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Start planning and
stop worrying!
In a recent Gallup poll, 60% of those surveyed said they worried
about their financial future.
There are a few simple steps you can take
to help reduce your worries:
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Put aside some amount regularly in
savings or other investments. The compounding of
earnings can be substantial. The longer your investment
period, the greater the beneficial effect of
compounding. |
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Invest in what you know. The better
informed you are, the better your investment decisions
will be. If you don't want to learn about investments,
consider hiring a money manager and paying him or her to
do your investing for you. |
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Diversify your investments. Have some
of your money in an investment that is easily converted
to cash in case of emergencies. The old adage "don't put
all your eggs in one basket" is good advice when it
comes to your investments. |
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Prepare an annual balance sheet (a list
of all your assets minus all your debts) to determine
your net worth. A comparison of your annual balance
sheets will reveal your success at growing your
retirement funds. |
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Plan where you want to be financially
by retirement age. The calculators listed below will
help you determine your savings requirements. Once you
know how much you need to save, put your plan into
action. Over 90% of Americans must rely on the
government or others for assistance during retirement.
With proper planning and diligence, you can be among
those who can retire in comfort. |
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Don't use credit to purchase
consumption items. Wait until you can pay cash for
things which decrease in value. Borrowing money to
purchase a home is usually a sound idea. Using credit to
purchase household furnishings is not. |
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Pay off your credit card balance every
month. Your credit card should be for the convenience of
purchasing, not a source of permanent finance. The
interest rates are much too high. |
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Monitor your investments to maximize
your after-tax return. Use the calculator below to
compare the long-term results of different interest
rates. The difference that a 2% greater return can make
in the growth of your investments is dramatic. |
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Have your insurance agent do at least
an annual review of your insurance needs to determine
that you are neither under- nor over-insured. Be sure to
contact your agent when you buy or sell any property. |
The Magic of
Compounding!
If you could have one of the following as your pay for thirty
days' work, which would you choose? (A) $10,000, or (B) a penny
the first day, two cents the second day, four cents the third
day, eight cents the fourth day, and so on, with each day
doubling on out to thirty days.
The $10,000 sounds very attractive, but the fact is that the
penny doubled each day for thirty days adds up to over five
million dollars. Of course, that is 100% interest compounded
daily, a rate not available to most of us working folk.
Nevertheless, this example shows you the power of compounding on
your investment earnings.
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