When it comes to making financial decisions and managing your money, who do you ask for tips or advice? We think it’s always a good idea to consult with experts, and that’s how we pulled together these bits of financial wisdom. Here are 40 money management tips from experts that you can apply to your own trading, investing, saving, and financial planning:
1. “For each investment you make, you really, really have to understand the risks that you're taking. Don't outsource that task to your financial advisor…. If you're not willing to do that work, you should just keep your money safely in a bank.”
Formerly COO of Deutsche Bank's commodity ETF business, currently a lawyer representing defrauded investors.
2. “You must walk to the beat of a different drummer. The same beat that the wealthy hear. If the beat sounds normal, evacuate the dance floor immediately! The goal is to not be normal, because as my radio listeners know, normal is broke.”
Host of the "Dave Ramsey Show" and author of "The Total Money Makeover"
3. “Cut your losses short. The ‘it'll come back’ mentality is dangerous. One great way to do this is through the use of stop loss orders. Don't fear them. Use them. They are your best friend.”
Principal at Reink Media Group, hobby investor, and full-time webpreneur. He is responsible for all equity broker reviews and business development on StockBrokers.com
4. “Be patient and wait for the high probability/low risk trades. They are out there. Be like a predator/lion waiting in the brush and then pounce. You'll eat for a week.”
Instructor at Online Trading Academy
5. “I will tell you how to become rich. Close the doors. Be fearful when others are greedy. Be greedy when others are fearful.”
American business magnate, investor, and philanthropist. Widely considered the most successful investor of the 20th century
6. “A common mistake people are making in retirement planning is failing to diversify their investment strategy from a concentrated stock position. There is no reason why you can't diversify your risk when it comes to the stock market.”
CFA, CFP®, AEP, President and Founder of Kendall Capital Management
7. “No one ever achieved financial security by being weak and scared. Confidence is contagious; it will bring more into your life.”
American author, financial advisor, motivational speaker, and television host
8. “Check your credit report for errors! One simple mistake can cost you money. If you are not looking at your credit report to protect it against errors, who is? 15 minutes, twice a year is easy for anyone.”
9. “Wall St. is playing games with your money. Many investors do not know it is a game or know the rules! The first rule of trading is to know you are in a game.”
Chief Knowledge Officer, Online Trading Academy
10. “Frugality isn’t about cutting your spending on everything. That approach wouldn't last two days. Frugality, quite simply, is about choosing the things you love enough to spend extravagantly on—and then cutting costs mercilessly on the things you don't love.”
Author of I Will Teach You To Be Rich
11. “Comparison shop when it comes to choosing a primary financial institution. It's a very basic concept, but one that many people fail to grasp. The big banks are often the default choice, yet smaller and institutions like community banks and credit unions are considerably overlooked.”
Analyst for NerdWallet, a personal finance website
12. “An investment in knowledge pays the best interest.”
One of the Founding Fathers of the United States. Author, politician, scientist
13. “Professionals look at a trade and ask ‘what is my risk?’ first. Novices ask ‘what can I make on this trade?’ first and don't understand the risks.”
Instructor at Online Trading Academy
14. “You don't have to start big...small steps over a lifetime really add up. Start funding your emergency fund with $10 a month, start investing with $50 a month. It is more important to get going than to wait for the big amounts of cash!”
Personal finance expert specializing in money management basics and beginner investing.
15. “In investing, what is comfortable is rarely profitable.”
American entrepreneur, investor, editor and writer
16. “Individual traders must manage their trading just like a business. In other words - keep expenses low, focus on improving profit margins, develop several streams of income, and build large cash reserves.”
Full-time, independent trader, creator of The Kirk Report
17. “Warren Buffet said: ‘When you combine ignorance and leverage, you get some pretty interesting results.’ We have seen this statement become fact in the last 7 years. However, leverage used correctly when investing in real estate can create long term wealth and great ROI.”
Instructor at Online Trading Academy - OTA Real Estate
18. “Live under your means. Know exactly what you earn each month and spend less. That's a step beyond living within your means. Take responsibility and choose where your money goes, instead of being influenced by whims, advertising, habits or peer pressure.”
National consumer finance expert, vice president of Freedom Financial Network
19. “The individual investor should act consistently as an investor and not as a speculator.”
Economist and professional investor. Graham is considered the first proponent of value investing
20. “One of the biggest mistakes I see people making is investing based on emotion rather than a disciplined, systematic process. In particular, I think people need a disciplined plan for risk management as mitigating large draw-downs in your investment portfolio has the potential to add more value over time than maximizing every ounce of upside in the bull markets.”
Co-Founder and Portfolio Manager at Season Investments
21. “Know you want it, then wait for wholesale!”
Instructor at Online Trading Academy
22. “My top tip for traders is to look at each of their trading positions each day as if they didn't have it and ask themselves if they would open it. If the answer is "no", then the position is no longer justified, and therefore should be closed. This simple mechanism allows traders to trick their biggest enemy (emotionality in trading) and stay objective.”
Chartered financial analyst and owner/editor-in-chief of Sunshine Profits, website dedicated to gold and silver investments
23. “Everyone has the brainpower to follow the stock market. If you made it through fifth-grade math, you can do it.”
American businessman and stock investor, research consultant at Fidelity Investments
24. “The most impactful approach to money management is spending less than you owe… By establishing a structured spending plan, which accounts for all expenses, you can focus on eliminating unnecessary expenses and commit your disposable income to building wealth.”
Community Outreach Director at Cambridge Credit Counseling Corp
25. “Saving at least $1,000 in emergency savings should be a non-negotiable part of your overall money management plan. This holds true regardless of any existing debt you're trying to pay down. Why? Because should an unforeseen financial crisis hit your front door, without a savings safety net, you’ll only fall deeper into debt; preparedness means everything when it comes to financial success.”
Editor for GoBankingRates.com, an online personal finance resource
26. “Invest in yourself. Your career is the engine of your wealth.”
Australian television presenter, financial analyst and financial advisor
27. “Wealth building is simple and can be fully explained in just one sentence: Spend less than you earn and invest the difference wisely. If you get that right you will be wealthy. Everything else is just details.”
Money Coach at FinancialMentor.com
28. “People should take every opportunity they can to save money because it really adds up, and the best way I know to do that is to make your savings automatic.”
American financial author, TV personality, founder of FinishRich.com
29. “Never enter into a trade or investment without having a thorough plan first. If you fail to plan, you plan to fail! That is the best money tip I can give you.”
Instructor and Host of Power Trading Radio, Online Trading Academy
30. “Run your household like a business and manage your finances like a bank! The lack of money is not our problem it's the mismanagement of life holding us back from maximizing our earning potential.”
Mark A. Wingo
Author of Wingonomics, Creator of Get Your PhD in Wingonomics and President and CEO of New Beginning Financial Group, LLC
31. “Success is not in the quality of the winning trade but in the quality of the losing trade.”
Mike Mc Mahon
Instructor at Online Trading Academy
32. “To have a successful and secure financial future, it is important to adopt the mindset of saving before spending. If you set aside funds for the future each pay cycle, you are sure to have plenty of money in your retirement account and any other long-terms savings account.”
Co-owner of Money Crashers Personal Finance
33. “When buying shares, ask yourself, would you buy the whole company?”
Australian entrepreneur, investor, investment adviser, and stockbroker
34. “Set aside an hour twice a month to update your budget and make sure your accounts are balancing. It's much easier to keep spending under control if you stay on top of things and catch yourself before you are too far over budget.”
CFP® and senior financial advisor from Moss Adams Wealth Advisors
35. “It's not how much money you make, but how much money you keep, how hard it works for you, and how many generations you keep it for.”
36. “Trade what you see…not what you think.”
Instructor at Online Trading Academy
37. “Keep it simple, understand what you own and why.”
Gary M. Shor
MBA, CFP®, VP Financial and Estate Planning, AEPG® Wealth Strategies
38. “The four most dangerous words in investing are: ‘this time it's different.’”
American-born British stock investor, businessman and philanthropist
Sir John Templeton
39. “Set it and forget it. Manage big planning items (retirement, saving for college, vacation planning, etc.) easily by making them automatic.”
Loan Consultant and credit expert at Veterans United Home Loans
40. “How you spend your money is how you vote on what exists in the world.”
Co-author of Your Money or Your Life and Yourmoneyoryourlife.info
As each New Year begins, we see a deluge of effective recommendations on how to improve financial planning.
If there is anything worth mentioning in the past two decades that we have been dispensing retirement planning advice to numerous people, it is the fact that those who take a proactive stance have achieved positive results while those who failed to protect themselves with sufficient safeguards encountered disastrous results.
With 2017 here, we focus on a few recommendations we consider essential in coming up with an efficient retirement planning strategy.
Essential Planning Tip #1: A Retirement Plan
Seek the help of a professional financial adviser to create a retirement plan for you.
A retirement plan is essential in charting your course on the right path for a secure retirement future, to avoid scams and put your hard earned money into waste. If you are not a professional financial practitioner, do not do it yourself in order to avoid committing errors or overlooking crucial aspects.
A retirement strategy must incorporate your income sources: Social Security, CSRS or FERS annuity, FERS retirement supplement and others (rental income, military pension, etc.).
You must never take this advice for granted. Do whatever you can to rev up your potential to earn. If you work as a federal employee, determine what you need to do to avail all the benefits to which you are entitled and discuss with a financial expert who can help you maximize your benefits. Having a highly knowledgeable financial adviser, however, may not be sufficient; because a few have given bad advice to federal employees who made wrong decisions that could not be corrected.
One vital step to take involves evaluating your specific income sources and analyzing how each one affects the others, determining how all of them can be made to work in synergy.
Take this case, for instance: In general, retirement planning advisers recommend putting off availing of Social Security benefits until one reaches the full retirement age (FRA) in order to gain a higher pension amount. For those born from 1943 to 1954, the stipulated FRA is 66 and it gradually goes up to 67 for those born in 1960 or after. For those opting to retire earlier, benefits are provided for those individuals who reach 62 and 1 month at a fixed reduced amount which is 75% of the full amount of expected benefit. It is crucial for those wishing to retire early to consider it if they are better off postponing Social Security benefits for a few years and getting bigger withdrawals from their TSP and other savings. This can often be a viable choice; but does not guarantee a positive result at all times. Find out if the withdrawals from your savings will eventually eat up your savings in just a short time; in which case, you might need to avail of your Social Security benefit earlier to secure your savings. This is why you have to assess all aspects of your plan.
Compute accurately what your expected net monthly income goal will be. This involves determining your actual expenses, like your taxes, insurance, utilities, car payments, etc.
At this stage, ponder what you plan to do when you reach retirement age: visiting places, learning to play music, dining, sailing, cooking, gardening, playing golf and others. Make sure you attach a figure to each activity so you will know what your expenses will be.
A good retirement plan will tell you if you are on track to support your targeted goals. You can adjust your savings target accordingly, especially if you have to contribute more to TSP or other savings plan to reach that target.
Cost of Living Allowance (COLA) must be part of a retirement plan to maintain your buying capacity in the future. As a married individual, you will also have to consider the survivor needs of your spouse which is a vital aspect of the plan. In case of the death of one of the spouses, the survivor might lose not just a part of the of the Social Security benefits received but basically half of the deceased spouse’s pension or federal retirement annuity, as it may apply.
An effective retirement plan has several components; and when everything is in place, you will easily recognize lapses or realize when you must adjust your plan along the way. A yearly evaluation of your plan is recommended in order to assess your progress and to make necessary changes according to your goals and needs.
The biggest mistake most people make, especially the young, is to procrastinate planning for one’s retirement. They feel that working with a financial advisor requires a big investment which they cannot afford and that doing it early enough is a waste of opportunity.
Initially, a lot of financial advisors offer a no-obligation consultation to find out what your financial situation and needs are. After that, they can quote a price for making a retirement plan for you. In fact, many people talk to several financial advisors before deciding who to work with in the end.
Planning for the future has no fixed-age requirement before you must do it. We can say that the earliest bird catches the biggest worm. With people having different needs, knowing you are on target as to your own goals can provide lasting peace and satisfaction.
Essential Planning Tip #2: Prepare a long-term healthcare plan
Provide for your and your family’s healthcare needs, especially for long-term medical care.
Even if you have a sound plan for your retirement years with a secure retirement income target in place may not be sufficient. Considering enhanced healthcare nowadays and the improved life expectancy among Americans, it is also a vital need to prepare for a more comfortable senior-year life through having a long-term healthcare plan.
LTC or Long-term care is a valuable protection for those who need care due to such conditions as physical injury, chronic illness, frailty or cognitive impairment. In general, the care provided is custodial care, not rehabilitative or intensive care. Based on the Department of Health and Human Services studies, 7 out of 10 people who reach 65 will require some kind of LTC. Depending on certain conditions, the care will vary in terms of cost based on the kind and length of care required, the care provider and the location of residence.
How do you pay for a long-term care need?
First is by the traditional LTC policy which is available through the Federal Government’s tie-up with John Hancock. An individual chooses the amount of daily benefit needed, the benefit duration and the inflation coverage. Perhaps, this is the least expensive way to acquire a LTC plan; nevertheless, the two main disadvantages pointed out are: (1) No guarantee on the premium given and rates have increased a few times. The most recent rate increase was in 2016 at 83% on the average, although beneficiaries’ premiums doubled. (2) In case you will not require a LTC, the insurer will not return all your premiums.
The Hybrid Life/LTC policy offers an option that has been attracting many individuals. In essence, the policy is a Universal Life insurance coverage which provides a chronic-care clause. Many of the providers channel 2% of the death benefit toward long-term care needs. For instance, if your plan stipulates a death benefit of $500,000 and you need LTC, you will receive a benefit of $10,000 monthly for LTC. In case you will not need LTC, your beneficiaries will receive $500,000 upon your death.
For those who have neglected the task of preparing sufficiently, self-insuring is the only choice. The rich, on the other hand, can opt for self-insurance without affecting their finances. Read this Forbes article: Can You Self-Insure for Long-Term Care?
An alternative plan is to buy into a Continuing Care Retirement Community (CCRCs) which provide different services in the locality as well as enhanced quality of care according to the changing needs. Nevertheless, CCRC’s charge high entrance fees and monthly charges, ranging from $100,000 to $1 million entrance fees and from $3,000 to $5,000 monthly changes which may increase with time.
You final choice is to avail of Medicaid. To qualify, you should have limited income and resources which may require spending down majority of your assets. Likewise, Medicaid might not satisfy some costs of your long‐term care needs; hence, preventing you from getting the quality of life you aim for.
Long-Term Care Requirements will Impact Family Relationships
Planning for long-term care will not only affect a family’s financial resources but also cause emotional and physical stress for family members who must assist overworked caregivers. With children in the picture as well, an individual may have to set his or her life on hold. Hence, not only is the caregiver affected but also the spouse and the children. When care is not equally shared among members, conflicts and squabbles may arise, sometimes even leading to estrangement. In short, LTC may have the potential to shatter families.
Essential Planning Tip #3: Avoid Splurging Your Money in Retirement
Many get into the trap of splurging away their money once they retire.
Having a sound budget in retirement helps prevent a person to commit the worst mistake ever – spending too much money too soon.
Overspending is a kiss of death for retirees. Prepare a list all of your monthly, quarterly or annual needs and divide into two classes: (1) Needs – such as food, rental or mortgage, transportation and healthcare. Account for any increase in healthcare cost. (2) Wants – such as hobbies, travel, sports and social affiliations.
For those who have been used to exorbitant payments for car and house obligations, changing your lifestyle may be only the solution. The key is to accept the realities of retirement life and then resolve to reduce your fixed expenses to free more funds for the things you truly enjoy.
Avoid the temptation to unnecessarily support the needs and wants of grown-up children and grandchildren. This happens so often to so many people in retirement.
Take the case of a lady who had taken a pension buyout from a private company. With her sizeable IRA, she felt she could adequately provide for her children. Thus, she overspent on her daughter’s wedding and kept saving her son from his financial straits. In short, before realizing it, she had spent too much too soon. Although we all feel we need to go out on a limb to help out our children, we should do so without endangering our own essential needs. Rarely, if ever, are there second chances in retirement.
Sparks Corporation welcomes you to a promising world of wealth-building opportunities. As a leading provider of wealth management services and investment solutions, we have proven our capability to surmount dire economic obstacles and successfully benefited our global clients in prudently managing their assets through efficient planning in order to achieve their financial goals.