Money talks
The buck starts here! Investment tips you can take to the bank!
There’s never been more advice available, yet most people remain in the dark about how to achieve financial goals.
A good financial planner can show you the necessary steps to meet all your financial goals, yet only three in 10 American families have a comprehensive financial plan, according to a 2012 report by the Consumer Federation of America.
Does that mean 70 percent of us don’t need professional help? In a word, no.
PLAN(NER) AHEAD
Everyone can benefit from a financial advisor, according to Joe Dykes, a financial advisor of 13 years who recently retired from Edward Jones in Leesburg. Here’s his take on who should enlist the help of a financial planner:
ANYONE LIVING PAYCHECK TO PAYCHECK. “Many people living paycheck to paycheck put very little, if any, money away for savings. How do you expect to retire? It makes no sense not to put some money away every month for your future.”
RECENT COLLEGE GRADUATES OR YOUNG PEOPLE ENTERING THE WORKFORCE. “The school system does a very poor job when it comes to teaching our children about managing finances. Young people love to have fun, which is understandable, but they simply don’t understand the importance of savings. If they begin saving young, they can accumulate wealth and retire at a reasonably young age.”
PEOPLE CHANGING JOBS: “A career change means a different level of income and benefits. It also means that you don’t want to leave any retirement accounts you had at your previous job behind. That’s a lot to manage for someone with no experience in financial planning.”
RECENTLY MARRIED COUPLES: “Newlyweds are now merging their finances and their financial goals and spending habits will now change considerably. They will need help reorganizing and formulating new goals. Plus, they need to be financially stable if they plan on having a baby.”
RETIREES: “I’ve had people in their 60s and 70s come in my office with very little savings. In situations like those, having a financial advisor is extremely important to keep them from going broke. Retirees who are financially secure need a financial advisor to ensure they do not outlive their assets.”
You’ve decided you need a financial advisor to navigate this complex financial world. According to Dykes, there are five important questions you should ask before hiring a financial advisor.
1) ARE YOU A FULL-SERVICE ADVISOR AND WHAT PRODUCTS DO YOU OFFER?
“You need a diverse portfolio to truly meet your financial needs. Make sure your advisor sells stocks, bonds, mutual funds and annuities, as well as insurance.”
2) WHAT’S YOUR FEE STRUCTURE?
“It’s important that your advisor provides you with a written estimate of the fees and charges you will pay on an ongoing basis. The advisor should also thoroughly explain those costs to you. Be sure you understand these costs because there are advisors out there who will sell you anything for a commission, whether it’s right or wrong.”
3) WHAT WILL YOU DO IF THERE IS A CONFLICT OF INTEREST IN INVESTMENT STRATEGY?
“For example, if you’re semi-conservative with your money, your advisor should not make a risky investment just because it gives him or her a high payout. Conversely, when clients desired to make an investment I felt was wrong for them, I had them sign a letter that the investment went against my advice.”
4) WHAT KIND OF LICENSES DO YOU HAVE?
“Make sure they have both a Series 7 and Series 66 license. Having these ensures they are fully rounded financial advisors who can sell stocks, bonds, mutual funds, insurance and other types of financial products.
5) WHAT’S YOUR EXPERIENCE?
“Ask them if they have any special designations, such as certified financial planner or chartered financial consultant. Also, ask if they receive any ongoing training or education so that they’re up to speed on the latest changes and trends in the financial industry.”
Time to take stock
Sure, buying stocks can be risky business, especially if you are ultra-conservative with your finances. However, if you decide to take a leap of faith and invest in the stock market, here are the ones industry experts feel are the best bets in 2015.
[row] [column lg=”6″ md=”12″ sm=”12″ xs=”12″ ] Salesforce.com (CRM)Headquartered in San Francisco, this company makes software to enhance relationships between businesses and their customers.
52-week high: $67
52-week low: $48.18
Annual revenues: $5.07 billion
Projected 2015 earnings growth: 35 percent
Google (GOOG)
Google, one of the most popular websites in the world, earnings has been growing at more than 20 percent each year.
52-week high: $615.05
52-week low: $511
Annual revenues: $67.91 billion
Projected 2015 earnings growth: 18 percent
Lockheed Martin (LMT)
A large aerospace and defense company, Lockheed Martin has boosted its dividend for 12 straight years.
52-week high: $192.94
52-week low: $135.39
Annual revenues: $44.6 billion
Projected 2015 earnings growth: 3 percent[/column]
[column lg=”6″ md=”12″ sm=”12″ xs=”12″ ]
Twitter (TWTR)
This popular social media company has 284 million active users, and its revenues double every year.
52-week high: $74.73
52-week low: $29.51
Annual revenues: $1.17 billion
Projected 2015 earnings growth: 240 percent
Apple (APPL)
Apple is famous for its computers and computer software. In September 2014, the company enjoyed its strongest revenue growth rate of the past seven quarters.
52-week high: $118.77
52-week low: $70.51
Annual revenues: $182.80 billion
Projected 2015 earnings growth: 20 percent[/column]
[/row]
Coming to Terms
We hear financial terminology being tossed around frequently, but most of us really have no idea what those words really mean. With the help of this mini-glossary, perhaps you won’t sound as phony as a three-dollar bill next time you discuss finances.
Annual percentage rate (APR): The interest rate charged on the amount borrowed.
Annuity: A contract sold by an insurance company that guarantees holders a series of payments at fixed intervals.
Bear market: A declining market.
Bull market: An advancing market.
Dow Jones Industrial Average: The market average of 30 large, industrial stocks from companies such as General Motors, Goodyear and IBM.
NASDAQ: An automated network, or electronic stock market, used for trading over-the-counter stock, with an emphasis on high-tech and developing companies.
New York Stock Exchange: The world’s largest organized securities market, founded in 1792 and located on Wall Street.
Portfolio: A combination of holdings that include stocks, bonds, managed funds or other types of securities.
Securities: Transferable investment products represented by certificates or documents of ownership.
Stock: A share of a company held by an individual or group. Corporations raise capital by issuing stocks and entitling the stock owners (shareholders) to partial ownership of the corporation.
See how things stack up
Who wants to be a millionaire? Okay, put your hands down. Achieving this feat will take careful budgeting on your part, but its possible. Here’s how much you would have to save each month to become a millionaire by age 65.
[row] [column lg=”4″ md=”12″ sm=”12″ xs=”12″ ] Age 20: $361.04Age 25: $499.64
Age 30: $698.41[/column] [column lg=”4″ md=”12″ sm=”12″ xs=”12″ ] Age 35: $990.55
Age 40: $1,435.83
Age 45: $2,153.54[/column] [column lg=”4″ md=”12″ sm=”12″ xs=”12″ ] Age 50: 3,421.46
Age 55: $6,071.69
Age 60: $14,261.49[/column] [/row]
Cents-less Spending
Many people throughout the world view Americans as materialistic and wasteful spenders. Based on the following numbers, their perception may not be far from reality.
[row] [column lg=”4″ md=”12″ sm=”12″ xs=”12″ ]
$1,092
How much regular coffee drinkers spend on coffee each year
According to a survey by Accounting Principals
$66.5 billion
How much Americans spent on lottery tickets in 2011
According to CNN
[/column] [column lg=”4″ md=”12″ sm=”12″ xs=”12″ ]
$400
How much the average American loses each year to gambling
$859.6 billion
The amount Americans owe on credit card debt, as of Jan 2014
According to Federal Reserve statistics
[/column] [column lg=”4″ md=”12″ sm=”12″ xs=”12″ ]
$117 billion
How much Americans spend on fast food each year
$7 billion
The total amount of ATM fees in the U.S. in 2010
[/column] [/row]
Sources: usatoday.com/story/money/personalfinance/2014/03/24/20-ways-we-blow-our-money/6826633/; newportinternationalgroup.com/glossary.html; keplergroup.co.nz/glossary-of-common-financial-terms/; businessdictionary.com/definition/bond html; investorwords.com/4725/stock.html; money.howstuffworks.com/personal-finance/financial-planning/dow-jones-industrial-average.htm; kiplinger.com/slideshow/investing/T052-S003-25-best-stocks-for-2015/index.html.
About the Author: James Combs
