year. Shares of Berkshire Hathaway went up about 20 percent in value, increasing Buffett’s personal fortune by about $12 billion, according to personal finance site GOBankingRates. He earned more last year than any other American, easily beating out fracking king Harold Hamm, Microsoft founder Bill Gates, and Amazon founder Jeff Bezos. Buffett’s net worth is now just over $75 billion. Most of Buffet’s gains came right after the presidential election. Buffet earned most of his gains in four areas: Banking/Financial Services, Airlines, Cable, and Food. Buffet is a long-time investor in American Express and the financial sector itself. Buffet invested heavily in Delta, United Continental, American, and Southwest Airlines. Back in 2014, Buffet invested heavily in Charter Communications. Buffett finally invests in food. Even though Buffet saw a loss in Coca-Cola, he also is a big investor in Kraft Heinz, and that stock is up 21 percent.

If you need are interested in creating a budget, then contact me for a financial checkup in the contact me section.

For this week, I’ve included THOUGHTS – Motivational Video from Be Inspired YouTube channel.

“If you think you know it all, you’re a fool for sure; real survivors learn wisdom from others.” Proverbs
28:26 MSG‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬