7 signs you're building wealth faster than you think

• If you're maxing out a retirement plan and being mindful of your investments, you may be on the fast track to building wealth.
• To be sure, most people don't get rich overnight. But, if you avoid high-interest debt, are focused on increasing your income, and have clear goals and a plan to achieve them, you're doing better than you think.

You have to commit to building wealth — it rarely happens by accident.

But if you're mindful and deliberate about saving, investing, spending, and earning money, you may be building wealth faster than you think.




Below, seven signs you could be rich sooner than you realize.

1. You max out your retirement accounts every year

IRAs and 401(k)s are two of your greatest allies in setting yourself up for a comfortable retirement.

If you can afford to put the full $19,000 into your 401(k) this year — or you're moving closer to that limit — you're accomplishing a few things.

First, you multiply your earning potential in the market. Second, if your company offers to "match" your 401(k) contributions, you score that free money. And lastly, you shelter a sizable chunk of your income from income taxes (you'll pay those taxes later, but for now your money grows tax-free).

You can also contribute up to $6,000, or $7,000 if you're over age 50, to an IRA in 2019. The tax savings are set up differently than a 401(k), but the fundamental strategy is the same: The more money you put in the market now, the more you stand to earn.


2. You're thoughtful, but not obsessive, about your investment choices

If you've made thoughtful choices about where to invest the money you put into your 401(k), you're head and shoulders above the rest.

Too many people make the mistake of treating their 401(k) like a savings account and don't touch the money once it's in there, certified financial planner Eric Roberge previously told Business Insider.

Some 401(k) plans have a fine default investment selection, but you should always double-check to make sure it matches your own time horizon and risk tolerance, Roberge says.

You're in good shape so long as you choose investments that diversify your portfolio — i.e. a mix of stocks and bonds — and don't levy too many fees. Roberge recommends choosing either an all-in-one target date fund, which automatically rebalances itself, or building a portfolio of individual funds that provide appropriate diversification.

Checking on your asset allocation periodically to ensure it matches your overall risk tolerance is smart, but obsessing over the details could easily lead to emotion-fueled mistakes.


3. You're focused on the 'big wins'

Spending less than you make may be the golden money rule — but it's not the only rule.

Yes, it's important to cut your spending "mercilessly" on the things that don't add value to your life, says financial expert and bestselling author Ramit Sethi. But people who are good with money know that $2 here and $10 there won't make you rich, he says.

"There are a few Big Wins in life where — if you simply get them right — you almost never have to worry about the small things. If you can focus on the 5-10 Big Wins, rather than 50 little things, you can have an insurmountable edge in life," Sethi says.

For example, paying down debt, saving automatically, negotiating a higher salary, and investing early will have a much greater impact — and in a shorter time frame — than forgoing your morning coffee or weekly brunches.

4. You don't keep too much cash

If you understand the power of compound interest, chances are you never keep more than you need in cash or sitting in a checking account.

The best way to multiply your money is to invest it in the market, but that's not always an option. You can still grow the money you need in the short-term by storing it in a high-yield savings account or certificate of deposit (CD).

Any savings account or CD with an interest rate above 2% is worth considering. At the very least, your money won't lose value to inflation. At best? You'll boost your savings by a few hundred dollars, with zero effort required.


5. Your income is higher than last year, but your spending hasn't changed

If you're bringing home more money than you did at this time last year, congrats! That's a huge sign of progress, particularly if you haven't increased your spending along with it.

Whether you scored a raise, landed a better-paying job, or created a second or third income stream, increasing your earnings is a form of leverage that can never be exhausted.

"If you can take the cap off of that and increase your income — it's not always easy to do that, which is probably why people don't pay attention to it — but if you can do that, it gives you a lot more room to both spend and save," Roberge said on an episode of his podcast, Beyond Finances.

6. You have no high-interest debt

Consumer debt is a proverbial wealth killer.

The stock market returns an average of 7% to 8% each year, adjusted for inflation. Meanwhile, the average credit card charges an APR of 17%. Carrying a balance at that rate would mean you have to invest twice as much money just to break even.

The bottom line: It's not worth it. When you avoid high-interest debt, you can optimize each and every dollar you have coming in.

As Robert Kiyosaki writes in the personal finance classic, " Rich Dad Poor Dad," "Most people fail to realize that in life, it's not how much money you make. It's how much money you keep."


7. You have financial goals and a plan to achieve them

There's no problem with aiming high.

But if you have a road map to getting there — and you actually put it into action — your chances of achieving your goals increase greatly.



You don't have to seek professional help for managing your money or coming up with a plan, but it could be worth it if you're feeling stuck. According to a Northwestern Mutual report, people who work with a financial adviser are more likely to know how to balance spending now and saving for later; set specific goals and feel confident that they will achieve those goals; and have a plan in place to weather economic ups and downs.


Tanza Loudenback Aug. 17, 2019

https://www.businessinsider.com/signs-building-wealth-faster-than-you-think-2019-8?IR=T&fbclid=IwAR3gsdUEuB3um8AFsHXwzugprcrOEWgjcqnvb1KwSvKAHKiTHCTzW7al1c4

Wealth Distribution

Wealth Distribution – What is a private trust?
November 18, 2018, Sunday


Wong Chaw Chern


A complete and holistic financial planning pyramid encompasses three wealth components – accumulation, protection and distribution.

Broken down, it describes the process flow where you start to accumulate your savings and investments, then protect your wealth against any unexpected events with insurance before deciding on how you will distribute your asset when the time comes.

In our opinion, the average Malaysian already has in place, a well thought-out and decently executed investment and insurance plan.

These covers the wealth accumulation and protection components. Briefly, here’s an example of what they generally consist of:

1)Wealth accumulation – Investments in properties, shares, Unit Trust Funds and bank deposits

2)Wealth protection – Medical and life insurance.

3)However, in many cases, the application of the third component and final piece of the financial planning pyramid puzzle – wealth distribution, is still found wanting.

A news report published in 2013, stated that RM45 billion worth of inheritance claims are still frozen by various agencies, lends credence to our belief.

Whether it’s the thinking that death is too taboo a word or procrastinating the idea of planning the distribution of wealth until a ‘later’ age, the truth is – one should plan, and preferably, to do it as early as you can.

Unexpected events do occur and sometimes, at the unlikeliest of times.

For example, if the deceased had not made any wealth distribution plans before passing on, a bickering among his/her beneficiaries or children on who should receive what, can have enormous repercussions. These can potentially tear the family apart, and with it, the family wealth and values.

Proper estate planning can go a long way towards preventing any unwanted occurrences.

So write your Will or remember to update it if there has been any significant changes such as: changes to your marital status, replacement of beneficiaries or if there are notable changes to the size of your estate.

However, if either retaining control of your wealth even after planning to distribute it away or wanting a more tailored approach towards your estate planning, a Private Trust may be more of what you are looking for.

A Trust is a legal instrument which is written on a Trust Deed for the Settlor (the person who creates the Trust) to provide instructions to the Trustee or Trust Administrator for them to hold, manage and distribute the assets to his intended beneficiaries. In this issue, we will talk about a Private Trust, which is a living trust.

Advantages of a private trust from a will

1)Assets are not frozen

Even after writing a Will, when a person passes away, his/her assets will still be frozen while waiting to obtain the grant of probate from the court.

The grant of probate is needed to allow the designated executor, who is appointed by the deceased person to administer and distribute out his/her estate. Generally, this may take between three to six months. Crucially, this may be the time when the deceased’s family members may need the money the most.



For example, if the sole breadwinner has passed away, his spouse may be unable to use the frozen money to pay for the children’s college tuition fees or other important monthly expenses.

In the case of a Private Trust however, for the assets already held by the Trust, they are not frozen and the Trust operates as normal and pays out according to the Settlor’s instruction.

For the assets which the deceased have nominated to the Trust eg: EPF or insurance proceeds, the transfer process can be started immediately without the grant of probate.

If a person dies intestate or without a Will, a long, lengthy and costly process await the family members.

Furthermore, the deceased’s assets would be distributed according to the Distribution Act 1958 instead of what may be his/her wishes.

2)Decisive appointment of beneficiaries and conditions

The Settlor can appoint anyone as the beneficiaries, even himself. For Muslims, assets held under the Private Trust falls outside of the Settlor’s estate, hence is not subject to the Faraid distribution.

Besides that, the Settlor can determine the timing and condition of the particular distribution eg: Instruct the Private Trust to only distribute out the beneficiary or children’s portion upon turning 30 or for the Trust to help with grandchildren’s education expenses.

Instructions can be as specific as spelling out that the Trust will only pay as long as the grandchildren is able to maintain a minimum grade of 3.5 CGPA.

3)Confidentiality

When a Private Trust is created, all the assets are held in the name of the Trust hence the Settlor and Beneficiaries remain confidential.

Moreover, unlike a Will, when the assets are distributed, it is done so to the intended beneficiaries discreetly and privately.

4)Emergency needs

When a Trust is already in place, it can provide a safety net to the Settlor or for the family in case of unexpected occurrences.

If a person falls under mental incapacitation which renders him/her unable to execute any decisions, all his assets remain under his ownership.

In other words, the beneficiaries are unable to utilise the money and the assets for the family’s needs.



With a Private Trust, the Trust is able to take over and perform the necessary procedures as previously instructed by the Settlor.

These may include arranging for medical care, application for EPF withdrawals and providing for the family’s expenses.

In the case of other emergencies, for example, if for whatever reason the Settlor is put in lockup and no next-of-kin to post bail, a Private Trust may come in handy.

5)Professional management

The assets in the Trust will be professionally managed in accordance to the Settlor’s specified mandate; this helps to prevent any mismanagement by beneficiaries who may not be financially astute or to prevent any spendthrift family members from mis-using the assets.

Depending on the size of the Trust, the fund managers can be instructed to invest in local, regional or in various asset classes.

The Trust will be managed to achieve its specified objectives eg: generating returns necessary for successive generations and make available liquidity whenever distributions or payments are necessary.

6)Bankruptcy or creditor protection

A Private Trust is able to provide creditor or bankruptcy protection for all the assets held under the Trust; provided the Trust structure is made Irrevocable and it will take effect after 5 years.

7)Duration

A Private Trust can be set up to last for a maximum period of 80 years.

Combined with the Settlor’s ability to set the timing and condition of the distribution, a Private Trust can be made to benefit successive generations of a family – provided the assets are substantial of course.

Conclusion Contrary to popular and long-held belief, Trusts are not reserved exclusively for the rich.

Neither are the fees staggeringly high nor the assets required to be in the mind-boggling tens of millions of ringgit range.

In some cases, RM500,000 could be enough to set up a Private Trust.

However, it is important to consult a financial adviser or investment professional like Areca Capital in order to specifically tailor the Trust to the Settlor’s needs.

Talking about assets for the Trust, aside from cash, there are various other assets that can be used to inject into the Private Trust.

Areca Capital is a niche Malaysian fund management company. We are a firm believer in the advisory-based approach towards investing. For any enquiries, ontact us at 03-79563111 or by email: invest@arecacapital.com.

Disclaimer: The article is produced based on material and information compiled from reliable sources at the time of writing. The article is not an offer, recommendation or advice to transact in any investment products, including the stocks or funds mentioned within. Investors are advised to consult professional investment advisers before making any investment decision.


http://www.theborneopost.com/2018/11/18/wealth-distribution-what-is-a-private-trust/

The whats, whys and hows of personal financial planning

The whats, whys and hows of personal financial planning
February 21, 2018, Wednesday AKPK



KUCHING: What do you do when you want to go somewhere?

You probably ask the following questions: What is the best way to go there? Will there be traffic jams? Is it better to take the LRT or bus? Should someone drive me there instead?

As you evaluate the options available to you, you ask questions about what you need to do and then make your decision — these are the steps involved in the planning process. Planning can be for the short-term, medium-term or long-term.

It is the same in personal financial planning, except that the time frame is over a longer period. Ideally, you should be looking as far ahead as your retirement years.

Personal financial planning involves asking questions about your future, your dreams and goals. It is thinking about what you want to do in your life, such as getting married, buying a car or a house, having children and planning for their education.

To achieve your life dreams and goals, you need to plan from the financial aspect. In personal financial planning, you look at how you will be budgeting, saving and spending your money over time.

Steps in personal financial planning

There are five steps in financial planning:

1. Assessing where you are now in financial terms 
2. Setting goals 
3. Creating a financial plan 
4. Implementing the plan 
5. Monitoring and reassessing


Benefits of financial planning

Many people think that financial planning is a hassle and that it stops them from doing fun things. If you consistently live on a budget, surely you would have to sacrifice some fun activities now, wouldn’t you? Think about it, if you have to save, you can always budget your money in such a way that you have some money to go out with friends and having a good time.

If you set a good financial planning habit, you can always have more fun in the future!

With a personal financial plan, you will:

Have more control of your financial affairs and be able to avoid excessive spending, unmanageable debts, bankruptcy or dependence on others.

Have better personal relationships with people around you, such as your family, friends and colleagues, because you are happy with your life and not borrowing any money to make ends meet or expecting hand-outs from others.

Have a sense of freedom from financial worries because you have planned for the future, anticipated your expenses and achieved your personal goals in life.

Be more effective in obtaining, using and protecting your financial resources throughout your lifetime, not only for yourself but also for the people you love.

With a good personal financial plan, you will be more informed about your future needs and the resources that you have. You will also have peace of mind knowing that your financial situation is in control.



Life stages and financial goals

In your adult life, you will go through various stages, from starting a career to retiring, from being single to getting married, having children and sometimes being single again. At various phases in your life, you have different priorities, responsibilities and financial goals.

Each stage of your life presents different investment opportunities and challenges. Discipline and perseverance play a key role in maintaining a reliable financial strategy. As your life changes, so do your needs and goals. Sound financial planning can prepare you to meet them successfully.

When you are in your 20s, you will be looking at money and spending it differently from when you get into your 50s. For example, when you are single, you probably want to have enough money to make a down payment for a car or go on a holiday with your friends.

After you get married, you may want to buy a house. Later, when you have children, you would want to plan for their education and maybe even start a retirement fund.

You have to adjust your financial priorities to meet the varied needs at different points of your life. Therefore, how you spend your money as you go through your adult life depends on your financial goals.



The Credit Counselling and Debt Management Agency (AKPK) is an agency under Bank Negara Malaysia tasked to help individuals take control of their financial situation. For assistance, please contact AKPK’s Power Infoline at 03-26167766 or visit www.akpk.org.my.

Capital Management in Personal Finance

A simple equation in finance describes your approach to capital management:

Assets = Debt + Equity

Everything you own was funded either by incurring debt or by expending your own resources.

Subtracting all your debt from the total value of your assets shows you how much equity (net wealth) you have accumulated.

The BALANCE of debt and equity you have used to fund the value of your assets is a critical portion of your financial management strategy, known as CAPITAL MANAGEMENT.



Cost of capital

Whether you use debt or equity to fund your asset ownership, there are COSTS OF DEBT and EQUITY involved, known collectively as COST OF CAPITAL.

The cost of debt refers to the amount of interest you will pay over the life of your debt.

Most people don't realise that there is also a cost associated with using your own resources to purchase assets, known as the "cost of equity".

"OPPORTUNITY COST" is the value of the next best option; so if you have the choice between purchasing furniture and keeping your money in a bank account, the opportunity cost of buying the furniture is equal to the amount of interest you would have earned by keeping your money in the account.

This makes most purchases far more expensive than people realise, since each purchase you make not only includes spending money, but also losing any earnings on that money if you hadn't spent it.




Effective capital management

Effective capital management requires you to assess the cheapest sources of both debt and equity being used to fund your assets, and also to find the proper balance of equity and debt so that you choose the cheaper of the two at any given point.

As you come to rely on one more than the other, its costs will start to increase; the more debt you have, the more lenders will start to charge you in interest rates as a result of the shift in your credit report.

If you rely more on equity, you will begin to pull assets which are more valuable, making debt cheaper compared to the money you would be losing by selling your investments.

The goal is to maintain the lowest cost of capital possible, using variations on the core equation:


Cost of capital 
= Cost of Equity + Cost of Debt
= [(E/A)*CE] + [(D/A)*CD]

E= The amount of equity you have
D= The amount of debt you have
A= The total value of your assets (D+E)
CE= The average cost of your equity (the money you would earn o the next best option)
CD= The average cost of your debt (the interest payments you will make)

E/A= weight of source of capital from equity
D/A= weight of source of capital from debt

You can assess whether your debt or equity is costing you more money from the above equation, to help you to determine the proper balance.

If these are not about equal, it is likely you could fund your assets more cheaply.




Are your assets generating returns more than the cost of capital?

Adding the cost of equity to the cost of debt gives you the total cost of capital.

The question remaining is whether your assets, on average, are generating MORE value than they are costing.

If yes, good for you.

If not, keep trying, because  right now you are losing money on your assets.

This equation only gives you a rough idea of your cost of capital, though.

The more precise you can be, even to the point of breaking down each source of debt and equity individually, the more accurate your calculation will be.

The fundamentals of portfolio management

Lessons In Financial Literacy: In this show, Anil Chopra, Group CEO & Director of Bajaj Capital Ltd and Gaurav Mashruwala, a financial planner, share their views to understand the subject of financial planning better. The show talks about the importance of investment planning, investment planning steps and ideal saving break-up.

Everything You Need to Know About Personal Investing in One Page

Scott Adams - Dilbert and the Way of the Weasel
"Everything You Need to Know About Personal Investing."

1.  Make a will
2.  Pay off your credit cards.
3.  Get term life insurance if you have a family to support.
4.  Fund your 401k to the maximum.
5.  Fund your IRA to the maximum.
6.  Buy a house if you want to live in a house and you can afford it.
7.  Put six month's expenses in a money market account.
8. Take whatever money is left over and invest 70 percent in a stock index fund and 30 percent in a bond fund through any discount broker and never touch it until retirement.
9.  If any of this confuses you, or if you have something special going on (retirement, college planning , tax issues), hire a fee-based financial planner.

Personal Finance by a leading Financial Planner for the Secondary School Students. Yes, educate them early.

Many intelligent people has no financial education.
This video is an excellent introduction to personal finance.
Well worth spending time to go through the 12 videos in a couple of hours which will benefit you for a lifetime in your financial planning and management.
You will learn the core knowledge of financial planning to accomplish your goals.

Define and set your goals.

Your goals should be SMART
Specific
Measurable
Attainable
Realistic
Time bound



Related:
Compounding
http://myinvestingnotes.blogspot.com/2013/04/compound-interest.html

Personal finance lending grows

KUALA LUMPUR:  Personal financing expanded by 30% last year, the fastest growth over the last three years, mainly due to lending by nonbank financial institutions (NBFI), said BNM in its 2012 Financial Stability and Payment Systems report yesterday.

Although the majority of borrowers were those earning less than RM3,000 per month, BNM said the credit risk had been well mitigated as about 80% of the borrowers have stable jobs and a regular salary with loan repayments deducted automatically at source.

“These developments are nonetheless being closely monitored particularly in light of recent innovations observed on product offerings by the NBFI,” it said in a statement released in conjunction with its 2012
BNM annual report.

NBFIs accounted for 12% of total credit to the nation’s household sector. But collectively, these institutions provided 57% of personal financing credit to households and such credit has been increasing significantly in recent years.

Last year, overall credit on all facilities extended by the three largest NBFIs expanded at a faster rate of 23.1%. The strong credit expansion was primarily driven by the personal financing activities which grew 30%
last year.

In 2010, personal financing grew 28.7% while in 2011 it recorded a growth of 25.1%. According to the statement, as at the end of last year, the banking system’s gross impaired loans ratio improved to 1.5% for the household portfolio, 2.9% for large businesses and 3% for small and medium enterprises.

“Following the implementation of the Guidelines on Responsible Financing during the year, banks are also more thorough in assessing borrower affordability with more prudent buffers allocated in the computation of debt service ratios, improved processes and documentation in income verification,” said BNM in its report.

The bank’s risk-weighted capital ratio and core capital ratio stood at 15.2% and 13.4% as at end of last year with financial buffers in excess of RM80 billion.

The banking system’s total capital ratio for financial institution was at 14.5% as at end of January this year.
Domestic implementation of the Basel III global regulatory reform package will significantly raise the level and quality of banks’regulatory capital starting January this year until December 2018.

This article first appeared in The Edge Financial Daily, on March 21, 2013



Business & Markets 2013
Written by Zatil Husna of theedgemalaysia.com
Thursday, 21 March 2013

Evaluating Your Personal Financial Statement

Month after month, many individuals look at their bank and credit statements and are surprised that they spent more than they thought they did. To avoid this problem, one simple method of accounting for income and expenditures is to have personal financial statements. Just like the ones used by corporations, financial statements provide you with an indication of your financial condition and can help with budget planning. There are two types of personal financial statements:

• The personal cash flow statement
• The personal balance sheet

Let's explore these in more detail.

Personal Cash Flow Statement

A personal cash flow statement measures your cash inflows and outflows in order to show you your net cash flow for a specific period of time. Cash inflows generally include the following:

• Salaries
• Interest from savings accounts
• Dividends from investments
• Capital gains from the sale of financial securities like stocks and bonds

Cash inflow can also include money received from the sale of assets like houses or cars. Essentially, your cash inflow consists of anything that brings in money.

Cash outflow represents all expenses, regardless of size. Cash outflows include the following types of costs:

• Rent or mortgage payments
• Utility bills
• Groceries
• Gas
• Entertainment (books, movie tickets, restaurant meals, etc.)

The purpose of determining your cash inflows and outflows is to find your net cash flow. Your net cash flow is simply the result of subtracting your outflow from your inflow. A positive net cash flow means that you earned more than you spent and that you have some money leftover from that period. On the other hand, a negative net cash flow shows that you spent more money than you brought in.

Personal Balance Sheet

A balance sheet is the second type of personal financial statement. A personal balance sheet provides an overall snapshot of your wealth at a specific period in time. It is a summary of your assets (what you own), your liabilities (what you owe) and your net worth (assets minus liabilities).

Assets

Assets can be classified into three distinct categories:

• Liquid Assets: Liquid assets are those things you own that can easily be sold or turned into cash without losing value. These include checking accounts, money market accounts, savings accounts and cash. Some people include certificates of deposit (CDs) in this category, but the problem with CDs is that most of them charge an early withdrawal fee, causing your investment to lose a little value.
• Large Assets: Large assets include things like houses, cars, boats, artwork and furniture. When creating a personal balance sheet, make sure to use the market value of these items. If it's difficult to find a market value, use recent sales prices of similar items.
• Investments: Investments include bonds, stocks, CDs, mutual funds and real estate. You should record investments at their current market values as well.

Liabilities 

Liabilities are merely what you owe. Liabilities include current bills, payments still owed on some assets like cars and houses, credit card balances and other loans.

Net Worth

Your net worth is the difference between what you own and what you owe. This figure is your measure of wealth because it represents what you own after everything you owe has been paid off. If you have a negative net worth, this means that you owe more than you own.

Two ways to increase your net worth are to increase your assets or decrease your liabilities. You can increase assets by increasing your cash or increasing the value of any asset you own. One note of caution: make sure you don't increase your liabilities along with your assets. For example, your assets will increase if you buy a house, but if you take out a mortgage on that house your liabilities will also increase. Increasing your net worth through an asset increase will only work if the increase in assets is greater than the increase in liabilities. The same goes for trying to decrease liabilities. A decrease in what you owe has to be greater than a reduction in assets.

Bringing Them TogetherPersonal financial statements give you the tools to monitor your spending and increase your net worth. The thing about personal financial statements is that they are not just two separate pieces of information, but they actually work together. Your net cash flow from the cash flow statement can actually help you in your quest to increase net worth. If you have a positive net cash flow in a given period, you can apply that money to acquiring assets or paying off liabilities. Applying your net cash flow toward your net worth is a great way to increase assets without increasing liabilities or decrease liabilities without increasing assets. 

The Bottom Line

If you currently have a negative cash flow or you want to increase positive net cash flow, the only way to do it is to assess your spending habits and adjust them as necessary. By using personal financial statements to become more aware of your spending habits and net worth, you'll be well on your way to greater financial security.

Read more: http://www.investopedia.com/articles/pf/08/evaluate-personal-financial-statement.asp#ixzz28JcbWX2o

Introduction to Financial Planning

The Wealthiest Life - Start In The Right Direction

Have you ever thought that your life could be better? It can be!

Start In The Right Direction

Most people step towards wealthy living with great anticipation, looking to everything that will change for the better. This is positive thinking but let us look at two principles that will ensure that your wealth dreams actually become a reality.

Two Keys To Living Wealthy

There are two keys to having the best life you could possibly hope for! 

• We must dream big dreams and 
• then commit to small steps that will lead us towards opportunities.

Dream Big

You were not meant to wake up in a year, or five years, and be in the same place that you are today. Dreams are the essence of life progress. Your dreams have the capacity to energize your present and future progress.

Take a pen and paper and write down all the improvements that you would like to see happen in your life. Take time to imagine your best life; see the end (the big picture). Then visualize the necessary changes taking place to propel you in the right direction.

Opportunities for advancement are awaiting each of us. Sadly, few experience the reality of these opportunities manifesting in their lives because they don't see them coming. Dreams open the hidden doorways to future life change.

If you have big dreams, you will eventually live a big life!

Commit To The Small

A very wise man once said, "Hope deferred makes the heart sick, but a longing fulfilled is a tree of life." - King Solomon (The Book of Proverbs Chapter 13, verse 12)

I have watched people grow extremely bitter as they have allowed their lives to stagnate for decades, simply because they would not take some simple life changing steps.

Experiencing another year will not necessarily change your life unless you commit to personal change in specific areas. Without making selective changes to our life patterns we will most likely remain in the same state for decades. This is a sad truth for many!

Each small step you take to change your life will activate opportunities in corresponding areas. For example, if you lose weight, your self-esteem will rise, your attitudes will brighten, your emotional and physical appeal will advance and you will attract greater relationship opportunities.

Think about how you will move forward emotionally, relationally, physically and financially by making simple adjustments to your lifestyle.

5 Steps Towards Wealthy Living

1. Don't spend what you don't have. If you can't afford something, it's not your time to buy right now.

2. Brainstorm monthly for one creative idea to generate more wealth in your business, or personal finances!

3. Position yourself around people who have a higher net worth than you and ask sensible questions to help you increase financially. Do this at least once a month!

4. Keep track of your daily income and expenses. By making this a daily habit, your finances will never get out of control.

5. Start giving to others and form this as a habit in your life. What you do for others will happen for you in increased measure. This is a principle practiced by rich philanthropists.

If you will dream big wealth dreams and take small steps towards those dreams, doors of opportunity will open in your life for riches to come in!

You can have a wealthy life. Why not start on the path today.

Article Source: http://EzineArticles.com/6890105

The Wealthiest Life
By Dr Carmen Lynne

Personal finance action-steps to build a solid financial foundation

Here are personal finance action-steps formulated to help individuals and families build a solid financial foundation. Savings and investments are very important but in the 2011 economy they will be most SUSTAINABLE when a solid present-day foundation has been attended to first. You'll know you have completed the "foundation" step once you have more money coming in to your household than going out for at least four consecutive months!

1. Write down your short-term, mid-term, and long-term financial goals and put them somewhere to easily refer back to them.
2. Review your goals (at least) on a weekly basis.
3. Figure out your exact financial status today. How much money a) comes in and b) goes out each month. Create a line-item and categorized itemization of money in and out. Don't forget things like eating out and entertainment.
4. Track your expenses and out-of-pocket spending precisely for at least one month. Save all receipts and record out-of-pocket information daily. Also determine the exact amount of money (or average) that comes in each month.
5. Do you have more money going out than coming in? If so, exactly how much?
6. Use your list of current itemized expenses to create an action-plan regarding how and by when you will lower or eliminate line-items that exceed the amount of money currently coming in to your household. This may mean creative downsizing.
7. Create an action-plan about how and by when you will increase money coming in to your household. As debt becomes reduced or eliminated, this action step becomes the most important one in order to stay ahead of the cost-of-living debt curve for the long-term.
8. As you focus on ways to increase cash flow, perhaps consider an independent trade or service that people will always need and that best suits you. For example, car mechanics, computer techs, hair stylists, barbers, clean-water suppliers, pet care-givers, delivery-service providers etc.
9. Make debt-elimination a high-priority; the final goal being to consistently live within your means and pay as you go.
10. Once credit-card debt is paid off, get rid of all but one credit card because credit access is actually an instant-gratification state-of-mind.
11. Do NOT keep your one remaining credit card in your wallet. Leave it frozen in a bowel of water in your freezer. This tactic builds time into the otherwise instant-gratification decision-making mindset of a credit card in your wallet.
12. You might even want to reallocate existing assets towards building your "more money in than going out" household-budget foundation more quickly. Since money (as debt) is worth the most today than it will be tomorrow, it's best to put it to work today! A stable present situation will increase your well-being. Increased well-being empowers a healthy decision-making process
13. Use cash first and foremost. Most people will pay more attention to what they spend when it comes straight out of their wallet.
14. Stop shopping for entertainment. Shop purposefully using coupons, during sales and buy bulk whenever possible. Generally shop recycled including for cars.
15. Include your children in the how and why of your decision-making process (should you accept this mission)and invite their imitation of your thinking and efforts.
16. If you have savings and/or investments to preserve, keep some of YOUR money entirely out of the reach of the banking-services industry. They consider their own interests before they consider yours! More and more people are moving their bank capital into hard (tangible) assets.
17. Specifically per 16 above, consider anything you have in savings, retirement funds or the stock market. (Remember the stock-market 2008 and FYI: The U.S. government is currently floating the idea of nationalizing 401(k)'s and IRA's given their nearly 14-trillion-dollar deficit. In other words, individuals would lose control over their account and the government instead would ration annuity-type payments.)

Article Source: http://EzineArticles.com/5646119

Taking Financial Inventory

Taking Financial Inventory
by Michele Cagan, CPA

Creating a personal financial inventory worksheet is the first step toward creating a unique guide on which you'll base all of your financial decisions. Although this initial inventory will be frozen in time, you'll revisit and reconstruct it regularly to chart the changes. At first, you'll probably need to revise it every three to six months; later, an annual revision will usually suffice. Even more important than looking at your personal balance sheet, it is vital that you understand what goes into it. This knowledge will carry you toward setting (and meeting) achievable financial goals.

Your net worth equals the difference between what you have (assets) and what you owe (liabilities). Your assets include things like bank accounts, investment portfolios, retirement accounts, the value of whole life insurance policies, the market value of real estate and vehicles, and any other property, such as jewelry. Liabilities encompass everything you owe, typically separated into short-term debt and long-term obligations. Short-term debt includes your regular monthly bills, credit card balances, income taxes, and anything else you might have to pay within the next twelve months. Long-term debts include mortgages and any other installment loans, such as those for your car. In taking stock of your assets, use current market value for things like real estate and vehicles.

Good news! In addition to your savings and other accounts, you can also count money that is owed to you by other people as an asset. As long as this money is coming your way in the foreseeable future, it can be regarded as part of your financial inventory.

While getting a formal appraisal may give you the most accurate assessment, it's not necessarily the most efficient way to proceed. To get approximate market values for your house, you can check out your state's property tax assessment website. For your car, try the Kelley Blue Book (online at www.kbb.com). For smaller items, you can determine which may have significant resale value. Again, you can get a professional appraiser, or you can try looking up similar items on a website like eBay to get approximate market values. Once you've ascertained reasonable values for your belongings, add them to your cash and investment accounts for a total asset figure.

Once you've figured out your assets, it's time to take an honest look at your liabilities. For now, we'll just add in your true debt and leave out your regular monthly bills. In this section of your worksheet, include the outstanding balance of your mortgage and other installment loans, everything you owe on credit cards, and any unpaid personal loans. Total these and you have an accurate picture of your current debt load.

To calculate your net worth, subtract your total liabilities from your total assets. The result shows what you'd have left if you sold or cashed in all your assets and paid off all your liabilities. Here are some steps you can follow to calculate your net worth:

List all of your liquid (cash-like) assets: bank accounts, CDs, stocks, bonds, mutual funds, etc.


List your retirement accounts: every IRA, 401(k) plan, ESOP, etc.


List all of your physical assets at current market value, starting with your home, other real estate you own, vehicles, and any valuable smaller items (like jewelry) that you choose.


Add the value of all these items to get your total assets.

List all of your outstanding debts, and add those to get your total liabilities.

Subtract your total liabilities (step 5) from your total assets (step 4) to get your personal net worth.

Revisit your worksheet every three to six months at first, then at least once a year going forward, to adjust for any changes.

If the number you came up with as your net worth is greater than zero, you have a positive net worth, meaning you'd still have assets left if you settled all outstanding debts. If your bottom line is less than zero, you have a negative net worth, meaning you would still owe money even if you liquidated all your assets and put that cash toward your debts. Regardless of your personal bottom line, you now have a solid base to work from and will be able to make your financial plan accordingly.

http://www.netplaces.com/investing/planning-for-success/taking-financial-inventory.htm

I'll die in debt, say one in three in UK

Nine out of 10 people have run up unsecured debt and many fear they will never be able to pay back what they owe, a survey has claimed.

5:40PM GMT 30 Nov 2010

Around 89pc of people aged between 18 and 35 said they owed money on a credit card, loan or overdraft, the research showed.

A third of people admitted they did not think they would ever be debt-free, 54pc of whom said they would always need to borrow money in order to fund the lifestyle they wanted.

One in five of these people also claimed they were not worried about the possibility of their debts being passed on to their next of kin if they died before they were repaid.

Just over half who owed money said they did not feel in control of their debt, with 8pc admitting they had needed to ask for help with repayments from a friend or family member. Eight out of 10 people also told the research for discount website MyVoucherCodes.co.uk that they thought it was too easy to borrow money through their bank or on credit cards.

Farhad Farhadi, MyVoucherCodes.co.uk's personal finance expert, said: "The majority of British adults owe money in some way, shape or form, but to see that almost a third think they'll never be free from debt is quite alarming.

"When borrowing money from any source, how you are going to repay it should always be in the back of your mind.

"A lot of people don't really think about the consequences of borrowing money and it can be easy to get complacent, but keeping it all under control should be a priority from the off. Only borrow what you really think you can afford to pay back."

MyVoucherCodes.co.uk questioned 1,722 people aged between 18 and 35 during November.

http://www.telegraph.co.uk/finance/personalfinance/borrowing/8171236/Ill-die-in-debt-say-one-in-three.html

Online Investing Tools Refine the Personal Touch

PERSONAL FINANCE May 28, 2010, 9:01PM EST
Online Investing Tools Refine the Personal Touch

Businesweek.com's latest look at online tools for individual investors reveals innovative new features for the do-it-yourself set

By David Bogoslaw

A year after the worst financial crisis in 80 years shook investors' confidence, mounting fear of contagion from Europe's debt crisis and rising market volatility offer fresh reminders of the need for greater vigilance. Investors and consumers may find it wise to adopt a hands-on approach in managing their personal finances and retirement accounts.

There is no shortage of resources for the do-it-yourself crowd. In its latest look at tools and technologies for individual investors, Businessweek.com examined nine websites (see slide show) that specialize in a range of areas, from actively managed investment portfolios and asset allocation advice to analytical stock research and personal finance. Whatever the topic, it is clear that there's a growing hunger for better ways to deal with money.

On kaChing.com, active investors get access to 16 different professional money managers. Their accounts can be as small as $3,000, vs. the minimum of $500,000 usually required by the managers' firms, and they pay ultra-low trading commissions because managers split commissions for each trade among all the clients who subscribe to their model on a pro rata basis.

Managers on kaChing get an investor IQ rating that takes into account how closely they stick to their stated investment style, their risk-adjusted returns (which weigh the performance of all their holdings separately), and the soundness of their investment strategy. An investor IQ must be at least 140 on a scale of 1 to 200 for a manager to be listed on kaChing.

This is a much more innovative way to measure a manager's skills than what's provided by the mutual fund industry, where no one can see what transpires in a portfolio between quarter-end dates, says Andy Rachleff, kaChing's co-founder and chief executive officer.

THE DOWNSIDE TO FIVE-STAR FUNDS

"Lack of transparency leads to an inability to develop a compelling ratings system," Rachleff says. "Without transparency, the only way to evaluate a mutual fund is on past returns, which aren't indicative of future returns," he says.

Once they have received a five-star rating from mutual-fund data provider Morningstar (MORN), mutual funds on average underperform the broad market, says Rachleff. When the influx of money that often results from Morningstar's highest rating has to be put to work, it tends to get invested in stocks that fund managers are less convinced about in order to avoid 5 percent ownership in the equities they already hold. (Owning a 5 percent stake in a company requires a more detailed level of financial disclosure to the Securities & Exchange Commission.)

Manager fees on kaChing average 1.25 percent of an investor's portfolio value, and one-quarter of the fee goes to the site. Investors also pay trading commissions on top of that, but commissions on an average account size of $10,000 tend to be 70¢ per trade, vs. the $7 to $10 you'd typically pay an online brokerage such as Charles Schwab (SCHW).

Unlike kaChing, Covestor Investment Management lets users follow both registered investment advisers and nonprofessionals, then replicate their trades. Covestor caps the risk investors can take according to their tolerance level, as well as if they're investing for a retirement account. The site won't replicate trades for stocks whose market cap is below $50 million in order to minimize liquidity risk. It warns clients about any performance drift from the model manager's returns because of the inability to replicate all trades, and it displays the average returns of investors who follow any single manager.

Clients must put a minimum of $5,000 in any model they subscribe to and the model managers set fees that can range from 0.5 percent to 2.3 percent and are split 50/50 with Covestor. In lieu of fees, nonprofessional managers receive royalty payments from Covestor for letting others follow and replicate their trades.

Growing interest in self-directed investing hasn't quieted the longstanding debate between proponents of active portfolio management and those who hew to index investing on the belief that it's impossible to beat the market consistently. In contrast to sites such as kaChing that stress active management and take a certain portion of management fees, MarketRiders offers only exchange-traded funds (ETFs) and shows users how much they can save in disclosed and hidden fees over the long run by avoiding active managers.

MENU OF ETFS AND MONTHLY REBALANCING

"The main difference with us is that philosophically we think if you start paying anybody more than 20 basis points [0.2 percent] to manage your money, you're going to end up with a lot less when you retire," says Mitch Tuchman, founder of MarketRiders.

Based on a user's age, stated risk tolerance, level of investing experience, and when he or she will begin to need the money, MarketRiders recommends an optimal asset allocation from a menu of ETFs vetted for superior performance and low fees. The site sends users monthly alerts about which holdings need to be rebalanced to return their portfolios to target allocations. Users pay $9.95 per month for the service, paying trading commissions only when they rebalance.

Andy Cohen, who manages a website that focuses on caring for older parents, began using MarketRiders a year and a half ago while it was in its beta testing phase. He uses the site to manage his retirement IRA and his 14-year-old son's college savings IRA, executing via a brokerage account at Charles Schwab (SCHW).

"I feel like I'm getting lots of diversification and it's very inexpensive," says Cohen. "I'm [investing in] stuff like commodities and international stocks, which I wouldn't have had the confidence to pick without MarketRiders telling me what to pick … and the right percentage of my portfolio to put in."

Cohen also likes the "non-nagging tone" of the monthly e-mail alerts about rebalancing. Another user, Bev Doughty, says it's pointless to use MarketRiders if you don't buy into the idea of rebalancing when assets either outperform or underperform target allocations.

Since it launched in March, Goalgami.com's audience has been primarily financial advisers who like the software's potential for helping them collaborate with clients—and communicate better with those who may not yet have figured out their goals. The site offers people privacy with which to work out various financial goal scenarios before they're ready to consult a professional adviser.

RISK CAPACITY VS. RISK TOLERANCE

Goalgami is based on the idea of goal-based investing, which holds that an individual's household balance sheet offers a better basis than a risk tolerance questionaire—the tool most advisors use to determine how conservative or aggressive a client's portfolio should be—for advisors to gauge what's appropriate for their clients.

"It's the difference between risk capacity and risk tolerance," says Advisor Software President Neal Ringquist, a proponent of goal-based investing and the creator of Goalgami. "The balance sheet measures how much risk a household should take, not how much risk they can bear to take psychologically."

On Goalgami's platform, users select goals and drop them onto a timeline or table. This allows them to see how these obligations translate into monthly costs and how they affect the user's affordability meter. With the drag of a mouse, the platform shows them how much money they could save by delaying retirement by five years, for example.

Investors aren't the only ones gravitating to the Internet in search of smarter ways to manage and build their wealth. Consumers trying to maintain a household budget, pay down debt, or save toward buying a home or some other important goal are finding comfort and practical advice at sites such asMint.com and LearnVest.com.

Ezzie Goldish, a young New York accountant, began using Mint just before the birth of his first child in June 2008. A month later, he lost his job while his wife was still working part-time so she could care for their baby. With Mint's help over the next year, the couple organized their finances and managed to pay off 40 percent of credit-card debt despite a 40 percent cut in income.

"As much as we thought we knew what we were doing, until you see [how you're spending] in front of you, it's a lot harder," he says. Goldish, who had already been getting calls for financial advice because of his profession, posted an economics survey on his blog for people in his Orthodox Jewish community. He has received hundreds of comments expressing interest in Mint from around the world.

AN ACTION PLAN TAILORED TO WOMEN

Mint can save a lot of time because it automatically integrates information from all of your accounts, eliminating the numbing task of having to input everything.

Although few people have been adequately schooled in personal finance, women tend to be especially unsure of themselves when it comes to understanding financial products and sticking to a financial plan, says Alexa von Tobel, founder of LearnVest, a website created specifically to help women meet their financial needs. Users appreciate being able to create a customized action plan that helps them save for graduate school or other goals, as well as the daily e-mail reminders to keep them motivated.

"They've created a tone that falls between your smart older sister and your best friend," says Bettina Scott, who's been using the site since last fall. "It's not like someone nagging you, but telling you this might be a good thing to think about."

LearnVest also offers insightful content written addressing how to buy a nice, affordable Mother's Day bouquet or throw a dinner party without spending a lot. "Consciously or unconsciously, it changes your mindset about finance. It makes you feel more comfortable with it" says subscriber Alexandrine Koegel.

Online tools available to investors and consumers have increased in sophistication and utility over the years. Will they prove to have made a difference over the long term? Leslie Linfield, executive director of the Institute for Financial Literacy in Portland, Me., wonders.

"Do they really stick with it?" Linfield asks. "It's about following through. Don't get caught up in the bells and whistles."

Bogoslaw is a reporter for Bloomberg Businessweek's Finance channel.


http://www.businessweek.com/print/investor/content/may2010/pi20100526_506024.htm