Posts Tagged ‘investing’
Last night I attended a benefit with a group of fabulous women. In a conversation before the show started, one of my companions mentioned that she was thinking about opening a brokerage account. She asked the very common question: Should she use a broker or do it herself?
I tend to lean toward the “do-it-yourself” route, but not everyone is the same. It can be reassuring to have a professional help you make important investment decisions and guide you on the steps to manage money. That said, remember that you’re going to pay for this service. If your goal is to get ahead, a full-service broker or advisor is going to slow that process with their fees.
Here’s what you need to ask if you go the full-service route:
- What are the fees associated with your service? Make sure all fees are in writing and that you understand how and when you’ll be paying.
- What is your investment philosophy? You want to make sure that your broker is on the same page you are. Generally (though not always) someone around your age will probably identify with your goals more than someone much older or younger.
- How experienced are you? Sitting in a chair for a long time doesn’t make someone an expert. That said, I don’t necessarily want to be the “test run” for the new broker.
The Financial Industry Regulatory Authority (FINRA) provides a website to make sure your prospective broker has never been in trouble. You’ll find it here.
If you decide to fly solo, you’ll also need a few tips:
- Are you a self-starter? Starting an online brokerage account is more than about avoiding fees. I’ve met plenty of people who never trade, never invest and don’t make prudent investment decisions while they’re savings a bunch of money in fees. Remember: saving money in fees won’t reach your goal. You’re going to need to plan and keep yourself on that plan to succeed.
- Compare services. Some online brokers offer convenient methods to add and subtract funds. Others offer incredibly low trading costs. Some work with many mutual funds. Others only let you choose from a few. Call the phone support people and ask them how to open a Roth IRA (whether you need one or not). Judge the service you receive. Was it helpful? Were you transferred several times?
We’ll do a full blog piece on this in the future, but hopefully this will help anyone out there considering this very question to get started!
I know they say not to sell stocks when the market is low. Should I be making any moves financially while the markets are so volatile?
Absolutely Sue! In this type of market people panic, creating deals for a shrewd investor. As an artist, you should be comfortable moving against the crowd and looking for opportunities that others miss. Translate this ability into financial moves, and you’ll soon be a pro!
Here are a few ideas:
- People often delay financial transactions when the stock market tumbles, so look for teaser interest rates at banks.
- The Federal Reserve may lower interest rates. If this happens, auto loans and credit card rates drop (mortgages, unfortunately, are more closely tied to long term Treasury bond rates, so you won’t necessarily find opportunities there). If your car loan is at a high rate or your credit card is taking a pound of flesh for every purchase, search for better terms.
- Sell loser stocks and upgrade. If you own mutual funds or exchange traded funds, it’s often best to sit on your hands through a downturn. But if you own individual stocks, this is an opportunity. Down markets usually don’t discriminate between bad and good stocks when the sell-off occurs, sending all of them down together. This could be a good chance to sell underperformers in your portfolio and jump into higher quality companies. Sure, you’ll be selling low, but when the market recoups, quality stocks usually outperform poor quality investments, helping you to make back lost money faster. Making money faster always puts a smile on my face!
So there’s a crazy blog title right? I’ve always been a champion of thinking BIG! My clients will tell you about the many books, articles and quotes I pass on to them on the topic of never, ever limiting our dreams.
On Saturday I attended a seminar on investing. It was a fabulous day. The instructor shared great information and did it in a way that made sense to someone like me who tends to go a bit cross-eyed when I try to follow the stock market. But early on in the class, he was talking us through a simple investment strategy, and explained a process we could follow to earn $100 over the course of a month. He looked around the room and obviously sensed the energy of the participants (me included) that was essentially – “Yeah, okay…$100…when are you going to get to the real stuff?”
He smiled a bit and then cautioned us to pay attention to our mindset and the ways in which, without even realizing it, many of us are guilty of consistently dismissing money. At that moment, we were all pretty much broadcasting loud and clear to the universe: “I’m not impressed. Don’t bother. Call when you’ve got something good for me.”
And then he said something almost ridiculously simple and incredibly powerful:
“ALL MONEY IS GOOD!”
I’ve been thinking about that statement constantly for the last couple of days. How often do you catch yourself saying things like:
- “Geez. A residual check for $1.04. It’s not even worth a trip to the bank.”
- “I can ONLY save $25 a month right now. What’s the point?”
- “Yes their gas prices are a few cents cheaper, but I’d have to make a U-turn.”
When we consistently blow off opportunities to take the “small” steps to building our wealth – what makes us think we’ll be given bigger opportunities? Spending mindfully, saving consistently, welcoming money of any size into our lives – all of these habits make us long term winners.
It’s funny because the first module of The Artist’s Prosperity Home Study System is Change Your Financial Mindset and How You Talk About Money. And what I say throughout this lesson is that our work in this area is never “done.” It’s not like you can check a box and you’ll never have another negative thought about money. But it’s so important to do the work and to keep coming back to it. Sure, there are other “more glamorous” topics like debt elimination, increasing your income and investing. But it all begins with the foundation of a strong and powerful state of mind about money.
Well this weekend created consciousness for me around an area that I want to really pay attention, and I thought I would take a few moments to also share that with you. It’s wonderful for all of us to continue to strive for everything we desire. We just want to remember to give gratitude and thanks for all the small steps we can take along the way.
Committing to invest money is like finding a good script and deciding to begin production. Although there’s power in making that first decision to begin, the harder parts are still to come. So today we’re going to roll up our sleeves and get a little technical, but in a fun way!
In my last blog post we discussed mutual funds and why these tools are an excellent choice for neophyte investors. I’ve been asked some important questions since that post — the most-common one being: Which fund should I use?
Mutual funds are like a room full of different colored paints, and each hue becomes more attractive under different light. It’s impossible for me to recommend the best fund to magically help your portfolio, but to support your research, here are some fundamental points — each building on the next:
1) Large company funds are safer than small company funds. Having both in your portfolio together is safer yet. The same goes with international funds and sector investments… the more diversified your portfolio is, the less risky it becomes. As you spread more paint on your investing wall, there’s a better chance one is going to work.
Luck be a lady tonight...
At some point during your career, you’ve had to make difficult choices. As artists, we’re constantly asked to choose. Do you want the part that’s more personally satisfying or the gig that pays well? Should you audition for a show that pushes the limits of your skill or the one in your wheelhouse where you’re sure to stand above the rest? These decisions are rarely fun, and yet, we know that avoiding them doesn’t make the pain recede. Rather, such avoidance can actually be career suicide.
It’s the same for investments.
I understand from experience how easy it can be to freeze up and choose not to invest because the right decision seems so difficult. How do you pick from the thousands and thousands of available investments? So many of them look good. What if you make the wrong choice?
Much like an actor chases the perfect performance and always finds room to improve, so it is with investing. You may spend days, months or even years searching for the perfect investment. Sometimes, accidently, you may get close, finding a juicy money-maker that was exactly what you’d dreamt about. But sadly, even near-perfect investments don’t last forever, so when it ends you’ll still have to go out and look again.
Investment horticulture: Low, indirect light. Water once a week. Fertilize regularly.
To some, investments seem like the Las Vegas segment of a financial plan; you bet your wages on an investment and hopefully watch your chips accumulate on the road to wealth. If you ever watch cable investment networks it sometimes feels as if the average person is just a lucky investment or two away from riches. The truth, however, is that the professionals we see on television, work all day, every day tracking the market, compiling data, and using mathematical algorithms to choose investments. The secret to investing successfully, if there is really any secret, is first recognizing that any sexy, get-rich-quick ideas are generally surefire strategies for a new investor to lose all of their money.
It can also be easy to be fearful and just avoid investing altogether. The trouble is that if you never invest money, you’ll never keep up with inflation. Worse yet, you’ll have to earn dollar for dollar whatever you want to spend later. If you ever want to stop working – or be able to focus all of your time on the things you want to do rather than have to do – investing is a critical part of your financial plan. Imagine that you’re not working anymore and you’ve never invested….only saved money into a bank account. How much money do you need? You’ll need to have money for every meal every day and that’s just for starters! Accumulating this pot of money without investments is close to impossible.
Here’s how successful investors work their magic. They begin by imagining their investments as a separate person who goes out and earns a living every day. You purchase an investment with a small sum and your funds go to work each day, as do you. At the end of the day your money brings home some more money. On a few days your investment comes home empty handed, or worse, loses some of your money. Imagine that you had an employee on your payroll like this? What would you do?
Well, the first thing you’d probably do is to tell your employee exactly what they’re trying to achieve. I’ve had jobs (and I’m sure you have also) where my boss was unclear about what we were actually trying to do. Because of this, nothing really got done. On the other hand, I’ve worked for people who were laser specific about their objectives, and all of the employees were able to quickly complete the job. By having clear goals about your money, it’s easier for your money to multiply.
PHILOSOPHER GEORGE SANTAYANA SAID, “Those who do not remember the past are condemned to repeat it.” That’s why, at the end of the year, I like to study the past twelve months and ask myself, what is it that I learned? Some years the answers to the question are easy, like in 2000, when the obvious moral was that the stock market doesn’t always skyrocket. In 2002, we were lucky to learn that the inverse, stock markets don’t always plummet, was true. Other years are more difficult, but if you dig, each twelve months you’ll find plenty of learning nuggets buried in the headlines that you can carry into the next year and beyond. 2010 is no exception. Although it wasn’t a year with brilliantly shining financial stories, there is plenty to remember.
Here are my top five 2010 lessons, in descending order:
5) Home ownership is difficult (still). According to RealtyTrac, one out of every 389 homes received a foreclosure notice in the month of October. Banks are still uneasy about loaning money to people for home purchases, and with good reason. If you own a home, having a good cash reserve, a low amount of debt, and a consistent income stream are all vital to maintain your mortgage.
Another long day battling our inner creative and financial demons.
Many people want to have more money—okay, everyone does. However, most people don’t know how to go about building wealth, even if they are high income earners. Their money often just sits in their bank account, because they really don’t know what to do with it or they are too afraid to take a risk. When it comes to us, the actors and artists, we also don’t want to risk losing the scant amount of money we have earned because we need that to make ends meet while we pursue our artistic careers.
What you have to seriously ask yourself is, with the scant amount of money and what you have to do to earn it, do you really have the time and energy to pursue your artistic career?
How many of you read the title of this month’s newsletter and said “Oh no! Not that again!”?
If you have ever attended any kind of financial seminar or read any books on finances, you have been told that you should consistently be putting a set amount of your income into savings. We all know that we are supposed to be putting away money every single month. Still, the reality is that an extremely small percentage of us actually do it.