What you should know before investing

Let me first start by saying that I am by no means a financial advisor and pay someone else to handle my taxes. What I want to share in this post is my experience with investing. If you want solid advice about investing or taxes make sure to speak with a professional. With that said, here’s my story.

I was tired of earning less than one percent on my savings and CD accounts. I was always curious about investing in the stock market, but it was intimidating, and the thought of throwing large sums of money at something I didn’t understand seemed pretty stupid. So I set out to learn about investing in the stock market without risking my main retirement funds.

I decide to start small ($1,000) with funds I had accumulated from a former employer’s 401k plan. When I switched jobs, I had to roll it over into an IRA, and it was just sitting there earning nothing for years. Why not invest it in the stock market instead? Here’s what I learned.

There are tax advantages (yay!)

If you buy stock in a qualified small business and don’t sell the stock for five years or more, you don’t have to pay tax on the capital gains when you sell it. I also learned to the difference between a traditional IRA and a Roth IRA. In simple terms, a traditional IRA is pre-tax funds, and the Roth is post tax. In other words, once you retire and begin taking withdrawals you’ll pay taxes on the traditional IRA but not the Roth. I chose a Roth IRA, so I didn’t have to pay on any gains later on.

It takes time

Be prepared to lock your money away for at least five to ten years. Since you’re tying up your money for a long period of time, link your investments to your long-term financial goals, such as saving for your child’s education or your retirement. You’ll need to learn to be patient. The value of your investment savings will rise and fall. When I first started, I watched the stocks daily, and every time it dipped, I thought of selling. I had to stop looking at the performance so often because I was going crazy. I began checking them every other week and to my surprise started to see real gains. I had to accept that the market fluctuates often and a down day doesn’t mean much in the long run.

Don’t be overly cautious

Choosing a stock can be difficult – especially if you over analyze it. I decided to take the Warren Buffet approach and invest in things I understood or used. This turned out to be great advice. As a consumer, I was able to get an idea of how the company was performing where it counts. For example, I was always a fan of Southwest Airlines, and when I learned they would be flying out of Atlanta, home of the busiest airport in the world, I decided to buy some of their stock (ticker symbol: LUV). At the time, the stock was trading at $14/share. As of this writing, it’s trading around $53/share. The gamble paid off.

Diversify, diversify, diversify

Don’t put all your eggs in one basket. If you put all your money in one investment and that company or market fails, you’ll lose all your money. There isn’t a better example than the unfortunate people who trusted Bernie Madoff [https://en.wikipedia.org/wiki/Bernard_Madoff] and unknowingly invested in his Ponzi scheme.

You should diversify your investment portfolio and spread portions across various companies and asset classes. Put some money in lower risk investments, such as government or corporate bonds, and some money in higher risk investments, such as equities or real estate.

Invest regularly

Not everyone, including myself, has large sums of money available to buy chunks of stocks when the timing is right. Instead, I keep an eye on some of my favorites, and when I can afford to, I buy a handful at a time. Another way is to look for investments, such as mutual funds, that allow you to contribute on a monthly basis rather than investing in one lump sum. Doing so allows you to minimize your losses when the market is down. It also allows you to buy more shares at lower prices if the market is falling.

Consider investing through a fund

It’s a good idea for beginners to invest their money in mutual funds. Mutual funds are managed by fund managers who use their knowledge and expertise to buy and sell shares or bonds that maximize contributors’ returns. Buying directly, instead of through a fund, can be expensive and especially risky for beginners who don’t know the market. The majority of my retirement is through mutual funds, and I’ve learned to appreciate the value of professional management.

You don’t have to be a high roller to be a successful investor. It’s easier than ever to buy your own stocks and gain experience in the process. Be patient and invest for the long haul. Here are some of the most popular firms to use:

For me, I’ve gained a much better understanding of how investing works and I now have more informed conversations with my financial and tax advisors.

Weekly Cartoon: The Blockchain

Could it be the blockchain

For those of you who may be saying “I don’t get it” – the blockchain is new technology on the internet.  It shows incredible promise and many people are beginning to use the word “blockchain” to make them look smarter when they don’t really know how it works (hence the cartoon).  Check out this site to learn more.

Do You Want to Save More Money Each Month?

It’s probably safe to say we all would like to have more money. But how do we do that without increasing our income or drastically changing our spending habits? Is it even possible? Yes, it is if you follow some of these savvy tips.

Review your bank statements

If you’re like most people, you don’t check your monthly bank statement. I don’t blame you – it’s not the most exciting reading out there. However, you may find that your bank or credit union is charging a recurring fee or there was a fee charged in error. For example, the gym where you canceled your membership several months ago may still be charging you.

I’ve seen examples of people discovering fees months later, and in many cases, past the time the bank will honor a refund. If you are incurring a monthly fee, you need to do whatever it takes to eliminate it. There is no reason to pay $12 – $15 for a checking account when there are so many free options available today.

Use cash

Debit and credit cards make spending money so easy that people don’t even think about the nonessential things they buy anymore. Estimate how much money you’ll need to get through the week and withdraw that amount at your bank branch or through the ATM. Then stick to your budget and only use the cash. Be sure to allocate money for shopping or eating out if necessary.

Use WiFi

This tip is for everyone who has ever been hit with massive data overage charges on their cell phone bill. Make sure you’re always connecting to WiFi at home and whenever possible at work or in public. Don’t be embarrassed to ask for the WiFi password at places where you’ll be using your cell phone a lot. If you have a teenager as I do, you’ll notice how often they reach their data limit. One of the causes of the excessive use of data is that the younger generation stream so much content with their phones and music and video use much more data than text messages or email.

Use a budget tracking app

Several budget tracking apps accurately track your spending after you connect all your bank or credit union accounts to them. Check the Internet for reviews on which work well. The best ones are great at accurately categorizing your expenses so you can see just how you’re spending your money. Sometimes knowing where it’s all going helps to adjust accordingly. My favorite app for this is Mint. It’s owned by Intuit, makers of QuickBooks. It’s available for both iOS and Android and has some great features including category tracking and alerts.

Just say no to the coffee shop

This is a hard tip for me to share since I love coffee so much. However, I notice when I go to a coffee shop I usually buy something beyond a good cup of joe and can end up spending $7 per visit. That can quickly add up! Let’s say I visit a coffee shop every day and spend $7 per visit. That works out to be $140 per month and $1,680 per year! Brewing your coffee, including lattes and cappuccinos, at home will save a lot.

*For me, I enjoy going to the coffee shop as a means to get away from the office, and since I participate in rewards programs, I get rewarded with free coffee occasionally. I have chosen to maintain my (reduced) visits to the coffee shop as long as I follow my next tip often.

Bring your lunch to work

Most of my colleagues go out for lunch every day. I try to limit my spending to once a week. My average lunch bill, which includes drink and tip, can be around $15. If I did this every day instead of once a week, I would be spending about $300 per month and $3,600 per year! Imagine what you could do with an extra $300 per month.

Open multiple checking accounts

This is my favorite tip because it has helped me dramatically over the years. Having two checking accounts may help you limit what you spend on non-essentials. Keep the majority of your money in your primary account for paying your bills and making necessary purchases such as gas and groceries. After putting money in your savings account, deposit your spendable money in the second checking account. This money is for eating out, shopping, and entertainment. Don’t dip into your primary account to pay for non-essential items. This makes sure your bills are not impacted by overspending.

There are countless ways to save money by not spending it on non-essential things. The items above are just a few. Get a handle on how you’re spending your money and think of ways that you can cut the extras out. What tips have worked well for you?

Live Healthy and Save.

Many people think it’s too expensive to live a healthy lifestyle. After all, gym memberships and organic foods aren’t cheap. If you’re one of those individuals, you might be surprised to hear that living a healthy lifestyle can actually save you money. Here are five ways that living a healthy lifestyle might put money back in your wallet.

Reduce transportation expenses

If your workplace is close enough, ride a bike or walk to work. I walked to work for a while and saved tons of money and lost a lot of weight. If you work in the city where parking is a premium, you may be able to walk to a public transit station saving gas, parking fees and the hassle of traffic. If you have children who go to school close by, walk them to school instead of driving them or having them take the bus. Not only will you improve your health and theirs, but you will gain more quality time with them.

Reduce monthly food bills

Replacing pre-packaged, processed foods with homemade meals can greatly reduce your monthly grocery bill. For example, compare pre-packaged soup to homemade soup. The cost of pre-packaged soup is the same as the ingredients for a homemade soup. However, the pre-packaged soup will last you two days, while the homemade soup will last five.

Eating at home will also help your waistline and wallet. A takeout meal costs two to five times more than a homemade meal and may have double the number of calories. Scientists have demonstrated that your body prepares itself for food intake while you’re cooking and digests food much better as a result. You’ll feel more fit and satisfied after a homemade meal.

At the very least, taking your lunch to work instead of eating out every day will dramatically reduce expenses, and you can eat healthier foods that you prepare yourself. Since you can take your lunch with you, walk to your favorite spot and “people watch” or listen to your favorite podcast or audiobook.

Reduce medical expenses

Living a healthy lifestyle isn’t just about developing a fit body. Exercising regularly improves your sleep and boosts your immune system. In turn, you will spend less money on over-the-counter medicines for colds, headaches and other common illnesses. You’ll find yourself spending less on prescription drugs too because losing weight reduces blood pressure, high cholesterol levels, and joint stress.

Another added benefit to exercise is it helps reduce stress. After a long stressful day, I would do pushups and situps in my garage every night. After a few days of this, I found myself being less stressed at work, I had more energy throughout the day and was in much better shape than when I started. To keep me motivated and help me keep track of my progress I used Runtastic’s PushUps and SitUps apps. These apps kept track of my progress and helped me develop a routine towards my goal. You can also compare your progress to other Runtastic users. You can learn more about these and other apps by Runtastic here.

Cut back on expensive activities

Taking your family to the movies is extremely expensive nowadays, especially if you buy popcorn, candy and other snacks. If you want to spend quality time with your family, buy a Frisbee or a football and head to the park. If you’re not into throwing things around, most parks have a walking trail. Why not walk and talk instead of sitting on the couch? In general, outdoor activity boosts your mood and improves your health, and it’s usually free.

Cut out expensive vices

This tip seems obvious, but I still encounter plenty of people who smoke. At current prices, smoking 10 cigarettes a day costs you about $1,750 annually. Besides improving your well-being, quitting smoking will save you money, which you can use for a gym membership, purchase healthier foods and vitamins or invest it.

Soft drinks are another vice that increases your weight and decreases your cash flow. You can save about $175 a year if you refrain from soft drinks. While that may seem like a small amount, drinking sodas increases the likelihood that you’ll develop diabetes and have to spend money on expensive treatments in the future.

Living a healthy lifestyle is about more than looking good. It’s about improving your overall well-being and quality of life. Saving money to help your financial health is just an added benefit. Feeling good about your health and finances will lead to much more happiness.

Five Simple Things You Can Do Every Day to Improve Your Life

Many times, we don’t make the effort to better our lives because the job may seem too big. You can make big improvements by doing some smaller, simple things each day. Here are five simple things you can do every day to improve your life.

Determine Your Day Before You Get Up – When the alarm goes off in the morning, rather than getting up right away, take a few minutes to predetermine the great day that lies ahead. Tell yourself that people are ready to help you, and visualize a satisfying day filled with energy, fun and enthusiasm. Remind yourself of past successes, and fill yourself with enthusiasm. Use your time in the shower as you get ready to continually mentally prepare yourself for a productive day.

Be Grateful – We truly need to realize that many of our “first world problems” are insignificant. We all have much to be grateful for. There are family and friends who care about us. If you are employed, be grateful for the opportunity. If you don’t like your job, be thankful you have the opportunity to change it. We have technology and conveniences and are connected like never before. Look for things for which to be grateful. It is nearly impossible to be stressed when you are in a state of being grateful. Try it.

Purposely Do Nice Things for People – You are probably already a nice and helpful person, but intentionally crank it up. Even make note of these good deeds. You may also want to pay attention to the reaction you get from doing these deeds. You just may be surprised about how much return you get both mentally and emotionally from these acts, even if they are anonymous.

Talk a Walk Outside by Yourself – Try to put your mind on hold if you are feeling stressed. If you are trying to solve an issue, a walk may help you focus on new ways to look at the problem. Your body will soon learn that these walks are designed to decompress. Your mind will learn that the walk is an opportunity to avoid distractions and find solutions. Learn to ask proactive questions such as, “What are three terrific solutions for this?” Breathe deeply as you walk, and let your mind do the work for you.

Review Each Day’s Positives – Too often, our days are spent focusing on negatives. Take at least some time at or near the end of each day to mentally review your day from the beginning, reflecting only on the positives. Try to find the positives in even the negatives. If a key employee left, remind yourself that you will be able to find a replacement. If you lost an account, remember that there’s more business out there. It is a good time to be grateful again and reflect on the successes of the day and anticipate more for tomorrow.

Hope these were helpful.  I know we can struggle at times, but knowing things can be worse may help put things in perspective.  Life is too short to be misserable.

The Best Time of Year to Buy Things

Did you know that you can save money on just about anything if you buy it at the right time of the year? That’s right. From new cars to computers to furniture to clothes, there’s a best time of the year to buy stuff. Check out our guide for when you can get the steepest discounts.

Cars

September is the best month to buy a new car if you’re willing to purchase last year’s model. New car models are released in the fall, so dealers slash prices on last year’s inventory to make room for the new year’s inventory. So what about used cars? April is the best month to buy used vehicles. Dealerships usually purchase them at auction in April and try to sell them pretty quickly. The excess supply makes April a buyer’s market for used cars. Since April is National Care Care Month, you can also get good deals on car parts, tires, and service.

Furniture

January is the best month to buy new home furniture. New models come out on in February, so furniture stores offer great bargains to clear space for new inventory. You can also find deals on office furniture. Entrepreneurs tend to launch new business ventures in the new tax year, so retailers drop their office furniture prices to lure them in.

Laptops

As you might expect, August’s back-to-school sales bring good deals on laptops. June is another great month in which to buy laptops even though back-to-school bargains are weeks away. If you’re in the market for a desktop computer, wait until September. Desktops go on sale after the back-to-school madness ends.

HDTVs and electronics

Obviously, November is a great time of the year to get the best deals on electronics, HDTVs, tablets, and cameras as the. holiday shopping season kicks off. HDTV savings continue into December. January is another month where you can find bargains on HDTVs and electronics. The annual Consumer Electronics Show triggers price drops, so retailers can clear shelves for the latest and greatest models. Retails continue to discount HDTVs and audio equipment in February, which is also a good month to buy video games released during the holiday shopping season.

Clothes

As a general rule, season specific clothes go on sale midway through their season. February is the best time to buy winter coats and apparel. May is when you’ll find the best deals on spring clothes, and July is a great time to buy summer apparel. If you can wait, September and October are the best months to buy jeans for you and the kids.

Other fun stuff

In general, the best time to shop for items is when new models are introduced or seasons end. Here’s a list that shows by month when you’ll find the best bargains on lots of fun stuff.

  • January: Home furniture
  • February: Boats and tax filing software
  • March: Winter sports equipment, suitcases, and frozen foods
  • April: Snow blowers and jewelry
  • May: Mattresses and home goods
  • June: Gym memberships, lingerie, and cruises
  • July: Tools and grills
  • August: Lawn mowers and camping gear
  • September: Bikes, patio furniture, and sunglasses
  • October: Bikes, grills, and lawn mowers
  • November: Wedding dresses and cookware
  • December: Small appliances, holiday decorations (day after Christmas)

As long as your willing to wait and don’t mind buying last year’s models or styles, then you can save big bucks waiting for the best time of the year to buy stuff.