Fortune Watch

Do you ever wonder where your spending money goes or how you can spend so much on practically nothing in so little time? In the old days people brought their paychecks to the bank, deposited most of the money and pocketed the rest in cash. The cash was supposed to last until the next check. If it didn’t, it was an obvious cue that too much money was being spent.

Fast-forward to these days when paychecks are deposited electronically and we stuff our pockets with debit and credit cards. Beaten-up dollar bills and heavy coins never dirty our hands. It’s so much nicer than the old days. Unfortunately, it makes it too easy to bust the budget.

Without that dwindling pile of cash it’s harder to recognize how much is being spent. Sure, you can log on and look at your bank account every day, but most people probably don’t. When they finally see their balance they think, “no way!” More than likely it’s not the mortgage that’s killing them; it’s the daily money drain. If that scenario fits your life, the seven-day money challenge may help you get on track.

Use this challenge to give yourself a wake-up call to those who don’t realize how much they’re spending. I ask some of my clients to guess to the best of their ability how much cash they’ll need for a week’s worth of spending. It’s just the day-to-day stuff like gas, groceries, going out for meals. The usual outcome is they’re out of money by Wednesday.”

Learn your weaknesses. “I was trying to go from Monday to Monday, I carried a little notebook and would write it down if I stopped for coffee or went to the drugstore. Wednesday night I went to buy gas and I didn’t have enough cash. I had to resort to my credit card to get me through the rest of the week. I was shocked and a little disappointed.” Thats what some of them say.

The Money Diet: READ (more…)

It takes time, sacrifice and consistency to join the million-dollar club

Quit fantasizing about marrying a millionaire, winning the lottery or walking off with a TV-quiz-show jackpot. By making your money work harder and smarter now, you can become a millionaire by the time you’re ready to kick back and trade work for play.

There’s no magic involved in reaching the million-dollar mark. If you set goals, do the research and start investing now, you can hit your wealth-building target on schedule. And you don’t have to be a financial whiz! What are needed are time, sacrifice and consistency.

Time is most significant: The longer you invest, the smaller the amount you need to put away each month to reach $1,000,000. Thus the younger you are when you start investing; the younger you’ll be when you join the million-dollar club. Many of the estimated 8 million millionaires began investing in their teens, and always with a long-term goal. Let’s say you’re 28 years old now, with no money saved or invested and would like to have a million-dollar portfolio of investments by the time you turn 60. You will need to invest $300 a month in stocks or stock mutual funds that have at least an 11 percent annual rate of return. If you increase your monthly investment to $500, you’ll hit your mark by age 54.

Read (more…)

There is inflation every year. You cannot stop an increasing in living expenses as prices of consumer goods increasing all the time. Saving money becomes an extremely difficult task to do. Here are some solutions for saving a little so that you can still meet your needs and still find ways to trim off a little for the future.

Budget – Get one and stick with it! And set aside at least a small portion for savings while you’re at it; savings for your future, your retirement, your education, your vacation, whatever. Head to your local office supply store for planning workbooks or budget sheets to use. Or head to your favorite search engine and type in, “budget planning” for hundreds of sites with articles, free downloads, tips, ebooks and other resources to help with your budget setup and follow up.

Plan Ahead – Make sure to plan for emergencies and the unexpected, like an appliance break down or garage door malfunction. Even if you can only set aside $100 or so each monthly, place it in an account and earmark it for this “Miscellaneous” fund. Then when things go wrong, and they will – nothing is perfect – you’ll be better prepared.

Monthly Items – Work out a monthly payment for items that you don’t pay monthly and set this up in your regular monthly budget. For example, for items like annual home owner or renter insurance, quarterly water bills and life insurance payments and annual trash bills, take the amounts and determine what they would be monthly. Then list the items on your budget log and pull these amounts aside, saving them in your account for those purposes. This way, when the bills hit, you won’t be caught off guard and have to scrounge for the payments.

What works well, instead of handling multiple savings accounts for each company owed, is to use index cards and one savings account. Create one index card for each bill. Then simply log the amount you’re setting aside on the card and deposit it into your savings account. Keep the index cards with your savings passbook to remind you what the balance covers. The total of all your index cards should equal the balance in your savings account. Make sure to create an index card for your regular funds that you are saving each month in step one above and a card for your Miscellaneous fund in step two above.

Both short term and long term trading can be effective trading strategies, however, long term trading has several significant advantages. These include the effect of compounding, the opportunity to earn from dividends, reduction of the impact of price fluctuations, the ability to make corrections in a more timely manner, less time spent monitoring stocks.

Compounding: Time can be investor’s best friend because it gives compounding time to work its magic. Compounding is the mathematical process where interest on your money in turn earns interest and is added to your principal.

Dividends: Holding a stock to take advantage of payouts from dividends is another way to increase the value of an investment. Some companies offer the ability to reinvest dividends with additional share purchases thereby increasing the overall value of your investment. Additionally, dividends are more a reflection of a company’s overall business strategy and success than volatile price fluctuations based on market emotions.

Reduction Of The Impact Of Price Fluctuations: In the long term investment the persons is less affected by short term volatility. The market tends to address all factors that keep changing in the short term. So a person involved in long term investment or trading will not be affected as much by short term instability due to factors such as liquidity, fancy of a particular sector or stock which may make the price of a stock over or undervalued. In the long term, good stocks which may have been affected due to some other factors (in the short term) will give better than average returns.

Long-term investors, particularly those who invest in a diversified portfolio, can ride out down markets without dramatically affecting his or her ability to reach their goals.

Read (more…)

Most working people dream of this thing called financial freedom. It certainly sounds like something we’d all want. But have you ever stopped to really think about what it means? It can mean different things to different people, so before you spend time looking for it, maybe it’s worthwhile to examine what the concept really means to you. After all, it’s hard to find something if you don’t know exactly what it is!

Time and money are inversely related. This means that in most cases, one can be traded for the other. And if you think of how that applies both to your everyday life and to the way business is conducted, it’s true. For example, you can spend your own time cleaning your house or mowing your lawn, or pay someone to do it for you, and free up the time for yourself. You can spend time researching on your own, or you can pay some money for someone else’s specialized knowledge in that same field.

With that idea in mind, financial freedom may be defined broadly as reaching the point where you no longer have to trade your time for money in order to provide for what you want in life. There are two key phrases in that idea – “no longer have to trade” and “what you want”. These are what you have to define for yourself, in order to determine what financial freedom means to you.

To many, financial freedom means just not having to work for a living. They dream of stepping off the treadmill of going to work everyday to pay the bills. Some may want to escape the stresses of the job itself, unpleasant working conditions, commuting, boredom, and so on. Others may just value more time to be with their families and pursue their own interests. For most people, it’s some combination of those.

Read (more…)

Stock trading has numerous benefits as a viable part time occupation.

In contrast to a second job, there are no special qualifications to begin. The stock market doesn’t care about your level of success, education, ethnic origin or any personal characteristics. Additionally you have the freedom to trade from any location. If you follow a few simple rules you can run your business on your own terms.

The most important factor is to be clear about why you want to trade stocks. What do you hope to gain financially from learning to trade?

Are you looking to: Create an enhanced lifestyle with supplemental income? Replace a full time income with a passive income stream? Become independently wealthy by creating a financial base independent of other income sources?

What would being a successful trader mean you? Imagine yourself making successful trades and gaining financially. Think about what it would feel like to have extra money in your bank account and to achieve your targets. With a clear picture of what you want and how that would feel you will be able to remain focused and motivated.

Your first task is to put one primary goal for your trading plan in writing. Additional goals you set can then support your primary plan.

Know Yourself. As well as learning to trade stocks it is essential that you understand yow you react under stress. Being aware of your own behavior patterns and common causes of and reactions to stress when trading will help you to master stock trading.

The reason that many people lose money in the stock market is because they lack the proper knowledge base. Independent of trading styles there is one thing common to all successful traders; the use of a tested and proven system.

In learning to trade you must be willing to let go of pre-formulated ideas and start fresh, develop new successful habits, and the discipline necessary to trade successfully over time.

Are you willing to do this?

Successful stock market trading eludes many people because they don’t have contact with an experienced, successful trader or trading system that actually works. Going it alone can be potentially expensive when learning by trial and error. Investing in a solid education and taking advantage of the insights and experience of successful trader makes a lot of sense when learning to trade successfully.

Obviously the answer lies somewhere in the middle– but where? We take pride in making responsible choices for the future instead of thinking only of today, but do you ever feel like you’re going too far? Not appreciating the present enough?

I hear that suggestion a lot regarding how much money frugalites and penny-pinchers spend: that we’re not enjoying life enough because we’re not willing to spend much money. The thing is, I don’t think that spending more money would make me noticeably more happy! I mean, certainly there are some things that I could spend more on and enjoy– probably more expensive vacations, maybe going out to eat more and/or at fancier places– but in general I’m very comfortable with the way things are. I find ways to enjoy myself that are just good values for the money… and if there’s something that comes up that’s expensive but would be really wonderful, I weigh it carefully but am pretty good about letting myself go for it if it’s worth it.

However, it’s the flip side that concerns me. The amount you save is a combination of how much you make and how much you spend, so it follows that to save the most for tomorrow you need to make as much money as you can today. A lot of personal finance bloggers like to stress the importance of increasing your income as much as possible.

For me personally, while I’m not earning as much as I could if income was my only priority but I’m still doing a job I like and one I feel is good for society. The thing is, I’ve never really envisioned myself following a standard “career path”. Yet most of the other options will likely pay substantially less, in some cases perhaps as little as half as much. So the question is, how long should I stay at a good-paying job that I’m fairly but not completely happy with? I definitely want to try other work, but don’t I have plenty of time for that later on?

Read (more…)

One of the unique things about the state of mind of investors in stocks or mutual funds nowadays is that there is a huge diversity in their happiness levels. Of course, those who chase short term opportunities over days or weeks are always in some part of a manic-depressive cycle but nowadays, even long-term investors’ moods have an impressive diversity.

On the face of it, happy days are here again. Stocks have clearly shaken off the decline the suffered in the middle of last year. The markets are at or near all time highs and so are equity mutual funds. Currently, almost 95 per cent of equity mutual funds are either at an all time high or within five per cent of such a high.

In fact except for a handful of perpetual dullards (whom no one any longer invests in any way), there are no equity funds that haven’t recovered the losses that the markets suffered a year ago. In fact, many funds have done substantially better. In the period from June 14, 2006, which was the lowest point that the major indices touched in recent times, the markets have gained considerably. During this period many equity mutual funds gained more than the markets did.

Of course, a larger number, performed worse than the markets. Still, as I pointed out earlier, the fact remains that even these have earned substantial returns over this period and as I said earlier, there aren’t too many funds which aren’t at all time highs.

All in all, there are hardly any investors who are today sitting on losses, no matter when they’ve invested. So that’s that isn’t it? Happy times are here again and everyone should be smiling and congratulating each other?

Not quite. The fact remains that people invest in equity mutual funds to make money, not just to avoid losses. A great deal of money flowed into equity funds in the first half of 2006. Based on the heady atmosphere of those days, I think much of this money was not level-headed long-term investment. Instead, it flowed in expecting quick and substantial returns.

However I think this has been a good experience everyone. This is the way equity investment is. Stocks are volatile and need time to give returns. Most investors who come in at the peak of a bull run actually end up having to make losses in exchange for receiving this valuable educational experience. Those who have learnt it for free should actually consider themselves pretty lucky.

Stocks not Best Investment for Quick Returns

Did you buy a stock to turn $20,000 into the $60,000 you need for Junior’s next year in college? If so, you’re not investing, you’re gambling, and, unless you are incredibly lucky, you will not meet your goal. The expectation of a high return in a short time frame is not realistic. Do stocks ever shoot up like rockets?

Yes, some do. However, you must understand that the market works on a rigid risk-reward basis. If there is little risk to the investor, there will be a lower potential reward. Investments that offer an extremely high potential reward invariably come with a high level of risk.

For the investor, this means if you are after the big returns, you must be prepared to suffer more losses than rewards. As an investment choice, stocks have historically returned 11 to 14 percent.

This does that mean that every stock should return in that range? Not at all – that is simply an average. You need to assess the risk of investing in a particular stock before deciding what an acceptable return is.

An investment in a young high tech company should have a higher potential payout than putting your money in a “blue chip” company that posts modest growth and pays a regular dividend.

What would be the risk factor for a stock that could potentially triple in price over a short period? The answer is very high – in fact, so high that the odds of it succeeding would be very slim. There is no safe (or legal) way to earn a very high return on your money over a short period.

Investing in stocks is best done as a long-term effort, which allows your money to grow and permits time for course corrections and adjustments.

Whenever you hear discussion of credit card debt, the various best ways to manage it and clear it etc., one thing is mostly ignored. Credit card debt can be extremely stressful and it can have a very negative impact on your life.

It’s always hanging over you, getting you down, making it difficult to live your life the way you would like to. This article takes a look at how to recognize debt stress, and what you can do about it.

The Symptoms of Debt Stress: There are numerous symptoms that can be caused by stress. Some of the most common ones are: feeling depressed and irritable headaches, not being able to sleep, forgetfulness, lack of concentration. If you have some of these symptoms but you’re unsure whether they are related to stress a visit to your Doctor may be in order.

Who Gets Debt Stress? Just about everybody that has debts gets stressed about them. Debt results in millions of days off work every year and it’s statistically one of the leading causes of suicide. When you read about someone who has committed suicide it’s very common to find their name is followed by “who owed in debts”.

Students and graduates are among the most vulnerable, as debt is growing here faster than in any other sector of society. It’s very easy for anybody to rely on their credit card, a little here and a little there and before you know it you owe thousands.

The average adult now owes many thousands in debts, tens of thousands even and as that’s the average, then it stands to reason that many people must owe much more. This being the case then always remember that you’re not alone, other people are suffering in the same way and there may well be many worse off than you.

How Do You Deal With It? The perception of stress caused by debt is often of embarrassment or shame. People with lots of debts don’t want to talk about it, even with their family or close friends, for fear of upsetting people or looking like a failure.

It’s essential that you talk about your problems, storing it up inside will result in even more stress. If you talk to no one else you should at least talk to your partner. They are in the best position to understand and possibly help you. When you’re ready to confront your debt stress probably the best route is to find two people outside of your partner, one who can advise you and one who can act as a counselor.

Finding someone outside your partner who can advise you and act as a counselor. That means a professional who knows what they’re doing in regard to financial matters and possibly a psychologist or psychiatrist or some other kind of counselor. Don’t let stigmas deter you, this is about your health which is much more important.

The next thing to do is to consider how you created the debt to begin with. Dig out your old credit card statements. What did you spend the money on? By far the best way to defeat your debt stress is to pay back your debts.

Even if it will take a while to clear the debt you know that your debt is gradually going down and as it does your debt stress will follow.