Evolutionary Wealth -- Live Smart. Be Rich.

The Old Banana

2011-01-02T20:07:00.000-08:00

Have you ever looked at a banana with spots and assumed that it was old, mushy and overly ripe inside? I usually don’t spend a lot of time talking about produce, but this is exactly what happened to me last week. A lone banana sat on my kitchen table and turned from bright green, AKA unripe, to yellow, AKA delicious, to neon yellow with dark spots, AKA too ripe/gross. I was pretty sure I had missed my window to enjoy it, so I let it sit there. Last Tuesday, I woke up late and didn’t have time for breakfast and took my inedible, geriatric banana with me to work. When I peeled back it’s tough, leathery exterior, I found that it was in perfect condition and tasty.

Here’s the infamous quote “don’t judge a book by its cover.” Since childhood, our parents, teachers and friends have given us this advice, but in the hustle of bustle of everyday life we often forget. Personally, there have been instances where I have judged solely on appearance. But I’ve learned through experience that a book’s cover can be misleading and we often miss the “fine print.” As in legal disclaimers and people alike, the fine print is only available if you take the time to read them. If I didn’t take the opportunity to read between the lines, I may have missed out on some of the most amazing relationships that have added and continue to add so much to my life.

When I was in boy scouts, one of our annual volunteering efforts was at the local convalescent home. Many of the elderly residents had no family and had been left alone in this world. We would do our annual visit during Christmas time. It didn’t take long for me to recognize, even as a child that they didn’t want presents, they just wanted your “presence.” They could care less about any gifts, but just wanted the opportunity to be listened to and heard. The first year, I assumed that I was about to be put into a room with a bunch of senile and irritable old people. This was hardly, the case. The majority of them had a youthful energy and had wisdom to share. Other times, I had assumed that teenagers are relatively simple and probably don’t know what’s important to them or have many goals, since I didn’t at that age. We need to learn to check our preconceived notions and judgments at the door. When you take the opportunity to learn about people, you may see an entirely different side than what you were expecting.

I have come to realize that there is beauty in nearly all people, if you open yourself up to it and stick around long enough to see it, you might also be blindsided and be amazed.

Wishing You Wealth in all its Greatest Forms,

Alex

Be Careful, It Might Be Contagious

2010-08-31T19:21:00.000-07:00

I was thinking about my trip last year to New York. The flight out there was great, but on the return flight I had a two hour window to arrive in Chicago’s O’Hare airport to catch my flight back to Orange County. The plane out of La Guardia was delayed and I sat on the tarmac due to weather delays. Needless to say, I didn’t make it onto my connecting flight. United said that the rest of the flights were overbooked and would not be able to get me up in the air until morning. I opted to “sleep” in the airport. The airline wouldn’t provide me with a blanket or a pillow since I wasn’t on the plane and my luggage was headed to Orange County without me.

I watched the airport inhabitants turned from families to maintenance workers with mops and brooms. It was hard to find a quiet nook without the clang of rolling trash cans and vacuums. I settled on terminal 21. I laid there with my shoes on because as a child, I watched an ABC afterschool special, I feared that my shoes would be stolen like in a homeless shelter. I didn’t get much sleep and was pretty cranky until that morning.

In the morning, the first flight to Orange County was at 7:55am and I had a spot. As the time got closer to boarding, people started shifting about and looking at their cell phones and designer watches. As the boarding time came and went, people began to murmur. You could cut the tension in the air with a knige. Then one man turns to his wife and says “with how much we pay for plane tickets these days, you would think they would be able to look at a watch and take off on time.” Other people began complaining. Much like one domino falling in a row, you heard a chain of frustrated sighs across the terminal. At about 8:45am, they announced we would be boarding shortly. In anticipation, people stood up, crowded the doorway and began jockeying for position like horses approaching the finish line. Needless to say, people were now even more frustrated than before, because the contagious discontent washed over passengers like a tsunami. Being negative is contagious and spreads like cancer. Left untreated, it can be deadly.

As the time came to, those with small children were called to board. As my section was called I walked past the entrance and waiting to get to 17C. In first class was this toddler with headphones on watching a Disney movie on a portable DVD player. She smiled and giggled with carefree abandon. It was quite amazing to see passengers in front of me shift from disgruntled to happy at the sight and laughter of this young child. It served as a reminder that we are in fact contagious by association. We sometimes forget how much power we have to make someone’s day. The choice is yours, so choose wisely.

Wishing You Wealth in all its Greatest Forms,

Alex

A Reminder for the Way Forward

2010-01-25T23:44:00.000-08:00

On a brisk Sunday morning, I woke up weary. The weather was the rare kind in California where you can actually see your own breath. The sun was shining after nearly a week of nonstop rain, ridiculously dubbed “Storm Watch 2010” by all major media outlets. As I stepped outside to feed the fish in the pond, I noticed that a snail seemed to be trapped on a cactus. All the other snails had probably already hidden themselves away before dawn. Snails are like vampires, they only come out under the guise of darkness.

There is a natural inclination to look down or judge those who move slowly. Whether, you are in line at the grocery store, in line at the bank or driving on the freeway. We think about all the things we could be doing if we just had more time. The reality is that if we had an extra 5 minutes, we would need 10 more and if we had 10, we would surely need an hour. We are always going to find time for those things that are important to us. For me, life sometimes moves at such a frantic pace that I fail to enjoy the moments since I am so caught up in accomplishing the goal, only to set another goal. I have to constantly remind myself to enjoy the moments that make up my days. Each moment can be a defining one.

Just like the snail, we sometimes end up in “sticky” situations. Often times, we have no idea how we got there and have no idea or plan of how we are going to get through it. I have learned time and time again that by committing yourself to making small strides in the right direction, that you not only figure it out, but might learn something along the way. I wouldn’t give up one mistake for another five years of life.

The snail slowly navigated all of those sharp cactus spines and was eventually rewarded with freedom two hours later. I think that is eleven months in snail years. We have eleven months left in 2010, so let's live and play full out.

Wishing You Wealth in all its Greatest Forms,

Alex

Should You Pay off Your Mortgage?

2009-10-13T07:51:00.000-07:00

It's common that most people believe that you should pay off your mortgage before retirement. For many homeowners their mortgage is their largest expense. And it's also true that if they were able to eliminate their mortgage, that they would be able to reduce their need for income during their retirement years.

What people fail to see sometimes is that while paying off the mortgage does reduce expenses, it also eliminates a potential source of income. When you take funds from your savings and retirement accounts, you are removing funds from your capital base and compromising your ability to generate growth and income in your investment portfolio.

Paying off the mortgage definitely improves peace of mind, but sometimes the financial trade offs are just not worth it. Retirement accounts which are typically invested in mutual funds or other investments have the potential to grow at a much faster pace than real estate. In addition, once a home is paid off, it is difficult to tap the equity and reverse mortgages can be expensive.

Wishing You Wealth in all its Greatest Forms,

Alex

Problems with the Past

2009-10-05T09:00:00.000-07:00

Not all financial planning works as it is supposed to. Since I have joined the profession, I have realized that every time I read an article, pick up a book or attend a seminar…some of the information is wrong. Keep in mind that this is not always the fault of the writer or financial advisor, but it’s because the advice is based on an experience that no longer exists.

The tools and techniques that most financial advisors use tend to be based on the millions of retirements that happened before they become planners or even went to college. Years ago, it was rare that most would be able to go to college or graduate degrees. Instead of having spent years in post secondary education, they started working early and worked for years and years. They were taught to live within their means, cut out debt and try to make due saving the little that they earned.

The key here is to make sure that the education that the financial advisor has is updated with today’s realities, including taxes and inflation. There was a great article on Marketwatch.com that discussed how over the last 10 years, many investors actually lost money in the stock market. This is not to say that one shouldn’t invest in the market, but to be aware that there is a need for newer thinking for many investors.

Wishing You Wealth in all its Greatest Forms,

Alex

Top 3 Bank Fees that Sting

2009-09-14T15:18:00.000-07:00

It seems as if banks are on the offensive these days. The amount of interest they are earning on their deposits is way down, so the money has to come from somewhere. When you make a deposit at the bank, they lend out your money and get paid an interest rate and credit you a rate. For instance, they may receive 1.0% on your deposit and pay you 0.75% and they keep the difference…so in this scenario they are earning 0.25% on your money. Since rates are so low, savings accounts are paying very little and their income is way down.
For most banks, fee income is important during this economic downturn.

The top three fees that you should be aware of include:

1. Overdraft or Bounce Check. If you write a check for more money than you have in your account, you will be hit with this fee. This fee has been on a gradual rise and can range from $20-$30 per occurrence. The key is knowing what you have available in your account and balance your checking account regularly.

2. Bad Deposit Fee. If you try to deposit a check from someone and the check bounces, you are also charged a fee. It hardly seems fair, but only take checks from people who are good for the money.

3. ATM Fee. If you are using an ATM that doesn’t below to your bank, you are going to get charged to withdraw money. They always get me at the Orange County Fair, ball games and concerts. Make sure you get the money you will need before you head out or get used to paying to get at your money.

Wishing You Wealth in all its Greatest Forms,

Alex

Magic Rule of 72

2009-08-24T17:19:00.001-07:00

Have you ever wondered how long it would take your money to double? There is a guideline to figuring out the time called the "rule of 72." How you calculate it is by taking the amount of interest you are earning and divide it into 72. For instance, if you were earning 9% interest you would take 72 and divide it by 9.

72/9 = 8 periods

So at a compound interest rate of 9%, you would double your money in 8 compounding periods, which is usually measured in years.

Back in 1791 Ben Franklin left $5,000 to the city of Boston and instructed them to let it grow for 100 years. In 1861, it had grown to $322,000. During that year, they decided to build a school with most of the funds, but set aside $92,000 for 100 more years. In 1960, the $92,000 had grown to $1,400,000. It's unlikely that you will have 100 years to let your money grow, but the rule of 72 can help you see how long it would take money to double. Below is a sampling of interest rates and how long it takes to double.

Interest Rate	Years to Double
0.5%	144.0
1.0%	72.0
3.0%	24.0
5.0%	14.40
7.0%	10.286
9.0%	8.0
12.0%	6.0

Wishing You Wealth in all Greatest Forms,

Alex

Great Depression Revisited

2009-08-17T09:00:00.000-07:00

Some of the wisest individuals today are the seniors that witnessed the stock market crash in 1929. After the crash, panic stricken consumers feared that they would lose their life savings at the banks. So they went to the banks, became a mob and attempted to withdraw their money simultaneously. With so many people trying to make total withdrawals, it resulted in banks not being able to meet the cash demand. Some were able to retrieve all their money, while others didn't receive one cent. Many banks failed in the weeks and months that followed. Does that sound familiar? Subsequently, in 1933 the FDIC was created to protect consumers and instill public confidence.

Beyond bank failures, the general business climate soured while commercial and residential construction declined over 60%. Businesses failed since people didn't have any money to buy the goods and services that were once necessities. During these times, banks did very little lending since they had little confidence that customers would be able repay the loans with high unemployment. During this time of massive unemployment, there was no welfare or unemployment insurance.

If you speak to an elder who lived during this time, you'll soon realize that the recession that we are experiencing today is minor in comparison. It might seem like dark days, but we now have programs designed to protect us when we are unemployed, when we are hungry and protecting our hard earned money in the chance that a bank fails.

It's easy to take these things for granted and feel as if the government isn't doing enough. The United States is down, but it is NOT out. I am looking forward to the recession ending, yet will continue to treasure each learning lesson that it provides.

Wishing You Wealth in all its Greatest Forms,

Alex

How the Wealthy Really Live

2009-08-04T21:52:00.000-07:00

Since my youth, I have always wondered about the difference between the wealthy and those that struggle and live paycheck to paycheck. Later in life, I was surprised to learn that it was much more simple than I realized. Those that are wealthy don’t always make more than the average American. The biggest difference is how they live their life.

1. They follow the plan

A financial plan is the most important part of getting on the path to financial freedom. Too often, we set goals for ourselves and fail to reach them because we don’t stick with it. The wealthy not only have a plan, but they follow the program. When we are consistent with our actions, they become habits. If you could develop one positive financial habit a week, imagine where you would be in just one short year. Those that are wealthy are diversified in their investment plan and have implemented sound insurance, tax and financial strategies and are willing to put off instant gratification for long term results.

2. They are penny-wise

The wealthy who have worked hard and developed their prosperity over time have also developed an attitude of frugality. They realize that every penny invested or spent wisely will bring about more pennies, which will bring about dollars. Those that are truly wealthy have the ability to discern between a need and a want and spend their dollars accordingly.

3. They ignore social prominence

The world’s “average” millionaires live rather simple lives. They tend to own their houses outright and drive older cars. The poor tend to rent and drive expensive automobiles. Those that are truly wealthy are that way because of their habits. Often times, you would never know their wealth by the way they dress, drive or live.

Every person can become wealthy if they take the time to cement those habits that allow them to become that way. We all have choice in our lives and you can choose to live a life of prosperity or a life of lacking. Take the time today to build positive financial habits.

Wishing You Wealth in all its Greatest Forms,

Alex

Respect Your Moolah

2009-07-20T09:00:00.000-07:00

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

2009-07-13T09:00:00.000-07:00

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

2009-07-06T21:16:00.001-07:00

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

2009-07-03T22:45:00.000-07:00

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

Financial Check Up Reminder

2009-06-16T10:53:00.000-07:00

We are now nearly halfway through the year and it’s a good time to take a look at your financial goals. In life, it’s easy to get caught up in the day to day and put financial plans on the back burner. But here are two thoughts.

Take a good long look at your financial goals and see if they have changed. Make sure that when you put together a plan it is both actionable and quantifiable. When a plan is actionable, it is something that you can actually do. For instance, an actionable plan is saving a certain amount of money per month. A non-actionable plan would be winning the lottery. A quantifiable plan is one where you can measure at the end of the year whether or not you have succeeded in it. Let’s say you were to put away $200 a month for the remainder of the year. You should have $1,200 if you save for July, August, September, October, November and December. If you don’t have $1,200 on December 31st, then you haven’t reached your goal. Take the remainder of the year to work on consistent saving, budgeting and investing methods.

If you were planning to make contributions to your favorite charity, there has never been a better time to do it. Charities that support the welfare of the local community are in a recession also. In a time where community services are much needed, charities have to get by with much less. Plus, it’s also a tax deduction you will be able to take for 2008.

Start with those two and check back here for more ideas soon.

Wishing You Wealth in all its Greatest Forms,

Alex

Is Your Mortgage "Under Water?"

2009-06-12T10:05:00.001-07:00

The words “under water” have taken on new meaning as many homeowner’s who purchased a home in the last few years have experienced the value of their home dropping below the balance remaining on their mortgage.

There is good news with Fannie and Freddie, the government sponsored companies that buy and insure mortgages and provide liquidity so that new loans may be made. If your loan is held by either or the FHA (Federal Housing Administration), you may be able to refinance your property up to 105% of its current appraised value.

The possibility is that you may be able to get a lower interest rate or reduce your monthly payments. If you quality, you may even move from an adjustable rate to a fixed one. Owner occupied properties up to four units, including single family residences, condos and rental properties are all potentially eligible for this. [Bankrate.com]

To find out more about the eligibility, go to the government website here.

Wishing You Wealth in all its Greatest Forms,

Alex

Credit Card Companies Complain, but Consumers Rejoice!

2009-06-02T10:46:00.000-07:00

President Obama put the pen to paper on May 22 and made changes to the way that credit card issuers do business. The changes were “common sense reforms designed to protect consumers.” Advocates are happy, but banks have already begun campaigning that the new reforms may hurt cardholders in the long term.

Let’s take a look at these changes. It’s called the Credit Card Accountability, Responsibility and Disclosure Act, but has been named “CARD” for short…a very fitting name. Some changes will occur in 2010, while others could happen in 90 days.[SmartMoney.com]

• No Surprise rate increases
If your card company wants to raise your rates, they now have to let you know 45 days ahead of time and let you know why in writing.[LaTimes.com]

• Bills in Advance
Your monthly bill has to be mailed at least 21 days before your payment is due. [SmartMoney.com]

• Restrictions on retroactive rate increases
The rate on an existing balance can’t go up unless you are at least 60 days late on a payment. And even if you are 60 days late, your credit card company has to restore the prior rate if you pay the minimum for the next 6 months.

• On time Redefined
If you pay your credit card before 5pm EST it will be considered paid on the same day. And in the chance that your payment due date falls on a weekend or holiday, you cannot be subject to late fees because they weren’t open.

• Fight Higher Rates.
If you are paying different rates for different kinds of transactions, you can now apply any payment above the minimum to the highest rate balance.

• Additional Protection for College Students
College students will be able to get credit, but within reason. There’s little reason for college students to graduate with loans and high credit card balances, which is a double whammy to getting started on the right food. Account limits will be either 20% of their annual income or $500, whichever is greater. The goal is to make this market less attractive to issuers and reduce the amount of exploitation.[SmartMoney.com]

• Protecting Future Generations
The new legislation bars companies from issuing cards to most people under age 21. Those younger than 21 will only be able to use a credit card under one of the following conditions: They can prove they have the means to pay the debt (or their parent or guardian promises to pay it off if they default).They are emancipated minors. They are designated secondary cardholders on a parent or legal guardian’s account.[CNBC.com]

• Universal Default Ending. This is the practice where if you make a late payment to one credit card company, they all get to raise your rate. Under the new plan, if you make a late payment to one, others cannot hike your rate and bury you.[SmartMoney.com]

• Over Limit Fees by Exception. Your account cannot be put over the limit without your advanced okay to do so. [SmartMoney.com]

Credit card companies are staunchly against these changes because without the extraordinary amount of fees, there will be less revenues. I believe that going forward, there will be less rewards and new annual fees.

Whether or not these changes help America become more financially independent remains to be seen. But I believe every bit helps and believe that credit card companies will need to also take a pay cut during these difficult economic times.

Wishing You Wealth in all its Greatest Forms,

Alex

Too Young For Life Insurance? Probably Not.

2009-05-25T08:23:00.001-07:00

It’s a common myth that you needn’t invest in life insurance early in life. That’s actually not necessarily true. The reality is that getting a life insurance policy early may pay huge dividends when planning for the future. By comparison, few people acquire life insurance coverage between 18 and 45, but there are many reasons to get life insurance during this time.

The most important question is “Are supporting loved ones whose livelihood depends on your income?” If the answer is yes, then you should be looking at life insurance to guarantee their future.

Commonly, people wait because it is believed that life insurance is only needed later in life and want wait until expenses decrease. Life insurance has been long viewed as only for “old people.” When you are 30 or 35, you focus on the long life ahead of you. Financially speaking, it may make sense to acquire life insurance coverage now.

1.Your health is in great shape. Most shop for a life insurance policy in the 50’s and 60’s. At that age, your health may be different and it may be more difficult to qualify for affordable life insurance. A multitude of things can cause premiums to spike, so why not get the coverage you will need someday, while you are in your prime.

2.The cost will be a lot less. Life insurance premiums are based upon your current age and life expectancy. Since you are younger, the premiums will be less since they will be based on a longer life expectancy.

Some studies have cited that premiums for standard risk-term life insurance policies have dropped as much as 50% between 1994 and 2007. This can be credited to the fact that people have been living longer. Even cash value policy premiums have decreased an average of 4% per year since 2000.

If you are single, you may also want to look for a term policy that can be converted to permanent coverage at a later time. It’s a way to protect your insurability, even if your health changes.

As we all progress though different stages of life including marriage, having children and retirement, our needs for life insurance change and typically increase. If you are considering life insurance, your timing might just be perfect.

Wishing You Wealth in all its Greatest Forms,

Alex

Bank Stress Test Results - Does Your Bank Stack Up?

2009-05-18T09:00:00.000-07:00

So the numbers are in. The Federal regulators have published the valuations of the nation’s 19 largest banks. With new information, comes new questions. Which banks are adequately capitalized and which need to raise new capital? And the billion dollar question: where might that new capital infusion come from?

The good news is that nine banks don’t need more capital. The fortunate are: American Express, BB&T, Bank of New York Mellon, Capital One Financial, Goldman Sachs, JPMorgan Chase, MetLife, State Street and US Bancorp. The government believes that these banks have enough capital available to weather the storm.

The bad news is that ten banks need to raise new capital or raise new reserves. These banks include: Bank of America, Citigroup, Fifth Third Bancorp, GMAC LLC, KeyCorp, Morgan Stanley, PNC Financial Services Group Inc., Regions Financial, SunTrust Bank and Wells Fargo. You will recall that a good number of these banks were on a business acquisition shopping spree less than 12 months ago.[Businessweek]

The government has given the banks that need new capital one month to come up with a plan and six cumulative months to raise it. June 8 is the plan deadline, with November 9 being the deadline to have the new capital. It’s possible that capital may be raised by converting government debt into private stock.

The Fed checked to see if the banks would have at least 6% of assets in Tier 1 capital and 4% in common equity by calendar 2010. Tier 1 capital includes common shares, majority of types of common stock and TARP funds.[Sfgate.com]

The drawing board for the banks that need to create a capital cushion may include:

1) Sell company assets
2) Raise new common equity from new or current shareholders
3) Applying earnings beating analyst expectations toward new capital
4) Converting preferred shares into common stock to eliminate preferred dividends

The government has instructed the banks to seek capital from the private sector first, before asking for federal money. The Treasury Secretary Timothy Geithner believes that the majority of banks needing additional capital will be able to find it in private sources.[Bloomberg.com]

Stress tests are nothing new and have occurred for years, but are typically kept private. In these difficult times, the government is taking measures to bolster the public faith in banking. Some analysts believe that the Fed is just posturing since we have still unresolved issues with the toxic assets on the balance sheets of these banks.

On the other hand, the stress test announcement was received well by Wall Street, who feared bank nationalization. The results were not as dire as some investors had expected. In addition, more economists believe that the economy will begin to improve by 2010, which should reduce bank stress.

Wishing You Wealth in all its Greatest Forms,

Alex

Refinancing Realities

2009-05-11T09:23:00.001-07:00

Mortgage companies have flipped the switch and their commercials seem to be dominating the airwaves once again. With the rates sitting around 5%, there are reasons to cheer, but the reality is refinancing is now a whole different ball game.

Rates are at 40 year lows, but qualifying for that rate can be a real problem. Unlike during the refinance boom, when all you needed was a paycheck stub and a heartbeat, today's mortgage process is more difficult. Lending guidelines are stricter today since banks are still dealing with foreclosures tying up their capital.

At the current time, to qualify for the best rate, you will need a credit score of 720 and 20% equity or more. This applies to single family residences that are owner occupied (you live there). You can also "buy" down your rate by paying a discount point, which equals 1% of your loan. Paying a discount point usually lowers your rate by 0.25%.

You would be smart to contact your local credit union, bank and trust mortgage broker. The credit union and bank will typically work off of specific in house guidelines, while the mortgage broker may be able to locate you the best rate/fee combination for your situation. Mortgage brokers typically work with multiple lenders.

If you are successful in refinancing, you may capture the lowest rate of your lifetime.

Wishing You Wealth in all its Greatest Forms,

Alex

The End of Recession?

2009-05-04T08:30:00.000-07:00

It appears that there has been some healing in the recent few months in some economic indicators: new and existing home sales, wholesale and factory orders, consumer spending and more positive reports from the Fed. And the stock market has proved to be resilient as of recent days with corporate earnings coming in better than expected. On the flip side, the unemployment rate is rising, March retail sales came in low and foreclosures are on the rise.

Ben Bernanke in Washington believes that economic declines are beginning to slow. And President Obama’s top advisor, Larry Summers, sees a “more balanced picture.” Away from Washington, Martin Feldstein of Harvard stated that “things are falling, but they are falling a little more slowly, but that doesn’t mean they will turn around anytime soon.” The forecast out of UCLA states that the recovery will be in 2010.

Recently, the Wall Street Journal polled economists and on average, they believe the recession will end in the third quarter of 2009. Whether the recovery is in 2009 or 2010, make sure that your assets are invested for long term success.

Wishing You Wealth in all its Greatest Forms,

Alex

Layoffs and 401K's

2009-04-27T09:30:00.000-07:00

As this year continues to see layoffs, I have been receiving more questions about 401k’s and what happens to them if you’re laid off. Basically, there are three options for your 401k. One is more flexible than the other two.

The first option is that you could leave your 401k with your former employer. The funds that you have contributed and a portion of your “company match” will remain invested in your selected portfolio mix. The financial firm will continue to send quarterly statements and your funds will continue to grow tax deferred.

The downside to leaving your money with your former employer is that you may have reduced flexibility. Typically, in employer sponsored plans, you will have limited investment choices, higher fees and limited access to make changes. Often times, people that have moved around from job to job have left a trail of 401k’s that are difficult to keep up with since they are with so many different employers and financial institutions.

Your second choice is “cashing in” your 401k. As I have mentioned in my previous posts, this should only be a last resort. Often times, the financial institutions will require withholding of 20% for potential tax liability and you may incur a 10% IRS penalty if you are under the age of 55. Plus, the removed funds will be taxed as ordinary income.

The third option is “rolling over” your money into an Individual Retirement Account (IRA). Typically, this is the best choice. There is no tax penalty when you rollover an IRA or do a trustee-to-trustee transfer. You can now benefit from total control of your money, continued tax-deferred growth, and more investment choices.

I am a big fan of having greater control of your money. If you would like more information on these choices, please email me.

Wishing You Wealth in all its Greatest Forms,

Alex

Should I Pay or Should I Go?

2009-04-21T20:11:00.000-07:00

Not everyone should pay off their debt first. Often times, business owners or professionals have some debt to finance their businesses. The long range goal should always be to build wealth and sometimes it’s okay to have some debt.

There is such thing as “good debt.” If the debt allows you to create income, it can be considered good. For instance, a rental home may have a mortgage, but it allows you to create a passive income from the rental payments. Bad debt is credit cards that have compounding interest rates and don’t provide any opportunity to income.

When you will be carrying a debt for medium to longer term, weigh the interest rate on the debt against your income growth and potential investment returns over the term of the debt. If the rate of interest associated with the debt appears to outpace your growth income and returns, then you will want to pay that debt down as fast as possible. Your debt growth rate should not be higher than your average income growth rate. Look at your primary job and all other sources of income when calculating this figure.

By paying off “bad” debts and reducing the amount of accumulation of new debt will improve your FICO score and lead to lower interest rates on credit cards and other loans. A good FICO score allows you to take steps closer to financial freedom.

Wishing You Wealth in all its Greatest Forms,

Alex

The “B” word…Budget

2009-04-07T19:59:00.000-07:00

No one likes to talk about budgets…well almost nobody. If a budget is sensible, necessary and even desirable, why do we hate them so much? The reality is that making a budget or staying with one seems to contradict our instant gratification that is part of our culture. We certainly don’t want to miss out on the latest fashions, electronics or the hippest restaurant, but a budget is as important to being successful financially as oxygen is to breathing.

A budget forces you to look at what you spend. A good budget will be able to break down, to the dollar, how much you spend on clothes, food, movies, etc. Most of us don’t like the restrictions that budgets pose, but we would do well to follow the quip “a penny saved is a penny earned.”

It will take a bit of time to set up a good budget, but you should start by understanding where you are spending your hard earned dollars now. Save all of your receipts, bank statements and credit card bills and put them in a pile. Also, you will want to either use an Excel spreadsheet or buy a software solution such as Quicken or Microsoft Money. The other option is going online to Mint or Budget Tracker and joining for free.

By getting started, you will be taking one of the first steps that will help you cement your financial future.

Wishing You Wealth in all its Greatest Forms,

Alex

Truth about the "Rapid Refund"

2009-04-01T09:47:00.000-07:00

For most Americans, instant gratification is their mantra…even in tax season. While driving around this year, I noticed signs on every corner for “Rapid Refund.” I spent some time researching and speaking with a number of tax accountants. A “Rapid Refund” is a short term loan that is secured against your forthcoming refund. The catch is that all loans come with costs, and hefty ones at that. These refund anticipation loans (RAL’s) come with an application fee and an interest rate from 36% to 200% or more. On a refund of $2,000, the cost can be upwards of $100. It’s estimated that in the 2006 tax season, 9 million taxpayers used a RAL. Additionally, RAL’s cost the working poor an estimated $500 million per year. The IRS does not regulate these loans.

To expedite your refund, you can do an electronic filing and have the refund direct deposited to a bank account. Within 10-14 days, your refund is in your account. The way I see it, you have already waited 365 days to receive your tax refund, so what’s another 14 days? In order to correct this problem for the next year, you can contact your Human Resources department and update your W-2 income withholding. This will give you more money in each of your paychecks throughout the year. Plus, the government is no longer receiving a free loan until you file your tax return.

Wishing You Wealth in all it’s Greatest Forms,

Alex

Don't Touch that 401K

2009-03-26T12:23:00.000-07:00

Yes, it's official that we are in a recession. These are certainly difficult times, but today I want to look at the pros and cons of borrowing from your 401(k). The spoiler alert is that there are far more cons than pros.

The pros are that you have access to money if you are in a tough spot. Some 401(k) plans allow you to borrow up to 50% of your vested account balance.

The cons are that some 401(k) plans don't even allow for loans. taking out a 401(k) loan may cause you to stop contributing to your 401(k) altogether, since you will be paying it back with a portion of your paycheck. You are essentially borrowing from Peter to pay Paul. If your company matches a portion of your contributions, you will lose out on that as well. If you cannot afford to pay it back, it becomes a taxable distribution with penalties if you are under the age of 59 1/2.

I recommend that you only borrow from your 401(k) as a very last resort. In addition, most people have suffered dramatic losses in their 401(k), so the amount that you will be able to withdraw is less today than it has been in the past.

Your 401(k) is one of the building blocks to a successful financial strategy. Treat it well and it will treat you well.

Wishing You Wealth in all its Greatest Forms,

Alex

Don't Miss the IRA Deadline on April 15.

2009-03-11T22:21:00.000-07:00

If you haven’t done so yet, be sure to make your 2008 IRA contribution before April 15! With stock prices at the lowest prices in over a decade, fully funding your IRA for 2008 (and 2009) could mean a great head start in saving for tomorrow.

I know that times are difficult. Most people buy high when market hype is at a peak, but refrain from investing when things seem difficult. But remember that the goal is to buy low and sell high! If you have an IRA, make sure to fully fund it. If you don’t have an IRA or Roth IRA, there is no better time to get started.
Don’t forget that you have until April 15, 2009 to make your contribution for 2008. If you have maxed out for 2008, you can start chipping away at 2009. Cross it off your to-do list. The current recession that we are experiencing will not last forever and chances are that someday in the future, you will be glad that you contributed when you did.

Wishing You Wealth in all its Greatest Forms,

Alex

A Woman's Financial Reality

2009-03-02T21:25:00.000-08:00

Getting behind the driver’s seat for women may be more important than for men.

Even today, men tend to earn more than women. Last year a survey by Hewitt Associates did a study on savings trends. Based on their findings, they found that women in the survey earned an average of $57,000 annually, compared to $84,000 for men. Since most employees contribute on a percentage basis to their 401(k)’s, the average male employee in the study had the chance to set aside greater amounts of salary into a company retirement plan. And possibly even more startling was that some of the surveyed female employees didn’t defer enough to trigger a company match.

Men rarely put their careers aside to rear children or take care of special needs family members. Although, times are changing, traditionally, women have been bearing the brunt of these responsibilities.

So, if a woman had to depend on the company retirement plan to accumulate retirement savings, the time out of the workplace can be seen as a financial setback. This is even more pronounced when you factor in the time value of money. A male employee may contribute to a 401(k) plan year after year for 20 or 30 years or more, and his contribution levels may increase as his salary increases. If a woman leaves the workplace for a few years (or more), her retirement nest egg still compounds, but the steady salary deferrals to a 401(k) plan cease. When she retires, she may have less of a nest egg than her male counterpart if she just relies on the company retirement plan as her primary retirement savings vehicle.

This is a compelling reason for women to build their own investment portfolios, in addition to participating in employer-sponsored retirement plans.

On average, women live five years longer than men. The Labor Department estimates that almost 90% of women will outlive their husbands and spend a portion of their retirements managing their own finances. This means that both counterparts need to be educated and fully understand the financial big picture.

A woman will face a longer retirement than men. On average, a woman’s retirement may last 20 years or longer. If you were to leave the workforce at age 65, you will need to have a healthy nest egg in addition to Social Security. (If it still exists).

The Hewitt Associates study estimated that women’s retirements will average 22 years, compared to only 19 years for men. Factoring in the projected increases in healthcare costs, it concluded that women need to save 2% more than men annually over 30 years to maintain their standard of living when they retire. If a woman earning $57,000 contributes 4% to her company retirement plan annually over 30 years instead of 2% (that’s $95 more a month), the study estimates that she’ll have an extra $81,000 at her retirement date.

The bottom line is that the best antidote to worrying about the financial future is planning for it. Investing to build wealth apart from work – and working with a qualified financial advisor – is a great move. If you want to invest conservatively, you can find strong investment choices with the potential to outpace inflation. Whether your life is stable or changing, talk to your financial advisor today and learn about the moves you can make for a comfortable financial tomorrow.

Wishing You Wealth in all its Greatest Forms

Alex

Are Money and Happiness “two peas in a pod?”

2009-02-15T12:43:00.000-08:00

It’s been said that money can’t buy happiness. Is that true? In this recessionary year, it’s interesting to ponder the effect money has on and in our lives. What role does money play in our happiness?

Most psychologists and sociologists will tell you that our happiness comes largely from social interaction and less from financial fortune. Yet studies indicate that there is a direct correlation between wealth and a degree of mental health.

Are we ultimately only as happy as we want to be? Maybe. Researchers now increasingly feel that people have a genetic “baseline” on the spectrum of happiness, and deviations from this norm are temporary. In other words, how the stock market does doesn’t rattle our basic level of happiness. Even life-altering tragedies or seeming miracles don’t ultimately budge us much from the norm. (Studies of the brain indicate that people with more activity in their left prefrontal cortexes seem to be happier than some others.)

I believe that money is just a resource that allows you to enjoy the other parts of your life. Sure, it is difficult to maintain a cheery attitude when the media has only negative news to report, but you are ultimately in charge of your quality of life and happiness. It’s important not to get lost in the headlines, but allow your head to see brighter tomorrows…starting NOW.

Wishing You Wealth in all its Greatest Forms

Are We Headed for a Depression?

2009-02-10T05:37:00.000-08:00

We’re not living in 1931. You’ve probably read articles that compare and contrast the current economy to the 1930s. Well, we haven’t gone that far back. Sure, we’re seeing a lot of short sales and foreclosures. But we’re not seeing every other bank shuttered, soup lines on the corner, or one out of every four Americans looking for work. The economy is down, but not out.

Clearer skies ahead. If you review what happened in the past, powerful bull markets have emerged from low points in equities and consumer confidence. You can point to 2003, after Black Monday in 1987, and 1982. Some of the best long-term investing opportunities have emerged from extended bear markets or flat markets.

Take some time and speak with your financial advisor about your portfolio and make sure that your plan works in concert with your goals.

Wishing You Wealth in all its Greatest Forms,

Alex

Look forward to 2009

2009-02-02T13:32:00.000-08:00

It’s time to leave 2008 behind. We’ve heard the sound bites in the news, seen the headlines and read predictions. Fortunately, that’s old news and we should look forward to 2009.

I believe there is reason to be optimistic. We have a new administration and a huge new stimulus/infrastructure plan that may benefit the economy. We have the Federal Reserve and the Treasury working to thaw the recently frozen credit markets. We have economists sensing the beginnings of a recovery later this year.

Stocks up 20% in 30 days. What? Was it some kind of statistical manipulation? On November 20, 2008 the S&P 500 closed at 752.44. It ended 2008 at 903.25. So the broad stock market gained 20% in less than 30 trading days at the end of 2008.

This doesn’t mean that it will continue, but it does mean that the American spirit has not abandoned the market or our way of life. I am hopeful for a recovery, but as in all things…we should expect the worst and hope for the best.

Wishing You Wealth in all its Greatest Forms,

Alex

Happy Chinese New Years!

2009-01-25T21:33:00.001-08:00

Hello Friends,

Although, most celebrated New Years less than a month ago(myself included). For my family, it's new years again...Chinese New Years. An ancient Chinese proverb states that New Years day is a celebration of change. For many Chinese, 2008 was a bittersweet year with an 8.0 magnitude earthquake on May 12th causing huge casualties and damage and the successful Olympic Games making China a focus in the world. Whether you celebrate traditional New Years or Chinese New Years, the message of change should ring true.

"Out with the old and in with the new."

On the path to a life of abundance(monetary fortune, good health, unstoppable spirit) will come tough decisions, unexpected turns in the road, people who may disapoint you and even self doubt. However, as you continue to live a life of passion and purpose, your challenges can become the driving force toward victory. Yesterday has no bearing on where tomorrow takes you. It's the steps you take today that determine your quality of life tomorrow. With that, I wish you and yours great fortune and success.

Wishing You Wealth in all its Greatest Forms,

Alex

Buy Yourself A Retirement

2009-01-19T20:39:00.000-08:00

Most of us know that it’s a good idea to save up for those big ticket items that we want to buy. A plasma TV, A car, a home, but what am I forgetting? While you might have each of these items for years, there is one item that we often leave off the list. That item that you forgot is your retirement. It is the most expensive thing you will ever need to buy and must last for decades. With the advancements in medicine, it is very possible that you may spend more years in retirement than you did working.

Most people don’t see retirement as a “purchase,” but the truth is every time you put money into your 401K at work, put money in an Individual Retirement Account (IRA) or toward your Keogh Plan(self-employed) you are putting money away today for the cost of your retirement tomorrow. On top of that, the cost of the living in retirement years is going up. Without even factoring in inflation, many are spending 20, 30 or more years in retirement. The days of sitting back in a rocking chair are gone and have been replaced with traveling and doing all those things that we didn’t have time for while punching the clock.

More retirees will have to shoulder more of the retirement burden, since Social Security is may be run out of funds to pay benefits. Plus, fewer companies are providing traditional pension plans and 401K’s are primarily funded by the employee and not the employer. Unfortunately, little more than half of all employees are even earning benefits at work. Many others are unfamiliar with the basics of sound investing.

In short, a comfortable retirement is going to need pensions, personal savings, and investments. If Social Security is still around, it will just be the icing on the cake. Since paying for the retirement you dream of is your responsibility, start buying your retirement and financial future today.

Wishing You Wealth in all its Greatest Forms,

Alex

Got Health Insurance?

2009-01-12T17:00:00.000-08:00

Statistics show that every single year

1 out of 112 people die
1 out of 75 people have an auto accident
1 out of 8 people suffer from some extent of disability

Health care is so expensive today that without adequate coverage, a major accident or illness could wipe out all your savings. It is believed that one third of uninsured people have trouble paying health care bills and illness is a leading reason for bankruptcy. A study also showed that uninsured people tend to die sooner than the average population...Yikes!

You should protect what you have before moving on to getting a return. For instance, don't make a full contribution to your Individual Retirement Account (IRA) if it means you can't pay for health insurance. If you had to choose between making more money or protecting the money you have, choose the protection first.

Today, I will focus on health insurance. You can insure against an accident or illness. You are effectively trading a smaller loss (the premium) for a potentially larger loss (accident or illness). Imagine not having health insurance and getting a serious illness. You will probably face a financially life threatening situation. Why not pass the risk onto someone else and get insured for pennies on the dollar? First off, people who don't have health insurance get charged higher prices than people who are insured. The insurance companies negotiate with doctors and hospitals to get lower prices for their insurance policyholders. The insurance company buys medical services in bulk, just like you buy milk in bulk at Costco and get a cheaper price.

The first place I recommend getting health insurance is through your group plan at work. Typically, it is cheaper than an individual policy and your employer will pick up part of the tab. If your employer doesn't offer health insurance benefits, you can get a private policy. You can start with a high deductible health plan that has a lower premium. It has comparably less benefits, but would shield you from skyrocketing medical expenses in the case of a catastrophic loss…insurance speak for being really sick or injured. There are plenty of insurance companies out and different combinations. I recommend speaking with your local health insurance broker, since they typically have more than one company to choose from and can give you the ins and outs of each insurance carrier.

Wishing You Wealth in all its Greatest Forms

Alex

Unleash Your Inner Child For Success in Life...

2008-12-30T12:00:00.000-08:00

As we grow older and dare I say mature, the connection with our inner child fades. It's no secret that as American adults, we are overworked, overstressed and overwhelmed. Between the hectic schedule of work, chores, social groups and other commitments, it's difficult to remember our childhood dreams.

Can you remember when you wanted to be an astronaut, firefighter or president? I guess, being an insurance adjuster was accidentally left off the list. When you're young, the sky's the limit. As we grow older, we develop tunnel vision and see only what's directly in front of us. We can easily lose sight of what's truly important in life...the childlike hope, passion and creativity.

When we were children, our schedules were completely laid out for us. In grade school, we were told when to play, sleep, eat and even what to say. Yet, that didn't keep us from letting our imagination run wild and enjoying each moment. This country was built on the imagination and possibility of our forefathers. Life, liberty and the pursuit of happiness are penned in the Declaration of Independence. You need to connect both your rational mind and childlike creative mind to see what's really possible, instead of only what is. Whatever it is, find your bliss.

Wishing You Wealth in all its Greatest Forms,

Alex

Living in the Moment

2008-12-16T21:00:00.000-08:00

There have been thousands of books and articles written on living in the moment. It has been a spiritual concept based on developing a greater awareness or consciousness. In a fast-paced world that is focused on activity, achievement and results, it's easy to lose the present and get lost in the concerns of tomorrow. Humans are social creatures by nature, but many still have a fundamental need for silence and reflection.

By living "fully out," you can not only experience reduced stress, but much more. Studies have shown that you can improve your health as the link between our state of mind and physical health increases. You can better control your thoughts, which can allow you achieve more with focused energy. And most importantly, you may find your purpose in life. It was a quiet moment in meditation, when I gained a greater understanding of my life's purpose to improve the lives of those around me.

Most of us let the present slip away, allowing precious time to pass by and instead worry about the future or punishing ourselves for the past. It's time to live in the moment and be mindful.

Wishing You Wealth in all its Greatest Forms,

Alex

Can You Be Honest and Successful?

2008-12-08T23:22:00.000-08:00

I recently was sent a blog post from the Zen Habits that absolutely captivated me. The title was “How to do what you love, without selling your soul.” It piqued my interest since I have wondered how to do that in my own financial practice. In today’s age, there are advertisements everywhere…from television, to buses, on buildings, the internet and even in the bathroom stalls. They are selling a product that purportedly will solve all of my problems. I am a bit embarrassed, but I admit that I bought the “Flowbee” hair cutting system way back…only to find that it was completely worthless. So this begs the question of whether or not you can be both honest and successful in a world where fine print is written by attorneys for attorneys with little concern for the American people.

In a perfect world, you would just need to do what you enjoy and people would start calling you up asking for you to provide your product or service. The world is not perfect, far from it. You have to give people a good reason to buy what you have to sell. Maybe you have expertise in an area or you have stumbled upon a solution to a common problem. One thing is certain; many “overnight successes” took a lifetime to happen.

There is almost a certainty that if what you love doing is providing value in the lives of others, you will be successful. Those that have committed to helping mankind overcome obstacles have been rewarded handsomely since their concern is genuine and their heart is pure. I would use the word karma, but I fear that word has been abused and misused all too many times. I have taken the oath to help others. Many others already have and this is the only real way to create a “sustainable community.”

To read the Zen Habits article, click here.

Wishing You Wealth in all its Greatest Forms

Alex

Make Do With Less…

2008-12-01T12:00:00.000-08:00

The number of job losses since January of 2008 has totaled more than 1.2 million. According to the Labor Department’s monthly jobs report, the unemployment rate rose to 6.5% from 6.1%. This signifies the highest unemployment rate since March 1994 and exceeded the economist’s forecasts of 6.3%.

The rate of inflation is typically between 3-4%, but for the month of September it was announced at 5.9%. Few in Generation X and Y, who have grown up on iPods, X-Boxes, and Plasma TV’s have lived through these difficult times.

It’s a great time to lower expenses and pass these good habits onto children. When I was a kid, I got grounded, for wasting electricity, water and food. That’s what happens when you have a dad that’s a member of the Environmental Protection Agency (EPA). Make sure to turn off the lights when leaving a room, take baths instead of showers, and only buy as much food as you can eat. We must each look around and see how we can conserve.

We can now learn the difference between our needs and wants. During times of economic expansion, your wants may seem like necessity. Your needs include food, clothing and shelter. Your wants are fancy dinners out, Couture clothing, and a Beach house. This is a time to tighten our financial belts and focus on needs. The economy has a cycle and it’s certain that there will be a time again where we can indulge our wants.

Wishing You Wealth in all its Greatest Forms

Alex

“It’s better to give than receive”

2008-11-24T19:19:00.000-08:00

When I was a child, I didn’t understand this statement, but now as an adult I realize the satisfaction in knowing the difference I am making. The holiday season is filled with family, friends and other loved ones. Although, I am all but guaranteed to eat too much and end up in a turkey induced coma, many families struggle with keeping food on the table. You can give thanks in many ways and help others in the process. You can donate food or better yet, your time to the local food bank. A personal favorite of mine is Second Harvest Food Bank of Orange County, which you can visit here. I have seen the difference they are making in the lives of the hungry first hand.

You should always know how your charity is spending their money. To research how much actually is put into the hands of the needy, go to Charity Watch . If less money is being spent on administration and fundraising, more money can be spent helping those that really need it. Also, keep in mind that your donations are tax deductible. You should always keep receipts or canceled checks for your donations since the IRS can audit donations. All clothing and furniture donations need to be in good or better condition in order to receive a tax deduction. If you have any interest in seeing the IRS rules regarding charitable donations, visit here.

Have a happy and safe Thanksgiving…

Wishing You Wealth in all its Greatest Forms,

Alex

A Rags to Riches Story...

2008-11-17T12:30:00.000-08:00

They say one man's junk is another man's treasure. In my case, that was all too common. Growing up, much of my wardrobe was from second hand stores or garage sales. I rarely received brand new clothes and can still remember getting up early on Saturday to go to yard sales with my mom. Was I envious of my friends nicer clothes, bikes, toys? Nope. My mom did a good job of explaining to me that whether you have little or you have lots, someone will always have more than you and someone else will have less. But, all you NEED is enough. I think part of going to garage sales was to allow her to splurge and not feel limited by the cost. We were a working class family living in Anaheim, next to the happiest place on earth(Disneyland).

Last year I read this article from the International Herald Tribune on the "Queen of Trash." It may not be a very glamorous title, but she will take it...all the way to the bank. From driving a used Dodge Caravan collecting cardboard years ago, she has become one of the richest women in the world. She is richer than Oprah Winfrey, Martha Stewart and the CEO of eBay, Meg Whitman. From meager beginnings great possibility still exists. Your future wealth is not related to a history of lack...if it existed for you. We are all born with different opportunities and disadvantages, but it's what you do with those every day that define you as a person.

Wishing You Wealth in all its Greatest Forms,

Alex

College Tuition Inflation

2008-11-09T12:00:00.000-08:00

The real expense of educating children has become one of the greatest financial burdens facing parents today. A college education was once a privilege reserved for aristocrats. The value of a college education is higher today than ever before. The demands of our global economy over the years will be for more educated people. Between 1993 and 2003, there was an increase of 40% of college graduates, bringing it to 40,621,000 per the National Science Foundation study.

In current times, employers are looking for increasing amounts of education to compete for today's jobs. Except for the purchase of a home and the accumulation of assets for a retirement fund, paying for higher education is one of the highest priorities and also one of the most expensive, that parents will ever make.
Excerpted from the College Board website, the education costs have experienced extraordinary inflation year over year.

SECTOR	2008-09	2007-08	% CHANGE
Public 2-Year	$2,402	$2,294	4.7%
Public 4-Year	$17,452	$16,586	5.2%
Private 4-Year	$25,143	$23,745	5.9%

*excerpted from www.collegeboard.com

There is going to be a greater need and better planning to provide the education needed to compete successfully in the workforce of tomorrow. In later posts, I will discuss the various options to create a college fund.

Wishing You Wealth in all its Greatest Forms,

Alex

Types of Insurance You Might Need...

2008-11-05T21:50:00.000-08:00

I promise you that this will not be the most interesting post, but it will be informative. We all know we will have different types of insurance in our lifetime, but it can be so confusing. I will provide a brief overview of the different types of insurance, including:

Auto Insurance
Homeowner's Insurance
Renter's Insurance
Life Insurance
Disability Insurance
Health Insurance
Long Term Care Insurance

Auto insurance is the most common type of insurance and pays for damages to persons and property when automobiles are involved in accidents, fires, thefts etc. Homeowner's and renter's insurance covers dwelling and/or personal property from fires, floods, thefts and even volcanoes if you live in Hawaii. Life insurance provides financial protection from a person's death so that dependents do not suffer hardship as a direct result from the loss of life. Businesses also use life insurance to protect against the death of a key person in the firm. Disability insurance pays a percentage of a person's wage when they are unable to work…think AFLAC. Health insurance covers the medical bills for the treatment of illnesses. Long term care insurance is used to pay for individualized care beyond medical and nursing care for people with disabilities.

When you own insurance, you have a contract with the insurance company that you will be compensated for "covered losses." For instance, I am covered for $100,000 in the case of my death(loss). The typical losses include death, destruction or theft of property, disability, illness and so on. Even if you have made only one premium payment, their contract will specify that the insurance company pay the policy amount. The goal of insurance is to reduce your risk and provide a smaller loss (premium payments) in exchange for a larger loss (death, property damage, medical bills).

I don't like paying for insurance, but it sure is nice having the "peace of mind" of being covered. These are the basic types of insurance you will probably see in your lifetime. I will spend more time on each different type of insurance in future posts.

Wishing You Wealth in all its Greatest Forms

Alex

Get the Vote Out...

2008-11-03T18:09:00.000-08:00

Tomorrow is the day that you get to put democracy into action. I dislike the media making every election "The most important election of our lifetime." Democracy I love, sensationalism...not so much. Whether you are a "McCainiac" or an "Obamatron,"
this is your opportunity to be heard.

If you are unsure of your polling place in Orange County, look it up here. I believe that both candidates truly want to do what's best for this county. This is a great article on CNN Political that provides a nice break from the madness."If you can’t (or can) say anything nice. . ."

Wishing You Wealth in all its Greatest Forms

Alex

Your "Hour of Power" is Here

2008-11-02T10:27:00.000-08:00

I just got wonderful news. Have you received something unexpected lately?
Maybe, it was extra time on the parking meter or finding money in the back pocket of your favorite jeans or getting an extra hour in your day? Today, I got just that. I had no idea that today was the end of daylight savings time and would be given the gift of time. Being so, I didn't make grand plans...like sleeping in an extra hour. Instead, I have decided to spend it connecting with old friends that have really made a difference in my life.

You can spend it however you like, but I recommend using the extra time and find ways to create more wealth in your life. Whether that means wealth in friendship or wealth in financial terms, like doing that budget that you have been putting off. Either way, I hope you make this extra hour count.

Wishing You Wealth in all its Greatest Forms

Alex

More Reasons to Keep Contributing to Your 401(k)

2008-10-30T14:07:00.000-07:00

I found this article on Money, where a concerned employee wanted to know if he should cut back his 401(k) contributions and invest the difference elsewhere. You would miss out on being able to contribute your money pre-tax and the tax deferral can lead to greater growth over the years. To access the full story, just click here.

Wishing You Wealth in all its Greatest Forms

Alex

New Home Sales Rise in September

2008-10-27T08:50:00.000-07:00

This just in...New home sales showed strength in a rise of 23% after showing a disappointing decline of 30% in August. The law of supply and demand states that if prices drop enough, people will buy. The profit margin for home builders have dropped significantly, yet interested buyers are waiting to take advantage of the weakness in home prices.

For more information and the complete story from Xinhua click here.

Wishing You Wealth in all its Greatest Forms

Alex

National Assn. of Realtors - Existing Home Sales up 5.5%

2008-10-24T08:46:00.001-07:00

It looks like there is some good news in real estate (for once). The affordability factor of homes is improving leading to buyers stepping off the sidelines. To read the full report from Realtor.org click here.

In Orange County, the median sales price has dropped to 2003 levels. This is partially the result of homes decreasing in value coupled with the fact that financing remains much easier to obtain (and afford) for properties below $500,000. To read the OC Register article, click here.

Wishing You Wealth in all its Greatest Forms

Alex

"Stop Contributing to your 401(k)"

2008-10-21T15:25:00.000-07:00

I am not advising that, but it's what I overheard while out at dinner this past Saturday. "If you put your money in your 401k, you are just going to lose it anyway." When my grandfather was still alive he told me to do the opposite of everyone else and I would be wildly successful. I have found that to be good advice time and time again...In the beginning of 2000, everyone was talking about the secretary at Netscape who became a millionaire...By April, the dot com companies were known as the "dot bombs." A financial commentator once said that "when people are greedy, you should be fearful and when people are fearful, you should be greedy."

Many people have seen the values of their 401k's drop in value, so instead of wanting to contribute more, they want to contribute less or discontinue contributing altogether. We must follow the golden rule of investing "buy low, sell high." Unfortunately, our emotions can play dirty tricks and take us to Jerry Seinfeld's "bizarro" world...where up is down and down is up. Most investors buy high and sell low since they allow their decision to be based on popular sentiment and not logic. When everyone is talking about the great performance of a particular stock, they buy and when others get scared, they sell. They have just bought high and sold low. The law of averages tells us that to create an average, you need both high numbers and low numbers. If the stock market has outperformed dramatically, then it may be time for a period of underperformance.

It's believed that 20% of employees have ceased contributing to their 401k plans in the last year. If you decide to halt contributions until the market stabilizes, then you are saying that you would rather pay higher prices for stocks and you spurn the idea of taking advantage of lower prices. It's normal to allow our fears to play a part in our decisions, but logic needs to lead our actions toward greater success.

Want to know what other people are thinking? Here is a poll from Yelp

Wishing You Wealth in all its Greatest Forms

Alex

College and Beyond...

2008-10-18T16:54:00.000-07:00

Many college seniors will be graduating this upcoming June, but there are stark realities that need to be dealt with. They know that with widespread layoffs, that the job market is going to be more competitive...possibly leading to fewer jobs and reduced pay scales. Yet, the decision to continue on to attain graduate degrees are going to be more difficult as well. The well has dried up for many student loans and taking on the additional debt of student loans seems frightening giving the current economic environment. Parents who intended to pay for their children's education are now thinking twice since the stock market has impacted the value of their 401(k) and IRA's. The boomers have watched their net worth decrease by $2 trillion dollars between home value and stock market prices.

The truth is that in difficult economic times, to get the job of choice, a person needs as much education as possible. Prospective graduate students should do everything in their power to continue on with higher education. There are still millions in grants and scholarships available to those who seek them out. With the birth of the internet, applying for a grant is as easy as going to Grants.gov by registering and applying.

Resources are always available for those committed to achieving more.

Wishing You Wealth in all its Greatest Forms

Alex

Slowing Down with Traffic School

2008-10-12T13:47:00.000-07:00

Yesterday, I attended traffic school. I received a speeding ticket for going 75 mph on the freeway 3 weeks ago at 6:00am. At first, I felt slighted and tried to rationalize that others were going 80-90mph, so they should be getting tickets. Then, I tried to dismiss the idea that I was in the wrong since there were very few cars on the freeway at this time in the morning. The bottom line is that I was going above the speed limit and I need to take responsibility for my actions. Anyhow, the Highway patrolman was very nice and nearly apologized for giving me the speeding ticket.

I was dreading traffic school since I have been so busy these last few weeks. You might be surprised, but it was the best $57, I have spent in a long time. The instructor was kind and had a good sense of humor. During our 8 hours together, he told us about how his life has changed over the years. He used to have “road rage” and be in a constant hurry. He read us a story from a former student that tried to get in front of another car, but ended up losing control and veering into the bike lane and hitting a couple on bicycles. She ended up surviving, but her husband passed away from this accident. The truth is we all lead busy lives filled with things to do and we often try to minimize the time we spend on the road by speeding, cutting in front of other cars or driving erratically. We drive so often that we forget how large of a responsibility it is. Many people are in a rush and bring their stresses on the road.

I hope that during this holiday season, we take the time to focus on what’s really important, getting to our families and friends safely.

Wishing You Wealth in all its Greatest Forms

Alex

Road to Someday…

2008-10-08T17:43:00.000-07:00

We are living in difficult times. House values have fallen, the stock market is at multi-year lows and there is reduced access to credit. Home prices are much lower in Southern California then they have been in years. The S&P 500 is down (32.15%) year to date, reflected in quarterly 401(k) statements nationwide. I have stellar credit, but was told that my credit line would be reduced by 25%. I knew this day would come and I am prepared for it.

Most people talk about saving, but never do it. The truth is that to become financially successful, either you have to work harder or your money has to. I choose my money since I only have 24 hours a day and I would much rather spend it with family and friends than working. Your choices are saving more today or working into your “golden” years. People in their twenties often feel that they have plenty of time to save later so they spend freely. Then, in their thirties and forties, money becomes tight since they are now paying for a new home or raising kids. In their fifties, they discover that they have less than 15 years (only 780 week) until they retire. At this point, it usually takes too much money create an adequate retirement fund. This means that living the retirement of your dreams will be nearly impossible.

Retirees often look back and are disappointed that they didn’t begin saving and investing when they were younger. If you develop good financial habits during these difficult times, it will pay dividends and serve you well into the future.

Wishing You Wealth in all its Greatest Forms

Alex

Banking in Uncertain Times

2008-09-30T10:18:00.001-07:00

These are certainly difficult times for banks. Indymac bank failed just a few months ago, Washington Mutual failed a few weeks ago and Wachovia was purchased by Citigroup. The amazing thing is that while these banks have faltered, other banks like Bank of America have purchased Merrill Lynch, one of the most recognized brokerage houses in the entire world. The headlines make many feel like "financial armageddon" is either around the corner or here. Although, this can be very disconcerting, how do you know if your money is safe?

The Federal Deposit Insurance Corporation was created in March of 1933 since thousands of banks failed after the stock market crash of 1929. The FDIC insures up to $100,000 per depositor in individual accounts, or up to $200,000 in joint accounts. It also insures up to $250,000 for individual retirement accounts invested in insured deposits. To find out more, go directly to the FDIC site.

Wishing You Wealth in all Its Greatest Forms

Alex

What Can't Money buy?

2008-09-24T21:02:00.000-07:00

There are thousands upon thousands of books, magazines, and websites devoted to how people can get more money, invest to grow their money or how to reduce expenses so they can keep the money they have. Money can buy art, luxury automobiles, amongst a seemingly endless list of things. Although, it’s true that the more money one has, the more they can spend, travel and play. It can provide the freedom to work less and contribute more to the church, community or causes dear to your heart.

It has been said many times by wise men and less than wise men, but money is a means to an end. Money cannot buy friendship, love or knowledge. In your life you may have noticed, that it also can’t make you a better person in and of itself. The value that our life has cannot be purchased with money. The key to benefiting from money is turning it into wealth…a resource only to the extent that it helps you enjoy and live a richer, higher quality life.

Wishing You Wealth in all its Greatest Forms

Alex

401k Anxiety?

2008-09-17T11:47:00.000-07:00

Since the company pension has become more of a myth than a reality for most employees, the 401k has stepped in to take its place. In today's volatile market, many people have seen their nest eggs shrink. These are difficult times for banks, where investment banks Bear Stearns was sold to JP Morgan Chase at bargain basement prices and Lehman brothers has filed for bankruptcy protection. Locally, we have seen Indymac bank taken over by federal regulators after its inability to redeem deposits.

Needless to say that these have been historic times and not in a good way. If you have seen the value of your 401k drop, you are not alone. What's the best way to deal with losses? You can reduce your exposure to the stock market by diversifying into bonds or by buying insured certificates of deposit. The risk you run is that when the market gets back to normal, you might miss out on the upside since stocks have outperformed bonds and cd's substantially in the past.

These are definitely trying times, but there's no need to panic if you have a long term horizon. If you have a relatively short horizon, this might be the time you sit down with your financial advisor and review your risk tolerance and confirm your retirement goals.

Wishing You Wealth in all its Greatest Forms

Alex

Is Your Retirement Projection Accurate?

2008-09-03T09:01:00.000-07:00

If you have a financial advisor, then you may have a projection that hasn’t panned out in the last year, in fact it hasn’t done you any favors over the last ten years. As of this writing, the S&P 500 has lost money when you adjust for inflation over the last ten years. Directly off of Vanguard’s website, the Vanguard 500 Fund Investor (VFINX) has returned 2.81% annually, over the last 10 years, net of fees. This fund is a proxy for the S&P 500, the index of the largest 500 corporations. Over the last year it is down 13.12%. Most financial projections are based on retirement dollars growing at 8%. This is not an arbitrary number, but one that is based on assumption of taking out 5% annually, then an additional 3% to offset inflation.

In the current market environment, you only have two choices. Either you need to change your lifestyle and expectations of the future or reassess your financial strategy and create one that is diversified enough to hedge from market declines.

Wishing You Wealth in all its Greatest Forms

Alex

The Problem with Macro-Real Estate

2008-08-28T10:29:00.000-07:00

The media has painted the real estate market with one broad stroke, releasing national statistics on a weekly basis. One week, it appears that the problems are just beginning, while the very next they claim that the worst may be over. The problem is that the national market is not a good indicator or what is happening in your hometown. The market is not some untamed animal, but made up of the dreams, hopes and desires of millions of families, not to mention the local economies. What happens in Orange County, California is going to be in stark contrast to what is happening in Detroit, Michigan.

The key to where you should be focused on is what is happening in your "neck of the woods." In Orange County, we have seen a huge increase in the number of buyers looking for new homes. Home sales increased 43.4% compared to the same period last year. At the same time, the median home price fell 40.3% as reported by the California Association of Realtors. The decrease in median price is due to two factors, (1) Distressed property sales have made up to 40% of available home inventory (2) The availability and affordability of mortgage financing is still biased toward properties selling below $417,000.

The GOOD News.

There is evidence out there that a bottom may have formed for real estate. Over the last week, the pending home sales report showed signs of strength by shooting up to a reading of 89, which was unexpected by all market commentators. This is the highest reading since October of last year. It is becoming a seller's market for lower end properties. For instance in Garden Grove, the number of active properties represents only a three to four month supply for properties under $500,000.

The "Subprime Meltdown" that that has been blamed for the real estate problems is slowly going away. The number of Suprime mortgage rate resets has been a foreclosure driver and according to First American CoreLogic, the number of resets should drop dramatically by October. This, coupled with new federal and state laws to protect foreclosure prone homeowners will surely be support for stabilization of the market. With the holiday upon us signaling the end of summer, have a happy and safe Labor Day.

If you have any thoughts or comments, I would love to hear them.

Wishing You Wealth in all its Greatest Forms

Your Friend,

Alex

Tomorrow’s Retirement

2008-08-19T13:47:00.001-07:00

The Retirement landscape is changing for millions of Americans and it’s being driven by both employers and the goals of future retirees. If you are currently working and plan to retire in the near future, you may have already seen these changes happening all around you.

It's very likely that the Baby Boomers, Generation X and Generation Y will “retire” later than previous generations. And it’s not only because the age for full Social Security benefits is changing. Retirement is no longer an event, but a process. Rather than an abrupt stop working full time, many have decided to trade in their full time stress for a part time love.

Instead of working for one company for 40 years and collect a company pension that will last forever, it's much more likely that you’ll have 4, 5 or more employers during your lifetime. Instead of being covered by the company pension, you’ll contribute to a 401(k) and if you are lucky receive an employer match on your contributions. Beyond that, it's unlikely that retirement will be years of sitting around...but much more likely an extended vacation before moving back into the work force at a slower pace with reduced hours and more “fulfillment.”

Unless you believe in reincarnation, you only live once. Live passionionately!

Wishing You Wealth in all its Greatest Forms

Alex

Credit Cards Hit You Where it Hurts – In the Wallet

2008-08-18T15:33:00.000-07:00

Have you ever walked into a room and felt like they were laughing at you? You walked down the hall, only to hear the laughter, yet as soon as you opened the door, a silence gripped the room. Well, the credit card companies may be laughing at you. Credit has become more expensive for everyone, including the credit card issuers. A peculiar thing occurred this last month. Chase decided to change the date my payments were due from the 28th to 23rd. I don’t keep a balance on my Chase card and pay it off in full on the 25th like clockwork. On the 25th of July, I logged on to pay my balance, only to find out I was assessed a $39.95 late payment fee. The gal on the other end of phone told me that it was within their right to change the terms due to “market conditions.” I asked her to define market conditions, which she declined. Of course, I decided to speak with her manager who told me that since my payment history was great, she would reverse the late fee. I wasn’t happy about the fee, but not because of the dollar amount, but more because this felt like an attempt for the company to improve the bottom line with late fees…and my dollars. My credit history has been very good, but I would bet dimes to donuts that a less qualified borrower wouldn’t have received the favor.

Additionally, this morning when I logged online to review my account I noticed a message stating “Universal Change in Terms.” It amounted to either agreeing with a rate change from being fixed at 15.99% to a variable rate of up to 26.99% plus the Prime Rate or they would close my credit line. A recent study by Consumer Action found that 77% of the 22 major credit companies can change the credit terms – at any time for any reason. Here is a link to the Consumer Action study.

Things are tough out there for a lot of credit card companies and they are passing the buck by using dollars from your wallet. Before signing up for new credit and even with your current credit, be sure to read the fine print. Commit to being informed, it will pay dividends.

Wishing You Wealth in all its Greatest Forms

Alex

Work More, Retire Later?

2008-08-14T10:59:00.000-07:00

It’s no surprise that millions of Americans are under prepared for retirement. I get told at least once a week, that they plan to continue working. On paper that sounds like a great idea, but you might be unaware that you may not be ABLE continue working. I am not talking about getting injured or becoming disabled. The landscape is changing and where older employees were once regarded as a company asset, many have now become liabilities. Companies are buying out higher paid employees at an alarming pace in the name of profit. The workforce is changing and becoming ever more competitive. When the economy hits a speed bump like we are experiencing today, the highest paid are encouraged to take the “golden parachute.” It typically means two years of severance pay and a kind letter from Human Resources. No more, no less.

From personal experience, my dad is 63 and even with all the education, certifications, not to mention the years of experience, it was difficult for him to find solid employment. They didn’t tell him to his face, but they are looking for someone younger, less experienced and most importantly… cheaper. High level jobs are being combined with lower level jobs, but compensated at the lower bracket. Here is a recent story on Yahoo that talks about job compression today.

So we have come full circle here. If you don't have enough to retire and you can’t just work longer, what can you do? The simple answer is positive financial choices today that will allow you to enjoy your golden years on your own terms. And if that doesn’t happen, Wal-Mart is always going to need “greeters.”

Wishing You Wealth in all its Greatest Forms

Alex

Financial Enemy #1

2008-08-11T15:42:00.000-07:00

With terms from "massive inflation" to "subprime crisis" floating around in the media, it's easy to lose sight of what is really keeping American's from their savings goals. The biggest obstacle is that most people just don't know enough about their financial reality to make any headway. They don't know what they earn, what it costs them to live and they don't know their discretionary income.

It's time to educate yourself. Grab that spiral notebook, you haven't broken out since college days and sit down with your montly bill and statements. Figure out the amount that you have coming in and what your expenses are. Chances are that you will be surprised by how much you spend. Most people are not happy with the picture they see.

This is the foundation to your financial fortress. A financial review can be both practical and enlightening.

Wishing You Wealth in all its Greatest Forms

Alex

Real Estate Review - August 2008

2008-08-06T18:51:00.000-07:00

Hello Friends,

Welcome to another edition of The Real Estate Review.

The Numbers Don’t Lie.

For the month of July, Orange County sales are down when compared to last month. The number of completed property transactions decreased by 85 homes (-3.8%) from last month, but are up year over year.

The current total inventory of available properties spanning all price brackets for August 2nd showed 14,501 available homes for sale in July, up by 1,303 (+9%) from last month. This is due to reduced monthly sales and slightly more added inventory.

The total number of properties sold in the month of July amount to 2163, Down by 85 homes (- 3.8%) from last month at an average sale price of $756,000, which was a decrease of $43,254 (-5.4%) from last month. From a longer term perspective, the average sale price for Orange County was Down by $182,139 (-19.4%) for the one year period.

Is this the BOTTOM?

The market for Orange County real estate appears to be slowly regaining its footing. The number of completed property transactions is up from a year ago. A sign of strength can be seen from the shore since bargain buyers are coming off of the sidelines. The price declines are not as steep, and the number of sales increasing slightly. It should be noted that some cities are obviously doing better than others.

For the month of July, there has been more of the same, with stronger competition for properties on the lower end of the price spectrum below $650,000. The bottom line is that there are bargains out there to be had if you are positioned correctly to take advantage of this market.

Wishing You World Class Wealth,
Alex

Housing Prices Decline Across the Pond

2008-07-31T10:20:00.000-07:00

We aren’t the only one’s suffering from falling real estate prices. British properties are down 8.1% on an annual basis, while the number of real estate transactions have decreased to an all time low.
They are also dealing with fears of a recession with key economies being affected.

Much like the United States, retailers have been hit hard by reduced consumer spending.

Read the full story here.

Why the poor stay poor.

2008-07-28T13:36:00.000-07:00

One of the major reasons why the poor stay poor is that they fail to take advantage of low cost or money saving opportunities available to them. A study was published by the Center for Studying Health System Changes found that of the 35.4 million people without health insurance, 20% declined coverage from their employers. People often underestimate how likely it is that they will become ill and the associated expenses with illness until it is staring them directly in the face. Another Merrill Lynch study found that 41% of their employers say their employees don’t participate because they can’t afford it. While, that may be true for some of the cases many others will spend $2,000-$3,000 on cigarettes or lottery tickets.

An International Study showed that if you grew up in a low income household, there was a 50% chance that you would become a low income adult. Although this study had far reaching effects and cast a dreary perspective on the future, I remain optimistic. When the odds are 50/50, then you have a classic “glass half full” or “glass half empty.” You could cite that you have a 50% chance of living as an impoverished adult, but instead I choose to see that you have a 50% chance of overcoming a childhood filled with lack and having the possibility of living a life full of prosperity.

Wishing You Wealth in all its Greatest Forms

Living Longer or Living Better?

2008-07-15T08:25:00.000-07:00

There’s been a shift in the media attention on aging over the last twenty years. Whether you believe the media is a reflection of nation or not, one thing is true…the focus has changed. As recently at fifteen years ago, the big push was finding out ways to live longer. They showcased new options for preventative measures, medical procedures, and let’s not forget new prescription drugs. The landscape of aging was entering a new frontier. Little did they realize that living longer carried a whole new set of issues. Sure, now you have a longer life expectancy, but with it came a dramatic realization that living longer isn’t a benefit if you can’t enjoy that time. In recent years, the shift in consciousness has been on living “better.” This ranges from eating better to improving brain function. Health food stores and farmer’s markets are more popular than ever with Wild Oats, Whole Foods and Mother’s Market catering to those wishing to live “consciously.” I wouldn’t credit all the push toward a “greener” world with the baby boomer generation, but they have certainly helped fund the growth and expansion of it.

Wishing You Wealth in all its Greatest Forms

Lottery Retirement Plan

2008-07-09T17:38:00.000-07:00

While purchasing my SOBE tea at the liquor store, a man told me that this was going to be his lucky day. He had worked hard all his life with nothing to show for it and he was going to win the lottery. This interested me intensely since everything in my training as a financial advisor doesn’t include the lottery as a viable retirement plan. Hmm…I thought to myself...I wonder how many people are depending on the lottery for retirement. Well, an article on MSN stated that 40% of people with incomes between $25K-$35K and 50% of people with incomes between $15K-$25K believe that their retirement nest egg will come from the lottery.

All I can say is that is startling. So if you subscribe to that belief you have a 1 in 135,145,920 of retiring well from your lottery winnings. To increase your chances, you might want to stop by a psychic that will not only tell you amazing facts about your past, but also what the next lottery numbers will be. Luckily, I have my six numbers clearly printed on the back of my fortune cookie message.

Good luck to all you players.

Wishing you Wealth in all its Greatest Forms.

Socially Secure?

2008-07-07T20:08:00.000-07:00

Social Security was created by Franklin D. Roosevelt as part of his plan to enhance economic security. Signed into law in 1935 to pay workers age 65 or older a continuing income. According to the White House there were 16 workers to support every one Social Security recipient during the Truman administration. Today, there are only 3.3 workers supporting every beneficiary. By the time the youngest workers turn 65 there will only be two workers supporting every beneficiary.

Social Security is a big source of income for the elderly, providing the majority of income for two thirds of beneficiaries and all of the income for 20% of them. Many people believe that Social Security will disappear and be unavailable for today's youngest workers. It may still be around, but there's a good chance that benefits will be reduced or the qualifying age will be
increased.

The bottom line is that we will be facing a much different retirement than our parents and grandparents did.

Wishing You Wealth in all its Greatest Forms

Real Estate Update - July Independence Day Edition

2008-07-03T10:02:00.000-07:00

The real estate market in North Orange County is starting to see some signs of life. Condo sales are up 5.5%. The seasonal buyers trend is up due to many children being out of school, which allows families to consider moving to new homes. It's not uncommon to see families led in caravans by their fearless agents, with the entire family in tow. Many properties that are listed aggressively in relatively good condition are going into escrow in less than two weeks at premiums above their asking price. Buyers who are looking for a bargain are coming off the sidelines. The majority of the properties being viewed are short sales and bank owned properties.

Short sales and bank owned sales currently account for nearly 50% of the pending sales and about 37% of the current listings in Orange County. The inventory of new homes has been falling an average of one hundred per week in comparison to increases of two hundred per week, the same time last year. This may signal that the first wave of foreclosures due to increased mortgage payments may have already worked their way into and through the market.

In a recent Orange County Register article, citing Economists at Global Insight believe that Orange County real estate is now 5.2% undervalued. Whether or not you buy into the media, local activity and interest has increased.

Wishing You Wealth in all its Greatest Forms

The SECRET Benefit of Failure...

2008-06-30T12:52:00.000-07:00

Today, I spent some time thinking back over all of my failures and their lessons. It’s great to fail, in fact with failures in hand we are provided valuable lessons. Every single man, woman and child out there has probably failed at least a few times. I don’t know a single person who went from crawling as an infant to walking on their very first try. I also notice there are very few adults who continue to crawl instead of walk.

For me the failure that to my mind is when I was 15 years old and I decided to go into the sports card business. I was offered a “good deal” from someone that was relocating and wanted to sell the cards at a “deep discount.” Basically, here was a man that was going out of business who was looking for someone to purchase his inventory in bulk. Enter a 15 year old teenager who was bright eyed and bushy tailed. So I purchased tens of thousands of cards of differing values. I was getting a good deal when he showed me how to price out them in the “Beckett” card value guide. Yet, I had no idea that people weren’t really willing to pay the prices in the book nor that demand for sports cards was being replaced.

I ended up selling the majority of cards off in bulk and recovered about half of my money and gave the cards to whoever wanted them. The market for cards was quickly shrinking with the quick growth of the video game industry and Internet. Needless to say, that was my first lesson in business. The lesson I learned was to avoid taking anything at face value and only to buy from those you trust.

The sports card business had been steadily fading out over the last 10 years. It was a fad that had a really great run, but you should always know your market and see what’s coming down the pike in the way of alternatives. I later relearned that in my business classes.

Wishing you Wealth in all its Greatest Forms

‘W’ before ‘H’ in the Financial Alphabet

2008-06-20T13:04:00.000-07:00

We all know that the letter “H” comes before “W” in the alphabet. At least I hope you learned that in public school. When it comes to financial planning these days, it seems as if the HOW comes much before the WHY. The HOW can be one of the myriad of financial products that are out there. There are 529 plans to fund college expenses, annuities that may guarantee income streams, and insurance to protect one’s family. Yet, in practice some advisors are familiar with only one product and recommend it to all their clients…putting the “H” before the “W”. The question why needs to be asked. Putting together a college fund for your child? Saving for retirement? Protecting your family? Or it may be a mix of all of them. The key to a Successful financial plan is figuring out the WHY, then the HOW part will be a walk in the park.

When I was growing up, my family doctor was one of the nicest people I ever met. I think I visited him probably 20 times between the age of 5 and 10, but the diagnosis was always the same. “It’s your allergies, take some Claritin.” I think my leg could have been broken and he would have told me to take some Claritin. He was an allergist, but that was his specialty. On a side note, my allergies are much better.

Wishing you wealth in all its greatest forms.

A lesson in perspective

2008-06-15T23:07:00.000-07:00

The other night I was in downtown Los Angeles, relatively late in the evening, celebrating a friend’s birthday. For me L.A. always seems to have plenty of homeless people, at least in comparison to what I typically encounter in Orange County. I asked two homeless people, the same question, which was, “How would you describe the City of Angels?” The first man I asked told me that people are sneaky and dishonest and that it’s a miserable world. The second man I asked told me that the city was friendly and helpful. How could two people who were both homeless, wore the same ragged clothing and lived in the same city have such different perspectives on life? I believe this is just another lesson in perspective.

In my life, I have always recognized that I have always found what I am looking for. Meaning, that if I am looking for all the things that are wrong, I will search until I find things that are “wrong” with my life. On the flip side, I have also noticed that when I look for all the beauty and opportunity in this world, I find it. Our expectations are magnetic and whether on a conscious or unconscious level, what you expect, you fulfill.

Wishing You Wealth in all its Greatest Forms.

Real Estate Review for June 2008

2008-06-05T11:07:00.000-07:00

Real Estate Report for North Orange County – June 2008

In the last 30 days, the demand for local real estate has relaxed a bit. In visits to local open houses, many agents reported that very few people had been visiting their open houses. These are properties listed at full potential value and not short sales. The majority of the local supply is in short sales since homeowner’s who don’t need to sell will wait for better prices.

For many first time homebuyers, short sales will be the way to go. Properties that were valued well over $550,000 as recently as 12 months ago can be had at prices between $350,000 and $400,000. Much of this has to do with the “foreclosure effect.” Many properties in north Orange County are valued lower due to most recent comparable sales being from auctions or short sales.

Some local homeowner’s are even “upside down” meaning that they owe more than the property is currently worth. Since the homeowner’s wouldn’t be able to fetch a price greater than the loan balance, lenders are making exceptions and allowing them to sell for less than they owe. Reports continue to abound about how property values are decreasing at a dramatic pace. It should be recognized that the majority of properties sold are in the lower price range since financing is easier to obtain and these properties are becoming more affordable at a quicker pace.

There are many properties that will be selling at “discounted” prices, but with foreclosures and short sales, the onus is on the buyers and their agents to investigate the property thoroughly. In representing my buyers, I currently have offers at lenders for properties at $350,000 that sold for $575,000 one year ago. There are many ways to get a good deal in the market, just make sure that you are well prepared.

Wishing You Wealth in all its Greatest Forms.

How you can earn 18% on your money guaranteed?

2008-05-30T08:33:00.000-07:00

Only a small fraction of people contribute to a 401k and many that do have little understanding of the investments within their portfolio. With that being said, here's a concept that many people understand...the concept of compound interest. It can work for you if you are invested in a Certificate of Deposit, Bond or even a Mutual Fund that has been performing and you reinvest interest or earnings. For many Americans the concept of compound interest works against them as in their credit card debt. When you make the minimum payment, the jeans you paid $80 for are accruing interest, but that very next month, the interest on your $80 jeans is accruing interest as well. So you are not only paying interest on the jeans, but you are paying interest on interest. Credit card debt can quickly spiral out of control not only because of lax spending but due to the compounding effect of interest against you. The stock market has been exceptionally volatile lately, which we may need to get used to. But there is a way, that you can earn 18% on your money. Pay off the balance on a credit card at 18% interest.

Some people keep their money in the bank earning 1.5%, while paying 18% or more on their credit card balances. By paying off the balance, you are effectively earning an 18% return on your money. That is a return that anyone that has been invested in this market would be ecstatic about.

Wishing You Wealth in all its Greatest Forms.

Stu vs Steve Part II

2008-05-22T12:35:00.001-07:00

Now let’s take a moment and look at Steve.

Steve is 47 years old, being raised in the family electric business, he never attended college. At the age of 21 he began working for a small grocer earning $29,000 a year. He always put 6% of his paycheck into his 401k and received a company match of 75%. Today, continues with his 6%, putting in a little more when possible. His job has never paid more than $75,000. He owns a small house in Valencia and drives a Honda Accord. Due to the power of compounding, he has over $850,000 in his retirement account. He still has almost 20 years of compounding before he is going to retire. By that time, he should have amassed nearly $2 million and with his modest lifestyle and house being paid off, he will be able to live out his retirement years at a great degree of freedom with vacations and spoiling his grandkids.

These are two different people in very different circumstances? Who do you want to be? Stu or Steve? If you want to be more like Steve and less like Stu there are some basic steps you can take today to make that possible. I will cover those in my next post.

Wishing you wealth in all its greatest forms.

Stu and Steve Part I

2008-05-22T12:32:00.000-07:00

There are two people I know personally that are showing me finance lessons that I never learned in the classroom. One is now retired, while the other has almost 20 years until retirement. I know them both but their names aren’t really important… let’s call them Stu and Steve. Today, I will introduce “Stu” .

Stu is 76 years old…has a business school education and a law degree. He is one of the kindest, honest and most generous people you will ever meet. He has worked for banks and was also a practicing real estate attorney. He has worked for himself and paid very little into social security over the years, believing that he would save on his own. He has had jobs that paid $15,000 a year when he was young to $150,000 a year in his mature years. Today, he is receiving $672.00 a month from social security. He is “living” on a very small amount and I use the term living very loosely. He doesn’t own a home and instead lives in a bachelor apartment in Los Angeles.

It’s unfortunate…but the hourglass sand has run dry for Stu. In his retired years, his focus should be on relaxing since he has spent his entire life working. Tomorrow, I will go over Steve’s story.

Wishing you wealth in all its greatest forms.

What a waste.

2008-05-11T21:10:00.000-07:00

I was recently sent a link to an article in the San Francisco Gate about waste. You may have heard of this story, since Ari Derfel was all over the airwaves for good reason. He actually saved all of his trash for an entire year to make a point. Initially, it seems like a pretty crazy idea, but how easy is it for us to ignore how much trash we create in our daily lives. For Ari, its around 96 cubic feet of trash. Things in small amounts rarely seem to impact us very much. Yet, they quickly gain significance when taken over a longer period of time…like a full years worth of trash. Last year, our garbage people (read waste disposal) went on strike for two weeks. Unfortunately, the week earlier I had decided to do some cleaning up and my huge trashcan was filled to capacity. I still had my usual weekly trash, but with nowhere to put it, I had purchased an additional trashcan to keep it out of the sun. Every time I went outside, I stared at my trash and just wanted it to be gone. It actually made me think of how much waste is created and if I could reduce any amount of it. I did a pretty good job of sifting through and putting all recyclables together.

After that week, where I had garbage just sitting around…I started to rethink things a bit. These days, I do my best to buy just enough, eat what I buy and waste as little as possible. A couple of ideas on reducing waste are:

Use and re-use gift bags instead of wrapping paper that can’t be saved
Bring a backpack to carry your items home when you go shopping
Recycle bottles, cans, and all paper products

I often believe that one person can’t make a dent on the collective consciousness of a nation. Then again, Ari has definitely made a difference and brought some real awareness to the issues at hand. I now know that if I change and that encourages others to change…then the we can collectively make a difference. Wishing you wealth in all its greatest forms.

Retirement Planning: Generation X

2008-05-11T19:06:00.000-07:00

Generation X is defined as those born between 1965 and 1980. In speaking to friends and colleagues, it’s pretty obvious that we are not a generation of savers. Many of us are going to face greater challenges than our parents. It's going to make you wish that all you had to do was carry your sister uphill in the snow both ways. In addition to the high cost of mortgages, student loans and credit card debt, the pension of yesteryear is missing in action. For my parents, the pension is going to be the foundation for my parent’s retirement. It will be augmented by passive real estate income and IRAs. Most pensions have been traded in for the 401(k). The 401(k) at most companies comes in one flavor, but many choices…maybe even too many. This shifts the risks from the company to the employee. Trying to plan can be mind boggling...but you have to start somewhere.

The million-dollar question is “where and how do we start?” Considering that nearly every time you turn on the television, get on the Internet, or even open a newspaper there is an advertisement for the newest online brokerage. The financial arena has become exceptionally confusing. There are stockbrokers, financial planners, and even financial consultants at the bank. We all know that we should plan for the future…but the who, what, when and how questions remain.

I think the first step is to find out what your retirement means to you. For some retirement means that they can just sit on the back porch sipping lemonade, while for other’s it’s that time when they are finally able to travel and do all those things they have put off. Imagine what you want retirement to look. Once, you know what you want it’s easier to get there. “Those that don’t know where they’re going will always get there.” Then you should take some time to interview financial professionals who help you clarify your vision, time frame and other specifics. The third is the easiest…creating a plan that doesn’t financially cripple you today, but provides the greatest freedom when your only job is to enjoy your life, on your terms.

The first part is the most difficult. Only you know how you want your future to feel. The second part is just asking the right questions to the right people. The third part is simple once you have a trusted partner in your life. Keep in mind that there are always people out there willing to help you, but you have to stay committed.

Wishing you wealth in all its greatest forms.

Real Estate Review for May 2008

2008-05-03T16:44:00.000-07:00

It seems as if every nightly news report has a section titled “real estate crisis” or something to that effect. It has been widely speculated that the S&P/Schiller Case Index is skewed since it tracks prices in only twenty major markets, of which many have had the most dramatic price appreciation and the most dramatic price compression. The S&P/Schiller Index claimed that median prices were down 12.7%, whereas the National Association of Realtor’s reported that the median price was down only 7.7%. These figures may have an undeterminable margin of error and inaccuracy due to the nature of the market. If more properties are sold in a lower price range than in a higher price range, the median price will decrease. With the market for jumbo loans being nearly frozen, it makes obvious sense that many properties being bought and sold will most likely come from the lower end of the price spectrum. So be prepared to question the very general figures that are being disseminated through the media and have a trusted realtor review comparable sales in your area since every market is different.

Keep in mind that I am not stating that prices aren’t decreasing. Seller’s are finding out that buyer’s are not willing to pay “2007” prices. There has been downward price compression, but seller’s who have the luxury of pricing their homes at reasonable levels are garnering offers at asking prices or higher. Even bank short sales that are priced below market prices are receiving a lot of attention. A La Palma property priced $50,000 under market value received thirty eight offers in a period of six days. What is unfortunate for many home sellers may be a boon to many first time buyers.

Buyer’s who have been priced out of the market for the past few years are beginning to take notice. With interest rates still at relatively low levels and a large inventory of homes, the right time may be right now. The bottom line is that new buyers should work with a realtor to find out what opportunities are available in their local area.

Wishing you wealth in all its greatest forms.

So easy, a chimp could do it...

2008-04-26T22:08:00.000-07:00

I was thinking about the TV show “The Big Give” and was just googling some information and came across this article online about altruistic chimps.

I was thinking about how people that you don’t know and will probably never see again can make your day. Since I was a child there has always been a “dollar menu” at fast food restaurants. When I was ten, I went to Mcdonald’s with exactly one dollar. I ordered a Big Mac for $0.99 and then was asked for $1.06. I had no concept of taxes at this point in my life. Anyways, I was a pretty shy kid, and felt embarrassed since I didn’t have enough. Here I am looking at my puny dollar then at the $1.06 digital reading across the screen…then at the cashier…then back at my dollar. Then out of nowhere, this lady steps in front of me and pays for it. She told me to put my money away. The kind gesture really resonated with me.

Have you ever done something for someone, without expecting anything in return?

I mentored a child for eight months. I was under the impression that all I had to do was spend a couple hours each weekend doing normal things. We went to the park, the arcade, and to miniature golf. He was a kid that had nearly everything going against him. The more time I spent with him, the more I realized that we are all born with different opportunities and disadvantages, but it’s what you do with them that defines who you are as a person. It was such a fulfilling experience that I highly recommend it for the right person. The bottom line is that the experience was the opposite of what I had expected. I was trying to make a difference in his life, but he really made a difference in mine.

For me, whether I am helping someone or being blessed by another, I get a feeling of warmth and kinship with others. I feel that people are born with the desire to help others, they often just don’t know where to get started or they feel like they don’t have enough time, money or both. There are many things that you can do that takes relatively little time and no money. Locally, I would look into L.A. Works or Volunteer OC for starters. Maybe it is a coincidence, but L.A. Works has a "Monkeying Around" event on May 4th.

Wishing you wealth in all its greatest forms.

Become a homeowner...step 1.

2008-04-19T16:15:00.000-07:00

If you are currently a homeowner or are going to be in the market for a new home, you may be able to appreciate this. My goal as a real estate broker is to help you purchase properties with unified perspectives. With additional guidance from financial advisors, tax advisors, you can be better prepared to understand your opportunities and make informed decisions on possibly the largest investment you will ever make.

We are currently experiencing a pull back in real estate prices due to more restrictive financing options, general concern about the overall economy and numerous foreclosures and “short sales.” We may have been able to avoid today's current environment if just a little more work was done upfront.

The first step to owning a house is budgeting. I believe that all potential homeowners should do a Personal Financial Statement (PFS). This statement covers the big financial picture, including all income sources, personal expenses with insurance and other investments. It provides a background on the true state of your finances. You may need to restructure your finances, but at least you are aware of what adjustments need to be made. It has typically been an eye opening experience. We rarely know how much we really spend since we have limitless access to credit cards. This is a great opportunity where your agent can learn about other trusted advisors in your life, including tax advisors, financial advisors and maybe even legal counsel. These very important people should work together to provide a seamless and unified plan. The tax accountant can help you review the potential benefits of mortgage interest deductions, whereas the financial advisor may have very clear investment goals that need to be maintained for a prosperous retirement. I feel that if more agents had performed these with their clients, less people would be losing their homes.

Many real estate agents don’t have a background in finance and would not feel comfortable with the personal financial statement. You may go to your trusted financial advisor who may already have your financial analysis on file. I strongly believe that agents should be in touch with other professionals to help clients purchase a home that truly maximizes a person’s values and goals.

Wishing you wealth in all its greatest forms.

Certainly Uncertain...

2008-04-10T20:46:00.000-07:00

These are definitely uncertain times. I work 20.7miles from my home and my car gets around 20-22 mpg and I paid $3.79 per gallon of gasoline this morning. It costs me nearly $8.00 to commute to and fro. You may have noticed people moving faster these days, it’s not because they are more in shape…it’s actually a result of their wallets being lighter. Inflation is now in full effect.

From gas to food, everything is more expensive. Food inflation is growing at the fastest rate since 1990. Since I enjoy purchasing things in bulk, I buy my eggs at Costco, but even there the prices have risen quickly. So far, egg prices have increased 40% and milk prices have increased 26%. You aren't even immune if you are vegan, corn and soybeans are prices are also on the rise.

It is simply the perfect storm for many retirees. Falling home prices and a volatile stock market has not only shaken their confidence, it has shaken their retirement portfolios.

Is this a doomsday prediction? Hardly.

There will be booms and busts in both housing and the stock market. The thing not to do is “suffer in silence.” It makes little sense to worry and spread fear when there are simple things that you could be doing right now. In these times of flux, take it as the opportunity to review your budget, create the savings plan that you have been “planning” to do. When you get your stimulus check, put it towards your rainy day fund and put it in a high interest savings account. If you have been putting off starting a retirement account for yourself, do it now. You can contribute for calendar year 2007 to your Roth IRA until April 15. Imagine never having to pay taxes again on that money ever again. The government is giving you a golden opportunity, take it.

If you can learn to budget in these difficult times, you will be well prepared when things turn around. Until that stimulus check comes in, I hear that the Mcdonald’s Dollar Menu is looking mighty good.

Wishing you wealth in all it's greatest forms.

On Wealth

2008-04-04T20:25:00.000-07:00

What's the definition of wealth? $100,000 , $1 million , $100 million , $1 billion? I hope that you found your number in there. Being wealthy means different things to different people. To a child who has never had his own pair of shoes, $100 might be his idea of being wealthy while growing up. Whereas, a child that has always had a life of lux and privilege, may believe that being a millionaire is not only the norm, but anyone below that financial status is poor. Some people consider themselves wealthy if they have $50 more than their cousin, while another may only consider himself wealthy if they have a beach front property. The bottom line is that wealth is a relative concept.

What is not a relative concept is that all people want to improve their condition of living. I believe the heart of human nature is the yearning for advancement. For example, if you are homeless, you would like to have shelter. If you live in an apartment, you would like to live in a home. If you live in a home, you would like to live in a larger home, in a more desirable neighborhood, closer to the beach etc... We live in an amazing country where hard work, dedication and innate talent can make these things possible...for that I am grateful.

From the "Google Earth" view, wealth means very different things to different people. It can range from health, friendships or even material comforts. How you can tell which one is important to you at this moment is finding out where your current energy is focused. We are constantly evolving into the people that we are meant to be. There have been years in my life where my energy was spent only on acquiring material comforts and other years where friendship and health took the reigns. For most people, the focus only returns to the peripheral areas when neglected to the point of distress. I have heard many stories, where a multi-millionaire stock broker is struck by serious heart attack, only then does health become priority one. Other times, cliches like "it's lonely at the top" come to mind. Where an individual has spent so much time and effort making money and one day they come to the realization that they have a network full of acquaintances, but no real connections with friends. We as human desire to be in balance, yet with all the daily noise, it is easy to forget what is truly important to us. Here's to living in the greatest wealth balance possible.

Wishing you wealth in all it's greatest forms.