Respect Your Moolah

Before I begin, let me clarify. Money is not your master, but if you respect your money, you are much more likely to receive greater financial success. A lack of respect for money and often time's for oneself will lead to a lifestyle focused merely on the acquisition of "stuff." A wise philosopher by the name of George Carlin ranted about this. When we go to the local mall, the items that are available for sale are usually money pits. They are rarely income producing assets, and will start to lose value as soon as you walk out the door with them in your big brown bag.

When you purchase items at the mall, the thrill or shopper's high only last a few short days or weeks. It is a temporary feeling that is fleeting. The financial impact is mind blowing.

$1,000 dollars today invested and growing at a rate of 10% per year, would grow to $117,390.85. That is the awesome power of compounding interest. The first year, the interest is based on $1,000. In year 2, it is based on $1,010. As time progresses, you earn interest on interest.

I speak on this all the time, but nothing you buy today will bring you closer to a successful retirement and long term financial security. You need to respect your money and put the laws of interest on your side. Money is not everything, but it something that is needed to gain peace of mind.

Wishing You Success in all its Greatest Forms,

Alex

The Problem With Short Term Thinking

Everyone wants to be independently wealthy some day. I define independently wealthy as not having to depend on someone else for financial support nor having to "work" to continue your current lifestyle. The majority of people fail in the pursuit of building wealth because they are looking at the short-term and fail to realize that building wealth is not a short race, but more akin to a marathon.

A cardinal sin of investing is focusing on fast performing "hot" stocks or funds without taking into consideration that higher returns often also carry higher risk. You will see people that otherwise make wise choices in every other area of their life "churning" their portfolios, which almost always leads to lower performance. The best advice that I can give is to work with a professional money manager or financial advisor that spends their days researching the investment market. Just because anyone can open a brokerage account, it doesn't mean that they are qualified to be a investment advisor. The goal should be an average of 8-12% annually, when you average the years over the long haul.

Wishing You Wealth in all its Greatest Forms,

Alex

Stocks 101

When you buy stock in a company, you become an owner of the company. The stock is an asset that you expect to increase in value. The thinking is that if you invest in Coca Cola that they will be able to grow their business and be rewarded with a higher stock price. Investments can help you stay ahead of inflation. The things to be aware of is that when you buy a stock, there is usually a commission charged to buy the stock. When you sell the stock and it has increased in value, you will need to pay taxes on the difference between what you paid for it and what it was worth when you sold it.

Wishing You Success in all its Greatest Forms,

Alex

Life Expectancy Examined

If you are in good health, there is a good chance that you may live to be about 75 if you are a man and 80, if you are a woman. In the 1900's, people tended to live only to around 47. By the 1950's life expectancy had grown to around 68 years old. On average, those born in 2005 will live to nearly 78 years old.[cdc.gov]

With the strides and advancements in biology and medicine, life expectancy continues to grow. Some scholars belive that the human body is built to last many years and we have just begun to uncoverthe tools to optimum life span. Imagine living to the age of 150, or longer. Many animals live six or seven times their age at maturity.

These are sobering statistics since most people create their financial plan starting at the age of 65. With medical advancements, it's possible that many will be retired for more years than they spent working. It's key that you create a plan that is based on the possibility of an extended retirement.

Wishing You Wealth in all its Greatest Forms,

Alex