Lifetime Financial Planning
Most of us have budgets of some kind and have an idea of where our money goes every month. However, sometimes budgets just don’t work. Why? Because there is usually more than just one person involved in the family budget and personal priorities and outlooks on spending money can vary greatly.
Implement a General Money Management Strategy
Toss in the odd personal life change such as job loss, unexpected pregnancy, illness, or injury, and you can have instant financial chaos. Planning ahead and looking strategically at spending can reduce your stress about the family budget.
You probably know couples who have comparable salaries but have substantially different assets and spending patterns. The difference? If you want to have financial security, you need to have a plan of action. It should be updated every time your circumstances change and every time you look at purchasing a big-ticket item.
Knowing where you are going financially and choosing your course of action will make a big difference in how you can plan for your future and your retirement. Would you take a trip to a new destination without a map? Would you just hop in the car and hope that you get there eventually? Think of your lifetime financial plan as a financial road map, with the ups and downs of life’s financial challenges as detours or freeways, depending on what’s ahead…Read more
A bond is a “security” which gives the holder a financial claim on the issuer. This claim protects the holder in circumstances in which the issuer is unable to pay the amount due. It is made formal by the “trust indenture,” a legal document that specifies all of the bond characteristics and the legal rights and obligations of all the parties to the agreement. Bonds are “fixed income” investments that have a fixed interest rate or coupon, payable on the principle amount, usually $100.
When people refer to “stocks” or the “stock market,” they usually mean common shares. A common share is a financial security that gives the holder an ownership claim in a company. Stocks gives the holder the right to receive dividend payments and a vote at the company’s annual meeting. The shareholders have specific rights under both corporate law and the company’s bylaws. Common shares are also referred to as “equity securities” or “equities” alluding to the accounting term “Owner’s Equity.”
A mutual fund is a financial vehicle that allows a number of investors to pool their money and have it jointly managed by a professional money manager. Individual mutual funds are divided into separate units and each holder is entitled to a share of the fund proportional to their investment. Each “unit holder” has the right to their share of the assets of the fund and any income that the fund earns.
A Hedge Funds are privately-managed investments funds. They have a wide-ranging scope regarding the types and breadth of investments they can have. A hedge fund is a financial entity used for pooling the capital of a group of individual investors. Each hedge fund has its own unique characteristics and preferences and is designed to invest jointly in a particular market. Hedge funds employ strategic investment practices and operate under a designated professional advisor who is compensated with both a management fee and a performance fee.
Derivatives are financial securities whose value is derived from another “underlying” financial security. Options, futures, swaps, structured notes are all examples of derivative securities. Derivatives can be used for hedging, protecting against financial risk, or can be used to speculate on the movement of commodity or security prices, interest rates or the levels of financial indices. The valuation of derivatives makes use of the statistical mathematics of uncertainty, which is very complex.
Whether you like it or not, I will make you into financial warriors. With the training and knowledge I will impart to you, I expect big things. Follow my financial strategies and tactics and you will be well prepared for victory in your lifetime finances. Just remember, no battle plan survives the first contact with the enemy. You must be prepared to be disciplined and apply my principals. My personal doctrine is to have a low impact on all environments. This means making effective use of all the resources available to you to complete any campaign and that includes living. I will walk you through what you should know and what you need to know, from a financial perspective, to make it through life.
There has been staggering growth in the financial industry’s acceptance of the CFA® charter as the most respected and recognized investment designation in the world. Earning the designation requires a significant academic commitment and is an indication to investors of the hard work, commitment, and knowledge that ranks them among the best of investment professionals.
Featured Book : Deep Simplicity by John Gribbin
My boss uses an analogy about a beaten up stock or bond. He says that this security is like a boat that is filled with rocks and lies at the bottom of a lake in ‘equilibrium’. As investors get less negative about the security, it equates to taking rocks out of the boat one at a time. As more rocks are taken out, the boat moves away from the bottom. Finally, when one last ‘critical’ rock is thrown out, the boat rushes to the surface into a new ‘equilibrium’. This scenario of taking out one ‘critical’ rock that causes the entire boat to rush to the surface lies behind Chaos Theory. Small changes that cause diverging outcomes in dynamic systems. This is the backdrop of John Gribbin’s book Deep Simplicity: Chaos, Complexity and the Emergence of Life… Read more
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