Category Archives: #BrownleeGlobal

Companies Start to Think Remote Work Isn’t So Great After All | The Wall Street Journal

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Projects take longer. Collaboration is harder. And training new workers is a struggle. ‘This is not going to be sustainable.’

“Four months ago, employees at many U.S. companies went home and did something incredible: They got their work done, seemingly without missing a beat. Executives were amazed at how well their workers performed remotely, even while juggling child care and the distractions of home.”

“Now, as the work-from-home experiment stretches on, some cracks are starting to emerge.

  • Projects take longer.
  • Training is tougher.
  • Hiring and integrating new employees, more complicated.
  • Workers appear less connected and
  • Younger professionals aren’t developing at the same rate as they would in offices, sitting next to colleagues and absorbing how they do their jobs.”

“Months into a pandemic that rapidly reshaped how companies operate, an increasing number of executives now say that remote work, while necessary for safety much of this year, is not their preferred long-term solution once the coronavirus crisis passes.”

“No CEO should be surprised that the early productivity gains companies witnessed as remote work took hold have peaked and leveled off, he adds, because workers left offices in March armed with laptops and a sense of doom.”

“Few companies expect remote work to go away in the near term, though the evolving thinking among many CEOs reflects a significant shift from the early days of the pandemic.”

Read more: https://www.wsj.com/articles/companies-start-to-think-remote-work-isnt-so-great-after-all-11595603397

Reference:

Cutter, Chip, Companies Start to Think Remote Work Isn’t So Great After All, The Wall Street Journal, July 24, 2020 11:10 am ET

Passive Income Ideas | Bankrate

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JAMES ROYAL, BANKRATE 8:00 PM ET 5/19/2020

Passive income can be a great supplementary source of funds for many people, and it can prove to be an especially valuable lifeline during a economic recession or during other tough times, such as the government lockdown imposed which has throttled the economy and exponentially increased unemployment in response to the coronavirus pandemic. Passive income can keep some money flowing when you lose a job or otherwise experience some type of financial hardship.

If you’re worried about being able to earn enough to pay essential living expenses or to save enough of your earnings to meet your retirement goals, building wealth and building retirement savings through passive income is a strategy that might appeal to you, too.

What is passive income?

Passive income includes regular earnings from a source other than an employer or contractor. The Internal Revenue Service (IRS) says passive income can come from two sources: rental property or a business in which one does not actively participate, such as being paid book royalties or stock dividends.

In practice, passive income does involve some additional effort upfront or labor along the way. It may require you to keep your product updated or your rental property well-maintained, in order to keep the passive dollars flowing.

Passive income ideas for building wealth

If you’re thinking about creating a passive income stream, check out these strategies and learn what it takes to be successful with them, while also understanding the risks associated with each idea.

1. Selling information products

One popular strategy for passive income is establishing an information product, such as an e-book, or an audio or video course, then the cash from the sales. Courses can be distributed and sold through sites such as Udemy, SkillShare and Coursera.

Opportunity: Information products can deliver an excellent income stream, because you make money easily after the initial outlay of time.

Risk: “It takes a massive amount of effort to create the product,” Tresidder says. “And to make good money from it, it has to be great. There’s no room for trash out there.”

Tresidder says you must build a strong platform, market your products and plan for more products if you want to be successful.

“One product is not a business unless you get really lucky,” Tresidder says. “The best way to sell an existing product is to create more excellent products.”

Once you master the business model, you can generate a good income stream, he says.

2. Rental income

Investing in rental properties is an effective way to earn passive income. But it often requires more work than people expect.

If you don’t take the time to learn how to make it a profitable venture, you could lose your investment and then some, says John H. Graves, an Accredited Investment Fiduciary (AIF) and author of “The 7% Solution: You Can Afford a Comfortable Retirement.”

Opportunity: To earn passive income from rental properties, Graves says you must determine three things:

  • How much return you want on the investment.
  • The property’s total costs and expenses.
  • The financial risks of owning the property.

For example, if your goal is to earn $10,000 a year in rental income and the property has a monthly mortgage of $2,000 and costs another $300 a month for taxes and other expenses, you’d have to charge $3,133 in monthly rent to reach your goal.

Risk: There are a few questions to consider: Is there a market for your property? What if you get a tenant who pays late or damages the property? What if you’re unable to rent out your property? Any of these factors could put a big dent in your passive income.

3. Affiliate marketing

With affiliate marketing, website owners, social media “influencers” or bloggers promote a third party’s product by including a link to the product on their site or social media account. Amazon might be the most well-known affiliate partner, but eBay, Awin and ShareASale are among the larger names, too.

Opportunity: When a visitor clicks on the link and makes a purchase from the third-party affiliate, the site owner earns a commission.

Affiliate marketing is considered passive because, in theory, you can earn money just by adding a link to your site or social media account. In reality, you won’t earn anything if you can’t attract readers to your site to click on the link and buy something.

Risk: If you’re just starting out, you’ll have to take time to create content and build traffic.

4. Invest in a high-yield CD

Investing in a high-yield certificate of deposit (CD) at an online bank can allow you to generate a passive income and also get one of the highest interest rates in the country. You won’t even have to leave your house to make money.

Opportunity: To make the most of your CD, you’ll want to do a quick search of the nation’s top CD rates. It’s usually much more advantageous to go with an online bank rather than your local bank, because you’ll be able to select the top rate available in the country. And you’ll still enjoy a guaranteed return of principal up to $250,000, if your financial institution is backed by the FDIC.

Risk: As long as your bank is backed by the FDIC, your principal is safe. So investing in a CD is about as safe a return as you can find. Over time, the biggest risk with fixed income investments such as CDs is rising inflation, but that doesn’t appear to be a problem in the near future.

5. Peer-to-peer lending

A peer-to-peer (P2P) loan is a personal loan made between you and a borrower, facilitated through a third-party intermediary such as Prosper or LendingClub.

Opportunity: As a lender, you earn income via interest payments made on the loans. But because the loan is unsecured, you face the risk of default.

To cut that risk, you need to do two things:

  • Diversify your lending portfolio by investing smaller amounts over multiple loans. At Prosper.com, the minimum investment per loan is $25.
  • Analyze historical data on the prospective borrowers to make informed picks.

Risk: It takes time to master the metrics of P2P lending, so it’s not entirely passive. Because you’re investing in multiple loans, you must pay close attention to payments received. Whatever you make in interest should be reinvested if you want to build income. Economic recessions can also make high-yielding personal loans a more likely candidate for default, too.

6. Dividend stocks

Dividends are payments that companies make to shareholders at regular intervals, usually quarterly. Dividends and compounding may be a strong force in generating investor returns and growing income.

Many stocks offer a dividend, but they’re more typically found among older, more mature companies that have a lesser need for their cash. Dividend stocks are popular among older investors because they produce a regular income, and the best stocks grow that dividend over time, so you can earn more than you would with the fixed payout of a bond, for example.

Shareholders in companies with dividend-yielding stocks receive a payment at regular intervals from the company. Companies pay cash dividends on a quarterly basis out of their profits, and all you need to do is own the stock. Dividends are paid per share of stock, so the more shares you own, the higher your payout.

Investors looking to boost the income generated by their portfolio may want to consider high quality dividend paying stocks. Profitable dividend paying companies have the ability to maintain and even grow dividend payments to their investors. This is demonstrated by the growth in dividends per share paid by the companies in the S&P 500. From 2010 through 2019 the dividends per share paid by the companies in the S&P 500 have more than doubled, a growth rate of nearly 11% per year.

Opportunity: Since the income from the stocks isn’t related to any activity other than the initial financial investment, owning dividend-yielding stocks or focusing on a quality dividend investment strategy can be one of the most passive forms of making money.

While dividend stocks tend to be less volatile than growth stocks, don’t assume they won’t rise and fall significantly, especially if the stock market enters a rough period. However, a dividend-paying company is usually more mature and established than a growth company and so it’s generally considered safer. That said, if a dividend-paying company doesn’t earn enough to pay its dividend, it will cut the payout, and its stock may plummet as a result.

Risk: The tricky part is choosing the right stocks. Graves warns that too many novices jump into the market without thoroughly investigating the company issuing the stock. “You’ve got to investigate each company’s website and be comfortable with their financial statements,” Graves says. “You should spend two to three weeks investigating each company.”

That said, there are ways to invest in dividend-yielding stocks without spending a huge amount of time evaluating companies. Graves advises going with exchange-traded funds, or ETFs. ETFs are investment funds that hold assets such as stocks, commodities and bonds, but they trade like stocks.

“ETFs are an ideal choice for novices because they are easy to understand, highly liquid, inexpensive and have far better potential returns because of far lower costs than mutual funds,” Graves says.

Another key risk is that dividend stocks or ETFs can move down significantly in short periods of time, especially during times of economic uncertainty and high market volatility, as in early 2020 when the coronavirus crisis shocked financial markets. Economic stress can also cause some companies to cut their dividends entirely, while diversified funds may feel less of a pinch.

7. Savings or Money Market accounts

It doesn’t get any more passive than putting your money in a savings or money market account at the bank or in a brokerage account offering high yields. Then collect the interest.

Opportunity: Your best bet here is going with an online bank or a brokerage account, since they typically offer the highest rates. Online bank and brokerage account rates can often be higher.

Risk: If you invest in an account insured by the FDIC, you have almost no risk at all up to a $250,000 threshold per account type per bank. However, money market accounts are not FDIC insured. The biggest risk is probably that interest rates tend to fall when the economy weakens, and in this case, you would have to endure lower payouts that potentially don’t earn enough to beat inflation. That means you’ll lose purchasing power over time.

8. REITs

A REIT is a real estate investment trust, which is a fancy name for a company that owns and manages real estate. REITs have a special legal structure so that they pay little or no corporate income tax if they pass along most of their income to shareholders.

Opportunity: You can purchase REITs on the stock market just like any other company or dividend stock. You’ll earn whatever the REIT pays out as a dividend, and the best REITs have a record of increasing their dividend on an annual basis, so you could have a growing stream of dividends over time.

Like dividend stocks, individual REITs can be more risky than owning an ETF consisting of dozens of REIT stocks. A fund provides immediate diversification and is usually a lot safer than buying individual stocks – and you’ll still get a nice payout.

Risk: Just like dividend stocks, you’ll have to be able to pick the good REITs, and that means you’ll need to analyze each of the businesses that you might buy – a time-consuming process. And while it’s a passive activity, you can lose a lot of money if you don’t know what you’re doing.

REIT dividends are not protected from tough economic times, either. If the REIT doesn’t generate enough income, it will likely have to cut its dividend or eliminate it entirely. So your passive income may get hit just when you want it most.

9. A bond ladder

A bond ladder is a series of bonds that mature at different times over a period of years. The staggered maturities allow you to decrease reinvestment risk, which is the risk of tying up your money when bonds offer too-low interest payments.

Opportunity: A bond ladder is a classic passive investment that has appealed to retirees and near-retirees for decades. You collect interest payments, and when the bond matures, you “extend the ladder,” rolling that principal into a new set of bonds. For example, you might start with bonds of one year, three years, five years and seven years.

In a year, when the first bond matures, you have bonds remaining of two years, four years and six years. You can use the proceeds from the recently matured bond to buy another one year or roll out to a longer duration, for example, an eight-year bond.

Risk: A bond ladder eliminates one of the major risks of buying bonds – the risk that when your bond matures you have to buy a new bond when interest rates might not be favorable.

Bonds come with other risks, too. While Treasury bonds are backed by the federal government, corporate bonds are not, so you could lose your principal. And you’ll want to own many bonds to diversify your risk and eliminate the risk of any single bond hurting your overall portfolio.

Because of these concerns, many investors turn to bond ETFs, which provide a diversified fund of bonds that you can set up into a ladder, eliminating the risk of a single bond hurting your returns.

10. Rent out a room in your house

This straightforward strategy takes advantage of space that you’re probably not using anyway and turns it into a money-making opportunity.

Opportunity: You can list your space on any number of websites, such as Airbnb, and set the rental terms yourself. You’ll collect a check for your efforts with minimal extra work, especially if you’re renting to a longer-term tenant.

Risk: You don’t have a lot of financial downside here, though letting strangers stay in your house is a risk that’s atypical of most passive investments. Tenants may deface or even destroy your property or even steal valuables, for example.

11. Advertise on your car

You may be able to earn some extra money by simply driving your car around town. Contact a specialized advertising agency, which will evaluate your driving habits, including where you drive and how many miles. If you’re a match with one of their advertisers, the agency will “wrap” your car with the ads at no cost to you. Agencies are looking for newer cars, and drivers should have a clean driving record.

Opportunity: While you do have to get out and drive, if you’re already putting in the mileage anyway, then this is a great way to earn hundreds per month with little or no extra cost. Drivers can be paid by the mile.

Risk: If this idea looks interesting, be extra careful to find a legitimate operation to partner with. Many fraudsters set up scams in this space to try and bilk you out of thousands.

How many streams of income should you have?

There is no “one size fits all” advice when it comes to generating income streams. How many sources of income you have should depend upon where you are financially, and what your financial goals for the future are. But having at least a few is a good start.

“In addition to the earned income generated from your human capital, rental properties, income-producing securities and business ventures are a great way to diversify your income stream,” says Greg McBride, CFA, chief financial analyst at Bankrate.

© Copyright 2020 Bankrate, Inc. All rights reserved

Source: https://www.bankrate.com/investing/passive-income-ideas/

References:

  1. https://oshares.com/research-paper-dividend-investing-ousa-ousm/

Wealth accumulation can create estate tax issues

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Financial security is a goal for us all, but with wealth comes complexity. An increase in wealth not only typically causes an increase in annual income taxes, but it may also beget estate and gift taxes. Current federal law allows each citizen to transfer a certain amount of assets free of federal estate and gift taxes, named the” applicable exclusion amount.

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In 2020, every citizen may, at death, transfer assets valued in the aggregate of $11.58 million ($23.16 million for married couples), free from federal estate tax. For gifts made during one’s lifetime, the applicable exclusion amount is the same. Therefore, every person is allowed to transfer a total of $11.58 million during their life or at death, without any federal estate and gift tax. (This does not include the annual gift exclusion, which applies as long as each annual gift to each recipient is less than $15,000.)

Therefore, generally, only estates worth more than these amounts at the time of death will be subject to federal estate taxes. But this wasn’t always so. From 2001 to 2009, the applicable exclusion rose steadily, from $675,000 to $3.5 million. 2010 was a unique year, in that there was no estate tax, but it was brought back in 2011 and then made permanent (unless there is further legislation) by the American Tax Relief Act of 2012 at an exclusion amount of $5 million, indexed for inflation. The Tax Cuts and Jobs Act passed in December of 2017 doubled the exclusion amount to $10 million, indexed for inflation ($11.58 million for 2020). However, the new exclusion amount is temporary and is scheduled to revert back to the previous exclusion levels in 2026.

Outdated estate documents may include planning that was appropriate for estates at much lower exemption values. Many documents have formulas that force a trust to be funded up to this applicable exclusion amount, which may now be too large or unnecessary altogether, given an individual’s or family’s asset level.

Take the time to review the formulas in your estate documents with your attorney and tax professional to determine whether the planning you have in place is still appropriate.

https://www.fidelity.com/insights/personal-finance/estate-planning-pitfalls?ah=1

USG Ordered 100M Doses of Experimental Covid-19 Vaccine | Barron’s

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U.S. Government has ordered from Pfizer and BioNTech 100M Doses of Experimental Covid-19 Vaccine.

The U.S. government has put in an order for enough doses of Pfizer and BioNTech experimental Covid-19 vaccine to inoculate nearly every American.

Pfizer and BioNTech said that the companies are selling 100 million doses of the vaccine to the U.S. Department of Health and Human Services and the Department of Defense for $1.95 billion, a deal that prices each dose of the experimental vaccine at $19.50.

The deal allows the U.S. government the option of buying an additional 500 million doses.

Americans would receive the vaccine free, according to the companies. Pfizer and BioNTech would provide the doses after the vaccine receives approval or emergency authorization from the Food and Drug Administration, and the government will make the payment after the first 100 million doses are delivered.

Read more: https://www.barrons.com/articles/pfizer-covid-19-vaccine-price-government-deal-51595425522?mod=bol-social-fb

Pfizer and BioNTech announced that two of the companies’ investigational COVID-19 vaccine candidates have received “Fast Track” designation from the U.S. Food and Drug Administration (FDA). Fast Track is a process designed to facilitate the development, and expedite the review, of new drugs and vaccines that are intended to treat or prevent serious conditions that have the potential to address an unmet medical need.

Emotional Well-Being and Gratitude During COVID-19

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“Your personal experiences make up maybe 0.00000001% of what’s happened in the world but maybe 80% of how you think the world works… We’re all biased to our own personal history.” Morgan Housel, Ideas That Changed My Life

COVID-19 Stressing You Out

According to the CDC, everyone reacts differently to stressful situations such as a pandemic and lock down. As Americans experience the effects of the COVID-19 pandemic such as worry about job loss, concern for your health or that of a loved one, the need to social distance, confining yourself to your home or apartment, changing your routine, spending more screen time than normal, it’s important to practice some degree of emotional self-care.

Finding ways to practice self-care can help reduce your stress and enhance your emotional well-being during the COVID-19 pandemic. Healthy ways to cope with stress include:

  • Taking daily walks
  • Practicing meditation
  • Making time to pray and to express gratitude
  • Knowing where and how to get help
  • Taking breaks from watching, reading, or listening to the sensationalized news stories and coverage about COVID19, protests, and political rancor
  • Reading novels and writing in journals
  • Learning a new skill or hobby
  • Eating healthy foods and getting enough sleep
  • Avoiding or reducing eating processed foods, foods high in refined sugars and carbs, and fried foods
  • Exercising and prioritizing time to unwind by doing activities you enjoy
  • Connecting with others (while social physical distancing measures are in place, consider connecting online, through social media, or by phone or mail)

Gratitude

Gratitude is recognizing the “value for favorable things or positive life experiences for which we did not actively work towards or ask for”, according to Sadhguru. Gratitude is important because it helps us see a world that is much bigger than ourselves. When we have gratitude, we can help ourselves and each other grow personally or professionally.

Psychologists find that, over time, feeling grateful boosts happiness and fosters both physical and psychological health, even among those already struggling with mental health problems. Ways you can foster gratitude by keeping a journal to write about the little joys of daily life or by writing down “three good things” that have gone well for you and identify the cause. Additionally, you can also foster gratitude by writing thank-you notes to others or going out of your way to be kind to others, according to Psychology Today Magazine.

Sources:

  1. https://www.psychologytoday.com/us/blog/hope-relationships/202004/overcoming-depression-and-desperation-in-the-time-covid-19
  2. https://www.psychologytoday.com/us/basics/gratitude

The Ultimate Growth Stock – Amazon

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Amazon’s stock price continues to soar since the company first sold shares to the public on May 15, 1997. 

The initial public offering (IPO) was priced at $18 per share. There have been three stock splits*, all between 1998 and 1999. Two of the splits were 2-for-1, while the other was a 3-for-1 split, according to Motley Fool (Fool).

If you invested $1,000 at the IPO price of $18, you would have purchased 55 shares. You would now have 660 shares after the three stock splits. Those shares would be worth $1,985,280 at today’s high price of $3,008 per share making you an Amazon millionaire. The total return from that initial $1,000 investment would be about 36% compounded annually, or a total return of about 198,000%.

Investors who stuck with Amazon’s stock through the harrowing market volatility and the bursting of the dot-com bubble around the end of 1999 and 2000 would have been handsomely rewarded for their patience and long term perspective.

The stock soared from a split-adjusted IPO price of $1.50 per share to $106.69 per share on Dec. 10, 1999. From there, it proceeded to fall 96% until it bottomed on Sept. 28, 2001, at $5.97 per share, according to Fool. 

If you invested $10,000 in Amazon 11 years ago on March 9, 2009, when the S&P 500 hit its closing low during the financial crisis and the Amazon’s stock closed at $60.49 per share, the value of that investment would be approximately $467,000, today, for a total return of 4,570%. In the same time frame, by comparison, the S&P 500 earned a total return of around 255% according to CNBC.

References:

  1. https://www.fool.com/investing/2019/11/24/if-you-invested-500-in-amazons-ipo-this-is-how-muc.aspx
  2. https://www.cnbc.com/2019/12/12/what-a-1000-dollar-investment-in-amazon-would-be-worth-after-10-years.html?__source=iosappshare%7Ccom.google.Gmail.ShareExtension

*The way splits work is that you receive more shares, but the stock price is adjusted accordingly so the value of your investment stays the same.

Stock Market Reaction to Expiring COVID-19 Programs | Charles Schwab

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Key Points

  • Stock markets around the world welcomed the COVID-19 fiscal stimulus programs; but now those programs are starting to expire.
  • If not extended or replaced, the fading support for the unemployed raises the risk of weakening economic momentum, turning the V-shaped recovery into a W. 
  • As investors seem to be discovering with international stocks outperforming in recent weeks, there are very different implications for U.S. and European workers.

Stock markets around the world welcomed the COVID-19 fiscal stimulus programs; the passage of the CARES Act in the U.S. in late March coincided with the start of the market rebound.

But now these programs are starting to expire. Key support for the unemployed in the U.S. and Europe is set to fade, raising the risk of weakening economic momentum and turning the V-shaped recovery into a W.

In the United States, an additional $600 per week for the unemployed expires July 31. The average unemployment payout without the CARES Act benefit is only $333 per week. Losing the extra $600 a week is like a two-thirds cut to income for 17 million Americans receiving state unemployment benefits. 

Investing implications

International stocks have outperformed U.S. stocks during six of the past eight weeks, including last week. One of the reasons may be the looming expiration of labor support programs and the different impact this could have on the unemployed in the U.S. compared with Europe.

https://www.schwab.com/resource-center/insights/content/stock-market-reaction-to-expiring-covid-19-programs

A Moral and Economic Imperative to End Racism

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The U.S. “has both a moral and economic imperative to end these unjust and destructive practices” of institutionalized racism. Raphael Bostic, President and CEO, Federal Reserve Bank of Atlanta

“Over the course of American history, the examples of such institutionalized racism are many, and include slavery, federal law (consider the Three-Fifths Compromise our founding fathers established to determine federal representation), sanctioned intimidation during Reconstruction, Jim Crow laws in southern states, redlining by bankers and brokers, segregation, voter suppression, and racial profiling in policing.”

Dr. Raphael W. Bostic, Federal Reserve Bank of Atlanta

“These institutions hurt not only the African Americans they’ve targeted, but the systemic racism they’ve codified also hurt, and continues to hurt, America and its economy. By limiting economic and educational opportunities for a large number of Americans, institutionalized racism constrains this country’s economic potential. The economic contributions of these Americans, in the form of work product and innovation, will be less than they otherwise could have been. Systemic racism is a yoke that drags on the American economy.”

“To be fair, we have made some progress. Legal reforms have erased many of those historical institutions that caused so much pain and violence, and further reform essential for helping end harmful practices is under way in many places. But the legacies of these institutions remain, and we continue to experience misguided bias and prejudices that stem from these stains on our history. These have manifested in the worst way possible—in the deaths of George Floyd, Breonna Taylor, Ahmaud Arbery, Dana Martin, and, sadly, so many others.”

“It is time for this cycle to stop. It is time for us to collectively embrace the promise of an inclusive America, one where everyone can participate fully. We are each being challenged to rise to this occasion through education and action. All of us, especially our white allies, must learn the history of systemic racism and the ways it continues to manifest in our lives today. Furthermore, we all must reflect on what we can do to effect change at every turn.”

“A commitment to an inclusive society also means a commitment to an inclusive economy.”

To read the entire text: https://www.frbatlanta.org/about/feature/2020/06/12/bostic-a-moral-and-economic-imperative-to-end-racism

Dr. Raphael W. Bostic is president and chief executive officer of the Federal Reserve Bank of Atlanta. He is a participant on the Federal Open Market Committee, the monetary policymaking body of the Federal Reserve System.

Financial Goal Setting

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“If you are bored with life, if you don’t get up every morning with a burning desire to do things – you don’t have enough goals.” Lou Holtz

Research shows that our brains are a goal-seeking organism.  Whatever personal or financial goals we give our subconscious mind will allow it to work night and day to achieve them. However, one goal isn’t good enough for our subconscious minds.

Some goals take longer to achieve than others, like buying a house or saving for retirement. If you spend years working toward only one objective, you’re likely to get discouraged when it doesn’t happen right away.

But when you have multiple goals you’d like to achieve, goals that align with your values and beliefs, you have more to strive for, and more opportunities to check those goals off your list. And the accomplishment you feel every time you complete a goal will inspire you to accomplish even more of them

Actions overcomes fear

Jack Canfield, author of Chicken Soup for the Soul™, states categorically that “the biggest reason most people don’t achieve their goals and realize their dreams is that they don’t take action, and the number one reason people don’t take action is fear.”

“There is a one thing that 99 percent of “failures” and “successful” folks have in common — they all hate doing the same things. The difference is successful people do them anyway.” Darren Hardy

People whom achieve their goals versus those whom fail has everything to do with overcoming the paralysis of fear versus taking action. The people who achieve great success in life are the ones who are willing to take consistent action toward realizing their dreams. They consistently push through their fear and take steps to make their goals happen, no matter what others may think or say about it.

Goal achievers make countless small decisions, they plan and they take deliberate actions every single day that keep them on target toward achieving their dreams. Because without deliberate action, your goals simply are not going to be achieved.

No matter how ambitious the goals or how brilliant the plans, if you’re not prepared to take deliberate action to reach them, they’re not really goals at all—they’re just dreams.

Start with goals you can achieve

Every successful investing journey starts with a set of clear goals.

Appropriate financial goals for an investor should be specific, measurable, attainable, reasonable and timed with a deadline (SMART). Successful achievement of goals should not depend upon unrealistic or outsize market returns or upon impractical saving or draconian spending requirements.

Defining goals clearly and being realistic about ways to achieve them can help protect investors from common mistakes that often derail their progress. Here we show that:

  • Recognizing constraints, especially those that involve risk-taking, is essential to developing an investment plan.
  • A basic financial plan will include specific, attainable expectations about action steps and monitoring.
  • Discouraging results often come from not following a financial plan, chasing overall market returns, an unsound investment strategy that can seduce investors who lack well-grounded plans for achieving their goals.
  • Without a plan, investors can be tempted to build a portfolio based on transitory factors such as fund ratings—something that can amount to a “buy high, sell low” strategy.

Life financial goals

Make a list of financial goals you’d like to achieve in your life. Be as specific as possible. Include details such as when they will happen, where they will happen, how much you’ll make, what model you’ll buy, what size it will be, and so on.

Keep your goals somewhere you can review them every morning. Put your goals on a poster or piece of paper where you read each night before you fall asleep.

Keep goals at the top of mind, you’ll be more likely to make them a reality. Reaching your retirement savings goals starts with developing a retirement plan. Fidelity Investments has developed a set of retirement guidelines based on 4 key metrics:

  • Yearly savings rate,
  • Savings factor to help you see where you stand,
  • Income replacement rate, and
  • Potentially sustainable withdrawal rate.

“Unsuccessful people carry their goals around in their head like marbles rattling around in a can, and we say goals that are not in writing are merely fantasies.” Darren Hardy

Writing your goals down is the first step in turning your dreams into a reality. If you keep goals in your head you’re not likely to focus and work on them consistently. Thus, it is important to write down all your goals. Whether it’s short-term or long-term goals, it is essential to list every goal in writing.

Writing it down will have a powerful effect on your subconscious mind to help you visualize and achieve your biggest dreams. Remember, a goal is a dream defined and written down.

Make Goals Real by Writing Them Down

Goals are a very effective way to build your self-belief because properly set goals require you to stretch a little outside of your comfort zone; causing you to expand your comfort zone as you achieve the goal.

With clear and measurable goals, investors can create a realistic plan for achieving their objectives within a certain time frame. Make a list of your short-term and long-term savings goals.

If you write down your goals, you’re more likely to achieve them. Think of them as a road map to where you want to go—and make them practical and attainable. Take a simple approach:

  1. Divide your financial goals into three categories: short term (less than one year); medium term (one to five years) and long term (more than five years).
  2. Attach a dollar amount to each goal. For instance, a short-term goal might be a family vacation. How much will it cost?
  3. The more specific you can be, the more motivated you’ll be to work toward that goal.

Goal Attainment Requires Believing in Yourself

Everything you have in your life is a result of your belief in yourself and the belief that all things are possible. According to Jack Canfield, the four most important steps to learning how to believe in yourself are:

  • Believe it’s possible. Believe that you can do it regardless of what anyone says or where you are in life.
  • Visualize it. Think about exactly what your life would look like if you had already achieved your dream.
  • Act as if. Always act in a way that is consistent with where you want to go.
  • Take action towards your goals. Do not let fear stop you, nothing happens in life until you take action.

Incorporate and practice these four steps.

Mistakes Investors Make

One of the biggest mistakes investors regularly make when goals and a plan are absent is to confuse investing with stock picking. Ask many people how their money is invested and they quickly tell you the latest hot stock they’ve purchased and the investment thesis that explains why they think it’s going to take off.

Saving for retirement and building an emergency fund should be the highest priorities, followed by other long-term financial goals, like college, travel, or a house. You can contribute a small amount to each goal or pick a couple to focus on first. Decide how much you need to save to reach those goals.

Sources:

  1. https://www.jackcanfield.com/about-jack-canfield/
  2. https://www.fidelity.com/viewpoints/retirement/retirement-guidelines

Developing Good Financial Habits

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“It’s not the big things that add up in the end; it’s the hundreds, thousands, or millions of little things that separate the ordinary from the extraordinary.” Darren Hardy, author of The Compound Effect

Financial planning in small steps doesn’t take large sums of money to start.  In fact, financial planning can have a profound impact on financial security for Americans, especially lower-income households, by helping people improve their saving and budgeting habits. A written plan helps savers prioritize their goals and provides a way to measure success.

A disciplined, steady approach to saving, investing and ruthlessly managing spending wins out. Wealth-building habits don’t involve a get-rich-quick scheme —it is a slow, gradual process to accumulate wealth,” you must be persistent and consistent.

Savings habits

“The real cost of a four-dollar-a-day coffee habit over 20 years is $51,833.79. That’s the power of the Compound Effect.” Darren Hardy

While investing may appear at times to be complicated and risky, saving is pretty straightforward. Two-pronged approach to increase the saving amount:

  • Generate more cash inflow.
  • Reduce cash outflow.

Spending and saving often go hand in hand because whatever you don’t spend is potential savings. That’s why it is important to focus on buying things that will hold value or appreciate in value instead of allowing expenses to eat into savings through continuous consumption. To accumulate wealth, it is critical to manage expenses tightly. Instead of living just within your means, it is important to live below your means.

One way to reduce outflow is to maximize tax savings through retirement plans such as the 401(k). Another is to pay off debt and prioritize by paying the debts with the highest interest rate first.

Keep an eye on the prize

“There is a one thing that 99 percent of “failures” and “successful” folks have in common — they all hate doing the same things. The difference is successful people do them anyway.” Darren Hardy

Following the adage that it becomes easier to reach your destination or to achieve a successful outcome with an end goal in mind. Those who gain wealth believe that everything they do is ultimately done to fulfill their financial goals. For example, people should set a “retirement number” and a deadline for reaching that number. That number is the goal for how much cash and investments they need for a comfortable retirement and the deadline is the date to achieve the goal. Every time you put money toward saving, you’re a step closer to the prize.

Set It, But Don’t Forget It

Setting up an automated savings and payment system is one habit highly successful people practice to keep their financial house in order. They automate their savings, investing, bill payments and money transfers. But they don’t ‘set it and forget it’ once they set up the automated system. They know it’s important to maintain awareness and manage regularly, at least weekly, where their money’s going.

Automatic saving and investing

People have to be consistently reminded that to develop habits of saving and investing. The more you do develop the habit of saving and investing for the long term, the easier it will become. Consequently, it is recommended to set automatic savings protocols, if necessary, so a portion of your earnings goes directly from your paycheck into a separate savings account.

Habitually and automatically save 10% to 20% of every paycheck.

References:

  1. https://www.bankrate.com/finance/investing/financial-habits-of-wealthy.aspx
  2. https://jamesclear.com/book-summaries/the-compound-effect