Category: Investing

  • Making Cents of Online Investment Services – Which is Best?

    Making Cents of Online Investment Services – Which is Best?

    The question of the day is all about using online investment services. In other words; Should You or Shouldn’t You? Naturally, as you might well expect with this sort of question, there is no one size fits all answer here.

    Working Definition

    Let’s begin with a good clear definition of what we are talking about here so that everyone is on the same page. For the purposes of this article, we will define an online investment service as any sort of investment service where you don’t have the dedicated attention of a specific financial adviser. In most cases, this is done as a sort of lowering the bar if you will so that those with fewer dollars to invest can still benefit from professional advice.

    Robo-Advisers?

    Although you may have encountered the term robo-advisers in and around your Google Searches for investment advice, this phrase is something of a disservice to the industry.

    Uh, hmm; not so much. Actually this is considered to be somewhat of a derogatory term by those in the business. Although you may have encountered the term robo-advisers in and around your Google Searches for investment advice, this phrase is something of a disservice to the industry. For example, the term “robo” implies more of a commoditized, mass produced product. Yet as you already know, each financial situation is unique. Consequently it would not make sense to try and use one size.

    What’s Available?

    It turns out that there is a wide range of online investment services out there. Depending on which firm you are looking at, you can receive access to services such portfolio management, asset management, investment advising, financial planning, portfolio analysis, online brokerage services, asset allocation advice and more. The point is that depending on your own personal financial situation, chances are you can locate an online investment advisory service that fits your needs.

    How Do They Do It?

    Understand that even the best online investment service can only work with what you give them. Most of these firms start the process with an online questionnaire for you to fill out. For example, should you happen to interested in how best to allocate your assets among the various investment choices available to you, the online questionnaire will have specific questions about your time horizon. Using this information, the adviser will then suggest a model portfolio for you to model based on that timeline.

    Using an online investment adviser means you have to take the time out to carefully think through the initial part of the setup.

    At the same time, there are some online investment advisory services that offer to select which portfolios that best fit your time horizon, your risk tolerance, that sort of thing. The point to get here is that using an online investment adviser means you have to take the time out to carefully think through the initial part of the setup. Otherwise, the advice you receive, the portfolio models and such will have little to no real meaning.

    Real World Examples

    Here is what this looks like in the real world. Take a look at how it works at the online investment company named Betterment. Betterment begins their process with an online interview process that is specifically focused on your time horizon for specific goals. During this process, you have a wide range of different investment goals to choose from such as wealth building, retirement savings amount, retirement income targets, safety net funding amounts, IRA and more.

    Going a step further is another online investment adviser firm named Hedgeable. Hedgeable takes this process one step further. Instead of merely offering you up model portfolios and the like, Hedgeable will actually manage your money for you to meet the goals you have identified. This means Hedgeable will buy and sell securities for you account.

    One more step up the online investment service can be found at Personal Capital. Like Hedgeable, Personal Capital will also manage your money for you. Yet Personal Capital takes it one step furhter. Personal Capital provides wealth management services.

    Now What?

    The above list is but a small sampling of what is available out there in terms of online investment services. Bottom line is this: if you are the type who doesn’t mind taking care of your personal finances online, then online investment advisers are the next logical step for you. On the other hand, should you be more comfortable dealing with your financial adviser face to face, well that option is still available.

  • Top Budget Hacks for Planning and Accounting

    Top Budget Hacks for Planning and Accounting

    Something most rags-to riches stories have in common is that a good budget is always needed to help anyone achieve financial security. If you want to significantly improve your credit, you have to learn how to pace your spending and increase your savings.

    Top notch advice

    There is no better medicine for bad spending than to see what you have to pay for in the future to live the life you want. In this article we’ll offer you some top notch advice on budgeting and accounting:

    # 1 – Keep Detailed Records

    Most people don’t keep track of every little expense they make.

    People usually rely on the online banking records to calculate their expenses. This is quite effective when it comes to having an overview, but it doesn’t help you keep an eye on bad expenses and avoidable spending.

    Make a folder on your computer, as not to waste paper and to be able to edit easily, and write down everything you spend in an ‘expenses’ file, while also keeping track of all incoming money on an ‘income file’.

    At the end of each month and each year you should check how much of your money went to avoidable, ‘bad’ expenses. Cut down on frivolous spending and watch your savings grow.

    #2 – Predict Large Expenses

    The number you’ll get will probably shock you, which is a good thing. There is no better medicine for bad spending than to see what you have to pay for in the future to live the life you want.

    It might sound like an obvious tip, but you’d be surprised how few people actually plan ahead for the major expenses during their lifetime.

    Buying a house or paying rent for life is one of those predictable, large expenses. Having a child (or many) is a predictable expense. If you include a few cars, a couple of large trips, furniture, college debts and similar big expenses, you can have a good look at what kind of money you’ll need to achieve the lifestyle of your dreams.

    The number you’ll get will probably shock you, which is a good thing. There is no better medicine for bad spending than to see what you have to pay for in the future to live the life you want.

    #3 – Make a ‘Get-Rich’ Plan

    Expert financial planners, like Dominique Brown, would advise anyone who wants to become rich to make a solid plan to achieve that goal.

    Riches rarely come to those that simply wait for them. This does not mean that it is takes extreme effort to become financially secure either.

    What you really need is diligence. Make a plan on your own, or get the help of a professional, and learn to stick to it as if it were a religion.

    Learning to live with a strict (if not tight) budget, will help you learn to keep frivolous spending in check.

    Remember that no matter how much money you make, you can easily spend it all on some luxurious stuff you don’t need and end up being poor again. Being truly rich for life means that you have to work for it and keep ahead of the financial game at all times!

  • Tips for Avoiding an Out of Money Experience

    Tips for Avoiding an Out of Money Experience

    Do you run out of money before you run out of month? Many do, but it doesn’t have to be that way! Wealth is the result of widening the gap between what you earn and what you spend. Most of us make the mistake of ramping up our spending as our disposable incomes rise. This is self-defeating. If you do not develop a respect for money, it will always elude you.

    You Need a Plan

    We call this a budget. That’s a four letter word to some people but if you count the letters, it’s really a six letter word … like friend. If thinking about budgeting makes you throw up a little in your mouth, try thinking of a budget as your friend.

    This friend will make sure that the month and your money expire at the same moment in time. This friend will rescue you from the endless cycle of debt that traps so many of us.

    You know the routine. You are out of cash with almost a week until payday. You hit the ATM for a cash advance on your credit card so you can get by until the end of the month, or worse yet, you sign-up for a payday loan, plunging yourself even further into the vicious cycle. This is not a plan! This is a band-aid!

    Establish Goals

    Goals are nothing more than a performance benchmark. Without goals, you have no means of measuring your progress.

    Make whatever goals you set realistic. Nothing torpedoes ambition like missing a goal. For this reason, in the beginning, set modest goals. Just getting through the month with no borrowing is a real accomplishment. Remember—budgeting and planning are processes, not overnight cure-alls. When you master one goal, more aggressive goals can follow, like setting aside some savings.

    Performance Benchmark

    Goals are nothing more than a performance benchmark. Without goals, you have no means of measuring your progress. Make whatever goals you set realistic. Nothing torpedoes ambition like missing a goal.

    Next Steps

    Living within your means, which is nothing more than making the money you receive on payday last until the following payday, is only the first step. Accomplishing this critical first step, as stated previously, requires a budget and the establishment of short term goals. But laudable as this may be, you are still living paycheck to paycheck.

    Oh, you’ve made progress—you are living paycheck to paycheck on your own money rather than borrowing money and increasing your debt. So what’s next? Next steps hinge on how you define your medium and long term goals. No one can define these for you, certainly not me!

    Maybe your end goal is a comfortable retirement, an early retirement, travel, a huge bank balance, a dream house, unfathomable wealth or all of the above. Regardless of your goal, you must have a plan, a roadmap to get you to the destination you have chosen, and this is much more complex than drawing up a budget. The following tips are critical ones, regardless of what your medium and short term goals may be, and will help you achieve success beyond your wildest dreams.