Tag Archives: investments

Physical Fitness for your Fiscal Fitness

*Ok, so a friend of mine is a health and fitness expert, and the blog post last week gave him an idea.  His name is Bert Wray and we decided to write this joint blog article. I hope it has some good info for you. Read the rest of his blog at icoachu4life.com*

We all have our own barometer for success. Those that achieve it carefully map out their goals and constantly work in pursuit of that next benchmark. There is nothing wrong with maintaining a laundry list of goals, but they all have to intertwine and relate to one another in some way. They should be prioritized based on the need or desire to achieve that specific goal over another.

For just about all of us, the top dog is cash money! Money is the ultimate enabler. They say it can’t buy happiness, but it certainly tough going without it. If you’re idea of achieving financial success involves a scratch-off ticket: WAKE-UP!! Financially successful is not the same as filthy rich. Maintaining a comfortable lifestyle within your means should be your part of your goal. Professionally, you have to make the most of every opportunity to ensure that you are in position to advance in your career and receive the benefits of those advancements. Understand how investing in yourself, as well as your finances, will propel you to the success you dream of. How does physical fitness relate to your financial success?

The Benefits Package: When interviewing for a new company or position, everyone is eager to know all the benefits available. Yet, when coming to the gym, you focus on one aspect of physical fitness benefits; weight management. How can you be so detail-oriented with one and narrow-minded with another?

We all know that regular exercise, coupled with reasonable nutrition, will help to manage our weight, increase strength and stamina, and tone muscle. Those are important, but the psychological effects of an effective exercise program are the true link to helping you achieve inside and outside of the gym. Generically, exercise boosts your energy levels. In reality, the effects of exercise on the brain is still being researched to completely pin down the true effects.

Why is exercise good for the brain? There are several possibilities:

* increasing the blood and oxygen flow to the brain
* increasing growth factors that help create new nerve cells and
* increasing chemicals in the brain that improve cognitive skills, such as dopamine, glutamate, norepinephrine, and serotonin

In other words, exercise can sharpen your skills, increase your alertness, and even act somewhat as an anti-depressant. All of which are essential in today’s professional arena.

Additionally, health clubs are an excellent networking opportunity. You never know who you may meet that could lead to your next big closing or even your next position. You must stay alert and focused to recognize opportunities. Once you recognize opportunity, you have to be willing to seize it.

Now that your exercise and nutrition plans are on track, what can you do to further advance your financial success? Just as you would look to a health and wellness expert for fitness advice, get your financial advice from a financial expert.

Michael Kothakota, CEO of Wolfbridge Financial, works daily to improve the livelihood of his clients. The following are fundamentals necessary to establish sound practices that will drive you to successfully achieving your personal financial goals:

The first step to achieving your financial goals is to actually have a plan. Now, when we talk about plans, we aren’t saying that they shouldn’t change or be set in stone. Financial plans are guidelines that you follow on your way to reaching your financial goals. As Bert said, you can’t be single-minded and focus on one thing. Most fitness goals require a comprehensive plan, and like fitness goals, financial goals can be complicated as well.

So, how do you get started?

First, organize your financial documents. When things are spread out all over the place, it becomes difficult to actually get anything done. Procrastination occurs, and then you are no further along than when you started. There are many filing systems that you can utilize. You can mirror one at work, use an electronic filing method (if that works for you), or you can create one.

Next, create a chart, table, spreadsheet with the organized financial information contained within. Separate your long-term investments from your shorter term money (checking, money market, etc.). Create a balance sheet that lists your assets and liabilities. Subtract your liabilities from your assets, and voila! You now have your net worth.

Don’t be afraid of the number. The important part is that you are now organized and have a good handle on your financial position. What’s next?

Budget. Developing a budget is fairly easy, but we make it difficult. Simply add together all income you have. Next, add together all fixed expenses such as your mortgage, car payment, student loan payments, etc. Variable expenses are a little trickier, but you can estimate with fair accuracy by averaging the past three months of variable expenses (water, sewer, gas, gasoline, etc.) and using that number to estimate a fair expense. Subtract both your variable and fixed expenses from your income and you now have a decent budget.

The next steps are fairly simple. If you have revolving debt, pay it off. There are all sorts of online tools that will help you do this. Most people pay off higher interest debt first, but I prefer that you payoff the smallest debt first. Why? Psychologically, it is fulfilling. It will encourage you to pay off the other debts quickly.

Once you have paid off your revolving debt, move onto creating an emergency fund. Three months salary is usually sufficient, but comfort level can come into play. Some people prefer six months or even twelve months.

Finally, you can move onto investments. If you have a 401k at work, or existing investments, unless you are a financial savant (in which case this half of the article is useless to you), please consult an investment advisor. A lot of 401k’s are offering this service for free for the employees. Or you can hire someone to look over your accounts and make sure that your investments are tracking our long-term goals.

Remember, the first step is to get organized. After that, it all becomes easy. Don’t let the overwhelming nature of financial issues stop you from seizing control

We all have our own barometer for success. Those that achieve it carefully map out their goals and constantly work in pursuit of that next benchmark. There is nothing wrong with maintaining a laundry list of goals, but they all have to intertwine and relate to one another in some way. They should be prioritized based on the need or desire to achieve that specific goal over another.

For just about all of us, the top dog is cash money! Money is the ultimate enabler. They say it can’t buy happiness, but it certainly tough going without it. If you’re idea of achieving financial success involves a scratch-off ticket: WAKE-UP!! Financially successful is not the same as filthy rich. Maintaining a comfortable lifestyle within your means should be your part of your goal. Professionally, you have to make the most of every opportunity to ensure that you are in position to advance in your career and receive the benefits of those advancements. Understand how investing in yourself, as well as your finances, will propel you to the success you dream of. How does physical fitness relate to your financial success?

The Benefits Package: When interviewing for a new company or position, everyone is eager to know all the benefits available. Yet, when coming to the gym, you focus on one aspect of physical fitness benefits; weight management. How can you be so detail-oriented with one and narrow-minded with another?

We all know that regular exercise, coupled with reasonable nutrition, will help to manage our weight, increase strength and stamina, and tone muscle. Those are important, but the psychological effects of an effective exercise program are the true link to helping you achieve inside and outside of the gym. Generically, exercise boosts your energy levels. In reality, the effects of exercise on the brain is still being researched to completely pin down the true effects.

Why is exercise good for the brain? There are several possibilities:

· increasing the blood and oxygen flow to the brain

· increasing growth factors that help create new nerve cells and

· increasing chemicals in the brain that improve cognitive skills, such as dopamine, glutamate, norepinephrine, and serotonin

In other words, exercise can sharpen your skills, increase your alertness, and even act somewhat as an anti-depressant. All of which are essential in today’s professional arena.

Additionally, health clubs are an excellent networking opportunity. You never know who you may meet that could lead to your next big closing or even your next position. You must stay alert and focused to recognize opportunities. Once you recognize opportunity, you have to be willing to seize it.

Now that your exercise and nutrition plans are on track, what can you do to further advance your financial success? Just as you would look to a health and wellness expert for fitness advice, get your financial advice from a financial expert.

Michael Kothakota, CEO of Wolfbridge Financial, works daily to improve the livelihood of his clients. The following are tips and tricks to establish sound practices that will drive you to successfully achieving your personal financial goals.

The first step to achieving your financial goals is to actually have a plan. Now, when we talk about plans, we aren’t saying that they shouldn’t change or be set in stone. Financial plans are guidelines that you follow on your way to reaching your financial goals. As Bert said, you can’t be single-minded and focus on one thing. Most fitness goals require a comprehensive plan, and like fitness goals, financial goals can be complicated as well.

So, how do you get started?

The first thing you should do is organize your financial documents. When things are spread out all over the place, it becomes difficult to actually get anything done. Procrastination occurs, and then you are no further along than when you started. There are many filing systems that you can utilize. You can mirror one at work, use an electronic filing method (if that works for you), or you can create one.

Next, create a chart, table, spreadsheet with the organized financial information contained within. Separate your long-term investments from your shorter term money (checking, money market, etc.). Create a balance sheet that lists your assets and liabilities. Subtract your liabilities from your assets, and voila! You now have your net worth.

Don’t be afraid of the number. The important part is that you are now organized and have a good handle on your financial position. What’s next?

Budget. Developing a budget is fairly easy, but we make it difficult. Simply add together all income you have. Next, add together all fixed expenses such as your mortgage, car payment, student loan payments, etc. Variable expenses are a little trickier, but you can estimate with fair accuracy by averaging the past three months of variable expenses (water, sewer, gas, gasoline, etc.) and using that number to estimate a fair expense. Subtract both your variable and fixed expenses from your income and you now have a decent budget.

The next steps are fairly simple. If you have revolving debt, pay it off. There are all sorts of online tools that will help you do this. Most people pay off higher interest debt first, but I prefer that you payoff the smallest debt first. Why? Psychologically, it is fulfilling. It will encourage you to pay off the other debts quickly.

Once you have paid off your revolving debt, move onto creating an emergency fund. Three months salary is usually sufficient, but comfort level can come into play. Some people prefer six months or even twelve months.

Finally, you can move onto investments. If you have a 401k at work, or existing investments, unless you are a financial savant (in which case this half of the article is useless to you), please consult an investment advisor. A lot of 401k’s are offering this service for free for the employees. Or you can hire someone to look over your accounts and make sure that your investments are tracking our long-term goals.

Remember, the first step is to get organized. After that, it all becomes easy. Don’t let the overwhelming nature of financial issues stop you from seizing control.

Why You Shouldn’t Get Your Stock Picks From Your Fitness Trainer

This was supposed to be a presentation that I was going to give at Ignite Raleigh.  Unfortunately, stock picks didn’t seem to be the interest of most people.  Social media was the primary focus.  Everybody wanted to know how to use Twitter, Facebook, et al for marketing and advertising purposes.  Those are great, but I feel I would be doing you all a great disservice if I didn’t at least write about it.

The premise isn’t so much fitness trainers, just that fitness trainers gave me the idea.  I have known personal trainers who give out stock tips to their clients as if they are serving double duty.  Which I guess I shouldn’t complain, when people ask me about workout tips, I usually provide them.  With the caveat that I really don’t know what I’m talking about and anything I tell you is third hand.  Kinesiology and nutrition and some other terms that I’ve never studied are complex.  A lot like investments.  So I am the first to say I am no expert.  After all, I work out six times a week, figure I eat healthy, and can’t drop a pound to save my life.

My reason for writing this is not so much the lack of expertise among the fitness trainers (they could be well studied in capital markets and understand securities more than the average person and maybe even more than some investment advisors), so much as the lack of understanding about the particular investor.  Which is what gets me going about financial opinion writers/pundits/tv critics.

Unable to tear my eyes from the television, I watch these shows and marvel at the dearth (10 dollar word) of bad advice being given out.  Not because the advice is bad, just that those providing it have no idea whether or not they are giving the right advice.  A good example would be recommending to someone who is obese that they need some more fat in their diet.  We don’t know if the advice fits.

So it is fascinating to me to see these people on television.  Let’s start with Cramer.  Booyah, anybody?  Jim Cramer is a former hedge fund manager who used to work at Goldman Sachs.  Jim Cramer is a smart guy and he is also a very animated guy.  He is also wrong quite a bit.  Oh, not about the stocks that he picks (although Barron’s did an article a few years ago pointing out that the stocks he picked went down rather quickly), but the fact that he has no idea what else everybody has in their portfolios.  Do his picks make sense for everybody out there?  Unlikely.  In fact, they are probably a small minority of people that they do make sense for.

What about Suze Orman?  What about those teeth?  Those teeth are nice and bright, and can be a little scary… but what about her advice?  Suze makes an effort to gather some information.  However, that information gathering is cursory and there is no verification.  Plus, others who may be in similar situations may apply her advice to theirs, but may be off because of other circumstances.  Suze is also smart and has done quite well for herself.  But here she is wrong.  Not because she isn’t good at what she does, but because she is providing advice out of context.

And everybody’s favorite, Dave Ramsey.  Dave Ramsey has made quite a name for himself.  Poor guy has had to file bankruptcy before and advocates zero debt.  Forget credit scores and the like.  Pretty much the opposite of Suze Orman.  Well, Dave does what they all do.  Provide blanket advice for problems that the advice may not fix.  Or even address.  I know I am getting pretty close to blasphemy here, but really it is getting quite out of control.

But what about you Mike?  You write things on this blog all of the time and you don’t know about my situation.  That’s true, I don’t.  But the advice I provide generally talks about being careful about making those decisions and often involve asking you to consult a professional (me or someone I think you should talk to).  Also, I never give specific recommendations, as that would be irresponsible and really should be illegal.  Why?  Because I don’t know your situation.  In order to properly give advice, a professional needs to know the situation.  Physicians read your charts, attorneys use discovery and financial advisors ask you questions and look at your financial statements.

So why shouldn’t you get your stock picks from your fitness trainer?  Because he doesn’t know your specific situation.

Roth IRA Conversion: Is It Right For You?

Any time there is a new marketing push by financial companies, you are bombarded by statistics about why you should do what will make more money for them. What I have noticed about people using statistics is that they either a) use them inappropriately, b) don’t disclose analysis methods or c) just make up numbers. Any of these three are hardly a process to engender trust.

Take the Roth IRA conversion push that is going on right now. In 2010, the income caps on Roth IRAs will be lifted and anybody will be able to invest in a Roth IRA. For those of you who don’t know, a Roth IRA is funded with after-tax money and grows tax-deferred. At the age of 59 1/2, owners of Roth IRAs may take money out of the account tax-free. No capital gains taxes, no income taxes.

This differs from Traditional IRAs in that when you begin taking distributions from your IRA, it is taxed at your current income level; the logic being that you will be in a lower tax bracket in retirement and the tax will not impact you as much. Traditional IRAs are funded with pre-tax dollars and thus the government wants to tax the money at some point.

So, back to our topic. Roth IRAs have had income levels on them so that if you made over a certain amount of income, you could not contribute. With the new law taking effect in 2010, this income cap is removed. Because withdrawals are tax-free, it can be argued that converting an existing (likely larger) Traditional IRA to a Roth makes much more sense.

However, you must pay the tax man. Uncle Sam will still want his slice. The act of converting a Traditional IRA to a Roth IRA will cause a taxable event (technically, you are taking money out of the Traditional IRA and then placing the money into a Roth IRA). Normally, you will pay a 10% penalty on top of the tax paid because you took a distribution from your IRA. For example, if you have a Traditional IRA with $100,000 in it and convert it to a Roth, you are adding an additional $100,000 to your income for the year. In addition to the tax you would normally pay on your income, your tax bracket is raised an you may pay additional taxes.

That could really NOT be fun in a recovery year when you need every dime you can possibly get. There is no penalty for early withdrawal on the conversion, so you are reducing your tax burden. Further, if you make the conversion in 2010, you will be able to spread the tax you owe over 2010, 2011, and 2012, helping to reduce the bit of the tax you will pay on your income.

So, what was I talking about earlier? Statistics. Like gold, you will start to see advertisements of Roth IRA conversions. You will see things like, “A Roth conversion makes sense for 95% of IRA owners”, and “You will make back the money you paid in taxes within seven years”. Please ignore these statistics.

Most “advisors” will want to meet with their clients in 2010 to discuss a Roth conversion. Those that are commission-based or even fee-based may take this opportunity to make “changes” to your account, which may or may not be appropriate. For the most part, the advertising is a way to get you in the door. The statistics used can be misleading and may or may not be appropriate for your situation.

Consult with a financial expert other than your broker or advisor. See if the conversion is right for you.

Gold Glittering?

You can’t turn on the TV without hearing about gold and how you should buy it. It is on commercials as well as being endorsed by political commentators such as Glenn Beck and others. The captain from Law and Order: SVU is even on there peddling gold to the public. “Our currency is becoming devalued, we must buy gold for when the world ends” is the mantra.

There has been speculation that gold will go as high $3000 an ounce! What a wonderful time to own gold, if that is the case. Since the decline of the stock and bond market that began in October 2007, there has been an increase in the value of gold of over 100%. Which equates of course, to an average annual return of 50% or more. This is tremendous and anybody who bought gold at that time would have doubled their money.

Is gold a bubble? Is it part of a broader commodity bubble? Or is it a genuine increase in the value of the precious metal that will allow those buying in now to reap the rewards of old ownership? To be sure, this has been a wonderful increase, and the pull of celebrities constantly telling you that gold is where you need to place your money is intoxicating. I have heard it suggested that gold will get to a 1:1 ratio with the Dow Jones Industrial Average! As of this writing, that would make it $12,282 an ounce!

Unlikely and $3000 is also unlikely. Of course it is not impossible. Those of you who have already bought gold will of course be upset with me for saying so, but this is not the time to worry about whether I am right or not.

It is a time to be cautious. As it always is when people are shouting from the rooftops that something is great. I am reminded of the client of mine who pulled all of the money out of his retirement account to invest in real estate in Phoenix in 2006, because people were “doubling their money in a month or two”. I urged caution, and to maybe take a portion of that money and invest it in the volatile real estate market.

That particular client’s wealth is wiped out. Gone. Not because real estate wasn’t at one time a great investment. The blame of course is on the investor. But I also blame the fact that so many people were urging the investment of real estate. The loans that were not only bad for themselves, but bad for the banks, because as everybody says, “Well, they aren’t making any more land, so real estate should always go up”.

The same holds true for gold. I am fairly certain that we can create gold, but from what I understand the process would be so expensive as to make it not worth it. But keep in mind that the real estate market was not supposed to tumble either.

Once again, I am urging caution. While it may seem like an attractive investment, the appreciation of gold is not something you want to put your trust in. Despite the celebrity endorsement.