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Simple Advice for Your Finances

The most important concept that determines how financially successful an individual/family is going to be is:

* Deferred gratification
* The hardest part of financial independence is not the investing… it is the savings factor:
In today’s world it is getting harder to be a good disciplined financial household.  There is so much outside influence and temptation that only the strongest make it (faking success).
**Credit Cards
** The desire to drive a new flashy car
** “Same as Cash” for everything including Furniture, Electronics, & Plastic Surgery

*How to Accumulate $1,000,000 by Age 65

* The advantage of starting early

Do not make investment decisions based upon tips from friends/family, and watch out for the media
*Understand your goals, risk tolerance, and time horizon
*Avoid the emotional reactions
** 2003 & 2004 DALBAR studies

Retirement Saving Rule of Thumb and Reasoning
* 15% to 20% of Gross Income
* Pensions are extinct
* Social Security is a joke
** According to the 2007 Social Security Trustees Report in 2017 Social Security begins to spend more than it takes in
** “We are increasingly concerned about inaction on the financial challenges facing the Social Security and Medicare programs.  The longer we wait to address these challenges, the more limited will be the options available, the greater will be the required adjustments, and the more severe the potential detrimental economic impact on our nation.” – 2007 Trustees Report

Most neglected yet important factor to long-term performance
* Fees and Taxes
* Index Funds are incredible tools when it comes to Large Company stocks
** Knowledge is power and it is hard to know anymore than anyone else when there are literally millions of people watching 1,000 Companies (Efficient Market Theory – Internet, CNBC, and Financial Publications)
** Meanwhile the average managed mutual fund charges over 1.50% for internal expenses (not counting commissions). Compare to Fidelity’s Spartan Index Funds that only charge .10% (.08% if you have over $100,000 in the funds).
** Warren Buffett even recommends Index Funds. Buffett has been asked why he does not take his own advice and he stated that he thought Berkshire could beat the S&P by a couple of percentage points, “just not a whole lot better” (For those looking at running out and purchasing Berkshire… it is trading at over $119,000/share.  That is right you have to have over $100,000 to buy one share).

The most important concept that determines how financially successful an individual/family is going to be is:

* Deferred gratification
* The hardest part of financial independence is not the investing… it is the savings factor:
In today’s world it is getting harder to be a good disciplined financial household.  There is so much outside influence and temptation that only the strongest make it (faking success).
**Credit Cards
** The desire to drive a new flashy car
** “Same as Cash” for everything including Furniture, Electronics, & Plastic Surgery

*How to Accumulate $1,000,000 by Age 65

* The advantage of starting early

Do not make investment decisions based upon tips from friends/family, and watch out for the media
*Understand your goals, risk tolerance, and time horizon
*Avoid the emotional reactions
** 2003 & 2004 DALBAR studies

Retirement Saving Rule of Thumb and Reasoning
* 15% to 20% of Gross Income
* Pensions are extinct
* Social Security is a joke
** According to the 2007 Social Security Trustees Report in 2017 Social Security begins to spend more than it takes in
** “We are increasingly concerned about inaction on the financial challenges facing the Social Security and Medicare programs.  The longer we wait to address these challenges, the more limited will be the options available, the greater will be the required adjustments, and the more severe the potential detrimental economic impact on our nation.” – 2007 Trustees Report

Most neglected yet important factor to long-term performance
* Fees and Taxes
* Index Funds are incredible tools when it comes to Large Company stocks
** Knowledge is power and it is hard to know anymore than anyone else when there are literally millions of people watching 1,000 Companies (Efficient Market Theory – Internet, CNBC, and Financial Publications)
** Meanwhile the average managed mutual fund charges over 1.50% for internal expenses (not counting commissions). Compare to Fidelity’s Spartan Index Funds that only charge .10% (.08% if you have over $100,000 in the funds).
** Warren Buffett even recommends Index Funds. Buffett has been asked why he does not take his own advice and he stated that he thought Berkshire could beat the S&P by a couple of percentage points, “just not a whole lot better” (For those looking at running out and purchasing Berkshire… it is trading at over $119,000/share.  That is right you have to have over $100,000 to buy one share).

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