Tag Archives: Savings

How To Keep Your Personal Finances Thriving

11 Jan

Everyone needs to face the financial facts of their daily life. In many cases, it feels like new expenses are constantly being rained upon you. You can learn methods to handle finances better in order to save money.

You may not know that after a certain period of time, debts expire. If you think that a debt has expired, consult an expert. You may not need to pay the collection agency for the expired debt.

Talking to a good friend or family member that has worked in the financial planning industry can be a good source of free information on how to better manage your finances. If one personally does know someone like this, maybe a friend of a friend who knows how to handle their finances could be a help as well.

Manage your finances in the same manner that banks manage their finances. Calculate how much you make and how much you spend each month. You want to always predict higher costs for things that you are predicting to spend money on, such as fluctuating bills like water or electricity. Then once you calculate your budget and have balanced things out make sure you put any money you have left into your savings.

Choose what you purchase wisely. Are you interested in realizing savings of 100 dollars or more each month? Although it may be difficult, take out unnecessary expenses like a storebought coffee and make your own. You can save five dollars or more per coffee by making your own coffee and adding creamer and whipped topping. Pour it into a portable cup and take it to work!

Do not waste money on anything that promises to make money easily. A lot of aspiring online marketers fall prey to this trap. While it’s important to increase your knowledge, rather than spending a lot of money, learn more through actually working.

Although it takes some foresight and a willingness to sacrifice convenience, you’ll find it does save you money to make use of only the ATMs operated by your bank or other financial institution. Financial institutions like banks often charge high transaction fees when people use other ATMs, and those fees can be very expensive.

Set out your budget before payday, give yourself a small allowance till next payday and bank your entire check. By budgeting your weekend money, you will help protect your paycheck. That way, you will still have money on Monday, when you’re in the proper mindset. This will prevent you from spending money rashly or unwisely.

When planning a budget, consider opening multiple checking accounts. Use your primary account to pay your necessary expenses and use your secondary account for optional expenses. If you are in the situation that you can pay your bills every month, you can keep track of where you are spending your money.

Sacrificing your home is a difficult decision that nobody wants to make. You can reduce your overall spending by looking into business and homes that cost less to live in. The last thing you want to have happen is to be evicted from your home after your repayment efforts ultimately fail. It’s best to be proactive about it.

Developing a budget you can stick to will help get your finances in order. You need to have a budget to help you change the way you spend your money. It will also keep you accountable for your spending.

The information in this article should help you understand how save in spite of the unexpected expenses which often arise. Don’t worry if your financial situation takes a little time to take care of. Just like when you diet, the results are not instant. Just stick with it and you will begin to see changes. Remember, an investment in good financial planning advice is usually well worth the effort.

Is Investment Timing Important?

18 Oct Investment Timing

When it comes to investing, you’ll hear different opinions about whether timing the market is possible to do over the long term. The people on either side of the argument all have their facts as to why they are right. I’m not going to debate this in this article. What I do want to do is look at it from another angle – how important is investment timing?

Investment Timing

photo credit: h.koppdelaney via photopin cc

If you’re in your 20’s or 30’s and have a small balance in your superannuation fund, whether the markets go up or down next year doesn’t really matter. Even if you get the timing right and are all in (or all out) of an asset class, the actual return you could make (in dollar terms) is quite low. so if you’ve got $20,000 invested and can get an extra 10%, you stand to make $2,000. Now, that will add up over the long term thanks to compound interest, but that’s not the only thing to consider.

On the other hand, if you’ve got $1,000,000 and can make (or not lose) 10%, that equates to $100,000 – a much bigger amount.

So when it comes to market timing, the only reason we’re concerned is because we want to maximize our returns and minimise our losses.

I suggest that this becomes more important to those people who are ten years either side of retirement. They’re at a stage of life where they’re more interested in looking after their capital – they don’t want to take unnecessary risks with it – hopefully they’re saving enough to be on track for a comfortable retirement without needing to take big risks.

So for these people, taking risks is not something they need to do. And history shows us that people are more concerned about losing money than they are with making it. So for these people, a conservative approach could work well. I’m not advocating putting everything in cash, but am suggesting they don’t try and time the market to try and chase the best return – they’ve got the most to lose!

Slow and steady is the best approach here.

A 10% drop on a million dollar portfolio is much more significant than on a $30,000 portfolio.

As they get closer to their expected retirement date, the thing they’re most concerned about is the predictability of their final retirement nest egg. They don’t want the potential value to fluctuate by 10 or 20% in the year they want to retire.

Or in the year after they retire.

So for these people, certainty is very important.

So perhaps something to consider for people close to retirement is how much fluctuation they’re prepared to accept in their capital.

The risk / return theory suggests that in order to achieve a higher return, you need to accept a higher level of risk. One aspect of risk is fluctuation in your capital.

So if you need to achieve a higher return in order to achieve your investment goals, you must accept that your capital will fluctuate in value more.

Is this acceptable to you?

The ideal position to be in is one where you have enough money saved when you’re five years away from retirement that you can accept a lower investment return – and lower risk – and still achieve your desired lump sum of money when you retire.