Money advice can’t be generalised

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NEW DELHI: There is a consistent complaint about this column. Why does it not provide specific action points? Can’t we have actual products as recommendations? Why explain the principles but stop short of converting them into thumb rules?

Personal finance cannot be generalised. Broad principles are universal, but actual application requires decisions the individual should make, based on their specific situation. Therefore, a specific set of steps will not work for all. So the effort is to point the reader to some principles, offer some ideas that enable them to think of their decisions, and provide frames for evaluation.

Let’s rework last week’s column on worries of the soon-to-retire generation. We tried to point out how those of us who don’t have a government pension, those who aren’t rooted to their bases, and those who don’t enjoy great health, might end up with a mixed bag of retirement experiences.

To convert that problem into an actionable set of rules would go like this: (I am not recommending these, only putting them here to illustrate a point). First, ensure that you earn a fixed income like a pension. Choose government-sponsored schemes and invest your retirement proceeds in schemes that offer annuity, pension, fixed interest and such. Second, make sure you have your own home to live in. Do not touch the retirement corpus. Third, buy a good medical insurance before any disease strikes. Fourth, do not stay idle, find something to do. Fifth, stay healthy.

The rest of the column can expound each of these. How much should the corpus be? How much to draw and how much to keep? Which medical insurance is best? Will the money get over if I pursue new hobbies?

The answers to all these questions is just math. In an excel sheet you can put numbers and assumptions, and you will soon have a number of scenarios and you can choose one that appeals to you most. We can make sense of the math, and make choices from what is on offer.

First, what should someone without pension do? Hopefully there is some money set aside—in PF, as investments and as assets. Bring all of it together. Include the houses, plot and gold—all assets you inherited or invested in. Evaluate each one and put them in those three boxes. You will get a sense of what you have.

Second, when you no longer earn an income, your assets must generate it for you. To know how much you need, make an estimate and include interests, travel, gifts and giveaways, and your regular expenses. What is a comfortable position? You have enough assets. A portion can be used to generate income, and a portion can grow in value and remain untouched.

Comfort in retirement is achieved when you have income that is enough and assets that are growing and can be tapped as inflation increases the amount of income you need. Money you need should be in income generating assets; money you don’t immediately need should be in growth generating assets. You need both. Over time you will shuffle between the two as needs change.

You already have many questions. And, there are no simple answers. You created the assets and you will bring them together and make them work the best for you. If that means selling your large house to move into a small one, and taking your spouse on a world cruise, you have to make that choice. No columnist can do it for you.

[“source=timesofindia.indiatimes”]

Aziz Ansari has great advice for people in creative slumps

A palette of paints is shown at Chelsea Restoration Associates, Inc. Thursday, Feb. 5, 2009 in New York.

Learning to accept uninspired periods in our lives is critical to future success. (AP Photo/Mark Lennihan)

When you’re a creatively successful person, people always want to know what you’re working on. The problem is that sometimes the answer is: Nothing much.

Actor and filmmaker Aziz Ansari recently offered a refreshing take on the pressure that creative types feel to produce. In an interview with GQ‘s Mark Anthony, he explains that he’s not feeling particularly inspired right now—and he’s trying to be all right with that. He says:

“I’m not gonna make stuff just for the sake of making stuff. I want to make stuff ’cause I’m inspired. Right now I don’t really feel inspired …

… I hope more people get very successful and then quit. Shouldn’t that be the game? That you make a bunch of money and just move to Italy and live a quiet life? No one does it! You do a bunch of shit and you just want to do more shit. Tom Cruise! Look at that guy! He will not stop. He’s still making these fucking movies. No one who does what I do—or anywhere related in my world—is ever like, I’m done.That’s why I travel so much. I always think about this thing someone once told me. They said, Patterns are the work of the devil. For some reason that stuck in my head.”

Of course, Ansari is speaking from a position of tremendous wealth and privilege. Most people don’t have the option of quitting work and embracing the European lifestyle of our choice. But his skepticism about the idea that successful professionals must always be creating is a useful thing for all of us to consider—because it uproots a very common misunderstanding about creativity.

No one, including the most acclaimed artist, is always inspired, says Scott Barry Kaufman, scientific director of the Imagination Institute in the Positive Psychology Center at the University of Pennsylvania. What’s more, learning to accept uninspired periods in our lives is critical to future success.

“Creativity isn’t a singular personality trait,” says Kaufman. “It’s a way of being that requires being constantly open to spotting and engaging in new ideas and experiences, without the expectation that these experiences will lead to inspiration or immediate creative outcome.”

The most common characteristics of people across all creative fields, as Kaufman previously explained in Quartz, include “an openness to one’s inner life; a preference for complexity and ambiguity; an unusually high tolerance for disorder and disarray; the ability to extract order from chaos; independence; unconventionality; and a willingness to take risks.” All of these characteristics suggest that true creativity is born out of a drive to relish—or, in Ansari’s case, “chill”—in the unknown.

Acknowledging when the process is not going well can be the difference between a forced (and failed) creative endeavor, and an opportunity for learning and resetting, says Kaufman. This is a reality that prolific creators like Lena Dunham, writer and star of the six-season HBO series Girls, have long internalized:

To become more creative, you should be actively trying to find meaning in things that aren’t going as expected or desired, says Kauffman. “Creativity emerges when you are open to detours, not when you approach life, or a job, or an single experience with a set goal in mind.” Only on such detours—like Ansari’s seemingly aimless travel, or a Saturday spent meandering around your neighborhood—can you recognize the paradoxes worth reconciling and the subtleties overlooked by those too busy, or “inspired” to slow down.

[“Source-qz”]

13 pieces of money advice you can’t afford to ignore

not listening cover ears hear people annoyed

There’s so much financial advice out there that it’s near impossible to follow all of it.

But missing the most important — and often most basic — words of wisdom could end up costing you big time.

To help out, we combed through our archives to round up the best money advice from financial planners, bestselling authors, and the second-richest man on earth, that will help you save and earn the most money.

Below, check out the 13 pieces of money advice you simply can’t afford to ignore:

1. Pay yourself first

“People still don’t grasp the fact that they need to save a dime out of every dollar,” author and self-made millionaire David Bach told Business Insider in a Facebook Live interview. He said the average American who’s saving money is saving just 15 minutes a day of their income, when they should be saving an hour.

Bach noted troubling research from the Federal Reserve that revealed nearly half of Americans wouldn’t have enough money on hand to cover a $400 emergency. Yet, he continued, millions of those people will buy a coffee at Starbucks today and expect to buy the new $800 iPhone next year. Americans have money, he says, but we aren’t saving it.

So get on the “pay-yourself-first plan,” as Bach calls it, and automatically save an hour a day of your income. “When that money is moved before you can touch it, that’s how real wealth is built,” he said.

Sebastiaan ter Burg/Flickr

2. Beware of lifestyle creep

There’s a lot of pressure in your 20s and 30s to keep up with your friends. Maybe they’re buying a nicer car or a house, but if you’re not in the financial position to keep up, don’t try.

“I always refer to it as ‘lifestyle creep’ because one of the big things that people can do — that’s an advantage to them — is keep their fixed expenses somewhat stable and reasonable for what they make,” Katie Brewer, a Dallas-based certified financial planner who founded Your Richest Life, told Business Insider.

Planning for your recurring costs — like mortgage, rent, a car payment, and insurance — ensures that expenses won’t creep up on you and derail your financial future. Of course, Brewer said, if you’re making good money you should have the freedom to spend it how you wish, as long as your lifestyle doesn’t overtake your income.

In short: Live below your means.

3. Take advantage of an employer-sponsored 401(k)

Putting money into a retirement plan as early as you can, no matter the amount, is a smart and easy way to pay yourself first.

If your company offers a 401(k) plan, take advantage of it. In some cases, employers will offer a contribution match. “That means the company contributes a set amount — say, 50 cents for a dollar — for every dollar you contribute up to a specified percentage of your salary,” Beth Kobliner writes in her book “Get a Financial Life: Personal Finance In Your Twenties and Thirties.”

“That’s free money, equivalent to a 50% or 100% return. There’s nowhere you can beat this!” she writes.

Plus, 401(k)s allow you to contribute your pre-tax money, meaning the more you contribute now, the greater the growth (thanks, compound interest) and the more money you’ll have down the road, though you will be taxed when you withdraw the money for retirement. For 2017, the maximum contribution to a 401(k) is $18,000.

Andy Kiersz/Business Insider

4. Invest in the stock market, just don’t try to time it

“No one can time the market, so know that if there is a decline, it’s going to bounce back. Over time, being in the market pays off more so than staying out of it,” Michael Solari, a certified financial planner with Solari Financial Planning, told Business Insider.

A smart play, according to Solari, is to put your money in a low-cost target date retirement fund.

Sometimes known as “set it and forget it” investments, these diversified funds automatically adjust their asset allocation and risk exposure based on your age and retirement horizon. Early on, when the need for that money is still a couple decades away, the fund will adopt a more growth-focused strategy. As you ripen toward retirement, it dials back the risk.

You may not get the average annual return of 11% in your target date fund — given you’ll be invested in a blend of stocks, bonds, and alternative assets — but if you get even 6% per year, an original $10,000 investment will be worth more than $32,000 in 20 years without you having to do a single thing. Compare that with $12,200 in your high-yield savings account or $10,020.20 in your traditional savings account.

5. Build an emergency fund

Let’s face it: It’s really not a matter of if you’ll need to fork over cash for a car or home repair, child expense, or medical emergency, but a matter of when.

“No matter how well you plan or how positively you think, there are always things out of your control that can go wrong,” Bach writes in his bestseller “The Automatic Millionaire.”

“People lose their jobs, their health, their spouses. The economy can go sour, the stock market can drop, businesses can go bankrupt. Circumstances change. If there’s anything you can count on, it’s that life is filled with unexpected changes,” he wrote.

Most financial planners suggest stockpiling anywhere from three to nine months worth of expenses in an emergency fund that you can turn to when in need. If you don’t have savings at the ready, you run the risk of having to rely on family or friends for help, or worse, falling into debt.

Kate Hiscock/Flickr

6. Pay off your credit card balance in full every month

Sometimes a credit card can feel like free money, until you’re slapped with the bill. Even then, most credit cards only require you to pay 1% to 3% of your balance each month, which can be an alluring prospect if your budget is tight. But consistently paying the minimum could cost you a fortune in the long run, damage your credit score, and affect your ability to qualify for a mortgage.

Farnoosh Torabi, a financial expert, author, and host of the “So Money” podcast learned this lesson the hard way.

Not only did she swipe her credit card with no reservations and adopt the bad habit of paying just the minimum amount — Torabi said she once forgot to pay the bill all together.

She remembered incurring a late fee that showed up on her credit report and gave her a true “wake-up call.” The incident happened before she “realized the power of automating” her bills, a practice that can save you money on late fees and relinquish you from remembering due dates and the embarrassment of missing a payment.

7. Don’t sit on too much savings

Saving money is important — and could be easier than it sounds — but if you’re saving too much, you may be keeping yourself from building wealth.

Though you’re “never going to kill your financial future” by accumulating money, Brewer says, “you’re losing out on opportunity costs by having money sitting around … especially if it’s sitting in an account making barely anything in interest.”

If you’re risk-averse, one way to manage savings overflow is to move your money into a high-yield savings account, where you could be earning 1% interest on your money, rather than the 0.01% earned in a traditional savings account. Or, as previously mentioned, stick it in a low-cost target date fund and see your returns balloon over time, with little to no work required.

John Lambert Pearson/Flickr

8. Have more than one credit card

It may seem financially reckless to have a wallet full of credit cards, but it’s actually smart. According to John Ulzheimer, credit expert at CreditSesame.com, having a single credit card can damage your credit score, thanks to something called your credit utilization ratio — that is, how much of your available credit you’re actually using.

“That percentage is very, very influential in your credit score,” explains Ulzheimer. “People say that you’re in good shape if you keep your utilization within 50% of your available credit, or 30%, but really, it should be below 10%.”

Available credit counts all the cards you have: If you have one card with an $8,000 limit and one with a $6,000 limit, your total available credit is $14,000, even if you only spend $1,000 a month. With a single card, you have no unused credit cushioning the impact of your spending. The closer you get to your limit, the harder the hit on your credit score.

9. Pay off high-interest debt first

Sallie Krawcheck, a former Wall Street executive and the founder and CEO of Ellevest, says paying down high-interest debt should always be prioritized, even above building an emergency fund.

She explained the math in an article on Ellevest:

“Say you have $5,000 of credit card debt at an 18% interest rate. Say you happen upon $5,000 of money. If you take some of the advice out there, and split the use of that $5,000 (half to establish an emergency fund, half to pay down credit card debt), you still have $2,500 of credit card debt and $2,500 of money sitting in cash.

“The $2,500 of credit card debt at an 18% interest rate costs you $450 a year. The emergency fund earns almost nothing in interest. So you’re out $450.”

Bottom line: You’ll save more paying off the debt than you’d earn if you invested it, whether in a high-yield savings account or the stock market.

10. Always be insured

Every American citizen is required to have health insurance, or be fined hundreds of dollars by the IRS each year. Kobliner advises signing up for insurance should be “your No. 1 financial priority” because it’ll protect you from unforeseen accidents or illness, and prevent yourself or your family from going bankrupt in the case of an emergency.

If your employer offers health insurance, take it, Kobliner says. It’s almost always cheaper than buying a policy on your own (but keep in mind that you can be covered by your parent’s insurance until age 26). Before signing up, though, make sure you understand the cost and extent of the plan, including your deductible, or how much you’ll be paying out-of-pocket before insurance takes over.

If you do end up needing to purchase a policy on your own, head over to healthcare.gov to compare plans and pricing.

Business Insider

11. Track your spending

Business Insider’s Libby Kane has written, edited, and read hundreds, maybe thousands, of stories about money during her career, and says she’s learned that “the best, most critical first step you can take to improve your finances is to track your spending.”

Keeping tabs on where your money is going, whether fixed expenses like rent or mortgage payments and transportation costs or discretionary spending like dining out and travel, is a crucial part of mastering your money.

Setting up a spreadsheet or using a service like LearnVest or Mint can help you make cuts where necessary and even set you on a path to early retirement, if that’s what you’re after.

12. Pay your taxes — and be smart about it

“Whether you owe money to the tax man at the end of the year or not, it’s always a smart move to file your taxes,” Kobliner advises.

And be aware that you can save money on taxes by taking advantage of deductions, or the specific expenses you’re allowed to take out of your income before calculating your owed taxes. The standard deduction — $6,300 for singles and $12,600 for couples — is a good place to start, Kobliner says.

You can also itemize deductions to maximize your savings by listing specific deductions, including expenses for housing costs like mortgage interest or property taxes, and charitable donations, or making use of tax credits.

And if you don’t file your taxes? You could pay a penalty fee of at least $135, plus interest on the money you owe, and lose ground on your credit report, among a host of other financial consequences.

Chip Somodevilla / Getty

13. Be patient

When bestselling author and motivational speaker Tony Robbins asked billionaire Warren Buffett a few years ago, “What made you the wealthiest man in the world?” Buffett replied, “Three things: Living in America for the great opportunities, having good genes so I lived a long time, and compound interest.”

“The biggest thing about making money is time,” the investor, who’s now worth more than $76 billion, said in a recent HBO documentary about his life. “You don’t have to be particularly smart, you just have to be patient.”

In his latest letter to Berkshire Hathaway shareholders, Buffett announced that he was on his way to winning a $1 million bet he made in 2007 that his investment in an S&P 500 index fund would outperform five hedge funds over a decade.

[“Source-businessinsider”]

 

“Expert Insights” Gives Lot of Advice in a Few Pages

Eleven small business experts share their greatest tips for small business growth and success in the book Expert Insights.

It happened again.

In my email was a question and a request that I only wish I could fulfill on “How do I get more customers without having to sell?” Ummmm — you can’t get more customers without selling.

If you want customers without having to sell, you’ll have to get a job — or you can read Diane Helbig’s (@Dhelbig) new book “Expert Insights: Business Gurus Share Tips to Accelerate Your Business Growth” and never look at selling the same way again.

120 Pages of Small Business Experts’ Greatest Hits

Diane Helbig is an internationally recognized business and leadership development coach, author and radio show host. While she excels at all things related to small business success, she’s best known for her practical and effective sales advice and consulting.

Over the last five years, she’s hosted the popular online radio show, Accelerate Your Business Growth, where she features small business experts who dole out their proven sales and marketing strategies for getting customers, keeping customers and making more money.

“Expert Insights” is a Compilation of Her Best Interviews

Helbig has culled more than 120 interviews down to just 11. That’s just the top 10 percent of all the experts she’s had on the show. This book is a small business owner’s dream. It’s tightly focused on those key topics Helbig feels small business owners need to focus on if they want their passion to transform from a hobby to a profitable business.

Kudos to Helbig for Caring About Our Time and Attention

What I loved most about “Expert Insights” is how Helbig appears to be in the background; meanwhile she is the grand architect of what information is included and how it’s presented. At first, I have to admit that I was a little critical of the book thinking “How is Helbig the author when this is nothing more than a retelling of interviews?”

But as soon as I started reading, I could see Helbig’s deft hand in topic selection, rigorous attention to critical elements of the experts’ advice and her ability to let the expert shine while she controls the lessons learned.

And when you think about the fact that all of this happens in less than 120 pages, you will thank her for respecting your time and attention.

A Quick Tour of “Expert Insights”

“Expert Insights” takes you on a nice journey that starts with Jim Smith Jr., an internationally renowned speaker and personal power expert who opens the book with a conversation around exemplary service and the power of a killer experience.

From there we move into Wendy Weiss (The Queen of Cold Calling) and her powerful re-contextualization of cold calling. She nails our two biggest fears about cold calling; that it’s about manipulating people and that the goal is to get people to buy from you in one call.

She writes:

Neither of these should ever be the goal. First off, every cold call should be done in steps; it should be more about building a relationship with the person on the other end of the phone than trying to ‘sell them.’ Secondly, if you know this, you’ll be able to relax a bit more and not come across as the dreaded telemarketers, someone they want to avoid.”

With these foundation chapters under your belt, you’ll be ready to head into Entrepreneurial DNA, where Joe Abraham describes that basic entrepreneurial styles and helps you identify exactly which style you are and how to best leverage that style.

Then there’s Kerry Heaps, President of Kerry’s Network, who dives deep into Follow Up Techniques and shows you how to think differently about following up.

Helbig also includes chapters on perception management, writing, charisma, negotiation, business models and ends with a chapter on “Great Ideas for Your Small Business.”  Yes, there are other topics that could have been included, but these are those critical few that matter most to generating sales and are often ignored or passed over by businesses that aren’t growing at their potential.

Ideal for Time-Strapped Business Owners Looking for Focus

“Expert Insights” is the book you want to take on your next business trip for airplane reading or to pick up on a restful Saturday or Sunday. This is the kind of book you read with a notebook and a pen at your side, grabbing bits and pieces of great advice that you can easily put on your to-do list.

I say it’s ideal for time-strapped business owners because there is zero fluff in this short book. Helbig has carefully pared away at all the things that might distract you from your goal of bringing more customers and more cash into your business.

If you want to get more customers, keep more customers and make more money, read “Expert Insights” and turn these tips into to-dos.

[“source-smallbiztrends”]