tag:blogger.com,1999:blog-44073240244458349482024-03-13T06:41:59.079-07:00Financial ConceptsHelping answer your financial questions and develop strategies focused on helping you work toward your goals and providing you with better opportunities to achieve the financial future that you would like to enjoy - both today and tomorrow.Saverio Manzo bloghttp://www.blogger.com/profile/13340379232831747256noreply@blogger.comBlogger13125tag:blogger.com,1999:blog-4407324024445834948.post-12389927501815175072011-11-10T20:42:00.001-08:002013-04-05T05:29:32.488-07:00Clean Up Your Debt: 29% of Mortgages Are Underwater<div id="yui_3_2_0_1_1320984589532331">
A whopping 28.6 percent of homeowners with mortgages owe more on their loans than their homes could sell for, according to quarterly data released Tuesday by Zillow, a real estate website. That’s up from 26.8 percent in the second quarter. Home values declined only 0.2 percent from the second quarter but were down 4.4 percent year over year. The rising percentage of homes with “negative equity” or “underwater” status is due largely to how long the foreclosure sale process takes rather than home value fluctuations, said Zillow chief economist Stan Humphries. Prior to the “robo-signing” scandal around foreclosures that came to light in 2010, the negative equity rate hovered in the 21 to 23 percent range, but has been in the 26 to 28 range since due to added delays in foreclosure sales. While the rate of foreclosures is dropping, the time required for foreclosures to sell has lengthened. “We’re in uncharted waters,” Humphries said in an interview. </div>
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“More than one in four homes underwater and about 9 percent unemployment is a recipe for more foreclosures.”</div>
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USA Today – <a href="http://www.usatoday.com/money/economy/housing/story/2011-11-07/foreclosure-pipeline/51126600/1" rel="nofollow" target="_blank">Foreclosure backlogs could take decades to clear out</a><br />
Foreclosure sales are moving so slowly in half the states that at the current pace, it will take more than eight years on average to clear the 2.1 million homes in foreclosure or with seriously delinquent mortgages, new research shows. That’s about twice as long as a year ago in the states where foreclosures go through courts — before the mortgage industry was upended by last fall’s disclosures that court papers in many foreclosure cases were improperly prepared. Since then, new checks have slowed the process. The backlogs suggest that the fallout from the nation’s worst housing-market collapse is likely to weigh on real estate prices in many markets for years to come, and on some markets for longer than on others.<br />
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<span style="text-decoration: underline;">Comment</span>: According to <a href="http://www.census.gov/compendia/statab/2012/tables/12s0998.pdf" rel="nofollow" target="_blank">Census data</a>, a total of 76.428 million owner occupied units existed in the U.S. as of 2009. Of those, 50.3 million currently had a mortgage on their property.<br />
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Recently, Core Logic estimated that <a href="http://www.arborresearch.com/bianco/?p=54599" rel="nofollow" target="_blank">22.5% of all homes in the U.S. were underwater and another 5% had near negative equity</a>. Additionally, <a href="http://www.arborresearch.com/bianco/?p=54599" rel="nofollow" target="_blank">JP Morgan has estimated that 27% of all foreclosures are walkaways</a>.<br />
Zillow’s estimates offer another data point on mortgages, suggesting nearly a third of all homes are now underwater.<br />
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Saverio Manzo bloghttp://www.blogger.com/profile/13340379232831747256noreply@blogger.com2tag:blogger.com,1999:blog-4407324024445834948.post-86790024547277745952011-08-28T05:52:00.000-07:002013-04-05T05:29:17.038-07:00Financial Planning and Baby BoomersJohn is one of the sharpest guys I follow, so we listen to his words carefully. <br />
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<span style="font-size: small;">Some Thoughts on Getting Older</span></h3>
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<span style="font-size: small;"><span style="font-size: x-small; font-weight: normal;">(Source: John Mauldin) </span></span></h3>
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<span style="font-size: small;"> I turn 62 on October 4 while in Geneva. I don’t feel that old, and hope I don’t look it, but the birth certificate verifies the age. I should note that my mother turned 94 last week and is still quite active. I was talking with a Rice University classmate (of ’72) and old friend, John Benzon, who has recently retired from Price Waterhouse and is trying to figure out what “Act 2” will be. I realized that when we graduated, we had barely lived 1/3 of the lives we now have.</span></div>
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<span style="font-size: small;"> So with that on my mind, two items hit my inbox today. The first was from Lance Roberts of Streettalk Advisors. The San Francisco Fed did a report recently that suggested that we aging Boomers will be a drag on the stock market as we sell to support our retirement (shades of Harry Dent!). From the report: </span></div>
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<span style="font-size: small;"><b>“The baby boom generation born between 1946 and 1964 has had a large impact on the U.S. economy and will continue to do so as baby boomers gradually phase from work into retirement over the next two decades. To finance retirement, they are likely to sell off acquired assets, especially risky equities. A looming concern is that this massive sell-off might depress equity values.” </b></span></div>
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<span style="font-size: small;">You can read his short piece and the link to the Fed piece at <a href="http://www.streettalklive.com/financial-blog/253-boomers-are-going-to-be-a-real-drag.html" rel="nofollow" target="_blank">http://www.streettalklive.com/ financial-blog/253-boomers- are-going-to-be-a-real-drag. html</a><em>.</em></span></div>
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<span style="font-size: small;"> I am not so sure, though. I think the Boomer generation is a little different from previous generations. I remember going to my grandmother’s in my early years, when my aunts and uncles were the age I am now. Even though active – and most lived well into their 90s – they had a far more sedentary lifestyle than many Boomers do today. Boomers are more active and, whether for financial reasons or simply because they don’t want to retire (that would be me!), they are going to work longer than previous generations. In fact, the only cohort that has seen their employment rates rise is workers over the age of 55! Good for them (although tough on my young kids, who need those jobs).</span></div>
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<span style="font-size: small;"> Then I got this picture from Jon Sundt, the president of Altegris, a close friend, and my business partner. He is 50, at the tail end of the Boomer Generation. </span></div>
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<span style="font-size: small;">This is a wave he caught at the Mentawai Island Chain, 80 miles off the coast of Sumatra, Indonesia. He goes there every summer. They go into the middle of the Indian Ocean to find these large waves. And it is mostly Boomer surfers. (I’m not sure how much I like the guy who’s responsible for a large part of my monthly cash flow taking these risks, but that’s another story!)</span></div>
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<span style="font-size: small;">Go to a gym or running trail: it is not just kids out there any more. There are lots of people my age where I work out. Some of the trainers are over 50! We all have friends who are pushing the envelope – climbing mountains, biking, etc.</span></div>
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<span style="font-size: small;"> And the new biotech that will come out within the next five years is going to offer cures for many of the things that kill us sooner than we simply wear out. Cancer, Alzheimer’s, sclerosis of the liver, viruses are all on the short target list. I was talking about this with Scott Burns, noted author and long-time newspaper columnist (and a long-time friend). He calls it “catastrophic success” in his next book, as living longer is a “success,” but it makes our collective pension, Social Security, and Medicare problems even worse. Maybe MUCH worse. I smiled and told him there are worse problems than living longer. I intend to be writing and traveling for a few more decades.</span></div>
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<span style="font-size: small;"> And as my Dad used to say (he made it to 86), “God willing and the creek don’t rise” I intend to do 62 pushups on October 4<sup>th</sup>, which will be a personal best. I can’t do much about getting older (I will be very disappointed if I do not get a whole lot older!), but I don’t have to go quietly into that dark night. And neither do you, gentle reader. So, make sure you are around to read my musings a whole lot longer, as well. If you hang around long enough, you will even see me turn bullish! It won’t be that long, I promise. It will seem like just a few weeks from now.</span></div>
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<span style="font-size: small;"> And while I was having lunch with Scott, he asked me the question, “How many years of US corn production would the dollar reserves of China buy?” I mused, maybe 40. Wrong. It is only 12. And that is just corn. Not soybeans, wheat or rice or cattle, hogs or chickens. Think about that and stand back in awe at the productivity of the American farmer.</span></div>
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Saverio Manzo bloghttp://www.blogger.com/profile/13340379232831747256noreply@blogger.com0tag:blogger.com,1999:blog-4407324024445834948.post-23772045698062825482011-06-20T15:47:00.000-07:002013-04-05T05:30:00.394-07:00Growing and Preserving Wealth: Life Lessons<i> <b> Money won’t buy happiness, but it will pay the salaries of a large research staff to study the problem. </b> <br />
Bill Vaughan </i> <br />
Please excuse the very wealthy for feeling a bit under siege lately.<br />
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Taxes for the top 2 percent are very likely to go higher. Uncle Sam’s share of capital gains and dividend income might rise, and means-testing for Social Security and Medicare is probable. In the United States, the very rich hold most of that wealth in dollars, which are worth increasingly less. As income inequality has grown dramatically in the nation, the very wealthy are blamed for all manner of social ills.<br />
Rather than pile on the wealthy, this week I’d like to approach the subject of money a little more philosophically. There are surprising insights to be gleaned from the experiences of the very wealthy regarding their investments and experience with wealth.<br />
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Some context: In my day job, I come into contact with very high-net-worth individuals. These include young technologists with modest portfolios to families that measure their wealth in nine and 10 figures. For the math-averse, that’s hundreds of millions to billions of dollars.<br />
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Over the years, I have had some fascinating conversations with people who have hospitals and graduate schools named after them. I’d like to share some of the things I have learned from these folks.<br />
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<b> <b>1. Having money is better than not having money.</b> </b> <br />
Sure, this may be obvious, but let’s get it out of the way upfront. Money may not buy you happiness, but it buys many other important things. Like financial security, excellent health care, education, travel and a comfortable retirement. In a word: freedom.<br />
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<b> <b>2. Don’t become “cash rich” and “time poor.” </b> </b> <br />
Devoting all of your waking hours to making money is a problem, especially in professions with a partnership fast track. Lawyers, doctors, bankers and accountants can get so caught up in the competitive nature of their jobs that they lose touch with their family. Any semblance of a normal personal life disappears, and a very unhealthy balance between work and home can develop.<br />
Work is the process of exchanging your time for money. Remember: What you do with your time is far more meaningful than the goods you accumulate with your money. If you are working so much to become rich but you ignore your spouse and miss seeing your kids grow up, you are actually poorer than you realize.<br />
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<b> <b>3. Memories are better than material objects.</b> </b> <br />
You may be surprised to learn that among the monied set, expensive cars, yachts, houses, jewelry and watches come at the end of the list.<br />
Their priorities? Memories and accomplishments. This was especially true when it came to family. Toys matter less than good times.<br />
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The rule of diminishing returns is a harsh mistress with luxury goods. Do you really think $100,000 audio speakers sound 20 times better than a pair of $5,000 speakers? (They don’t). Is a $250,000 sports <a href="http://www.thinkinsure.ca/car-auto-insurance/car-insurance-ontario/insurance-quotes-ontario.php">car</a> five times faster than a $50,000? (It is not). These days, you can buy quite a lovely home for $1,000,000 (and much less in the country’s interior). Those $10,000,000 manses are not 10 times roomier. Anyone who has owned a $10,000 Rolex will tell you that a $39 Casio keeps better time.<br />
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When discussing the benefits of wealth, I have heard again and again about amazing experiences, family get-togethers, vacations, shows, sporting events, weddings and other events as these people’s most important life experiences. While these things cost money, nearly every family can afford reasonable versions of them.<br />
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<b> <b>4. Watch your “lifestyle leverage,” especially early in your career.</b> </b> <br />
Those partnership-track careers? The dirty little secret: Those firms love to get their young employees leveraged up. They will even help you get that way, co-signing mortgages for big houses or even directly lending you the cash on favorable terms.<br />
They encourage up-and-comers to spend extravagantly; they extend lines of credit to their rising stars. You need a big house with a jumbo mortgage; you cannot pull up to a business meeting in anything less than the best luxury <a href="http://www.thinkinsure.ca/car-auto-insurance/car-insurance-toronto/insurance-quotes-toronto.php">car</a>. It is part of their corporate culture.<br />
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Isn’t that nice of them?<br />
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Not really. The big banks, investment shops, law firms and accountants have learned how profitable it is to have “golden handcuffs” on their best employees. These highly-leveraged, debt-laden wage slaves will work harder, put in longer hours and stay with the firm longer than those debt-free workers.<br />
Besides, overleveraged employees do not leave to work at a new start-up or a smaller, more family friendly competitor.<br />
You recent graduates: Remember this when you are offered credit on generous terms. Your leverage is your detriment.<br />
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<b> <b>5. Having goals is incredibly important.</b> </b> <br />
I have a friend who is a serial entrepreneur. He was a board member in a household-name dot-com from the 1990s. He sold his stock — too early, I warned at the time — for $30 million. (It would have been worth $90 million a few months later.)<br />
But that didn’t matter to him — he planned to use that money for his next company, which he promptly built and sold for $250 million. He rolled that l into his third venture, which he cashed out of for a cool $1 billion. His long-term goal, and the ability to execute that vision, are what led him to incredible success.<br />
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He once said something that has stayed with me: “I am always surprised at how many people have no goals. They simply let life’s river flow them downstream.”<br />
There is a Latin phrase associated with military actions: “Amat victoria curam.“ It translates as “Victory loves careful preparation.” You would be amazed at what you can accomplish with planning.<br />
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<b> <b>6. You must live in the here and now.</b> </b> <br />
Goals are important, but don’t miss out on what is happening today.<br />
This is especially true among entrepreneurs, corporate execs and Type A personalities. Do not let dreams of that mansion on a hill prevent you from enjoying the home you live in.<br />
This is an area that can easily veer into cliche. Rather than risk that, I’ll simply remind you of what John Lennon sang in “Beautiful Boy”: “Life is what happens to you while you’re busy making other plans.”<br />
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<b> <b>7. It helps to be incredibly lucky</b>. </b> <br />
I am struck by how many very wealthy people I know — especially tech entrepreneurs – have expressed being grateful for their good luck. Again and again, I have heard the phrase: “Being smart is good, but being lucky is better.”<br />
Rather than leave you with the impression that success is simply a roll of the dice, I am compelled to remind you what the Roman philosopher Seneca the Younger was reputed to have said: “Luck is where preparation meets opportunity.”<br />
I don’t know whether it’s better to be smart or lucky, but I would suggest that making the most of the opportunities takes more than just dumb luck.<br />
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By <a href="http://www.washingtonpost.com/barry-ritholtz/2011/03/31/AFWBwIBC_page.html" rel="author">Barry Ritholtz</a>, <span class="timestamp updated processed">Published: June 18</span></h3>
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Saverio Manzo bloghttp://www.blogger.com/profile/13340379232831747256noreply@blogger.com0tag:blogger.com,1999:blog-4407324024445834948.post-45258515680482473322011-05-25T18:20:00.000-07:002013-04-05T05:32:59.390-07:00Is Life or Disability Insurance for You?<div class="first-paragraph">
<span class="Apple-style-span" style="font-family: 'Helvetica Neue', Arial, Helvetica, sans-serif;"><a href="https://www.insuremetoo.com/about-my-insurance-broker/social-responsibility-insurance-broker.html" target="_blank">Insurance brokers</a> resolve challenges in claims for high-net-worth clients with a combination of clear communication and attention to detail. Life insurance claims present fewer challenges than long-term disability claims.</span></div>
<span class="Apple-style-span" style="font-family: 'Helvetica Neue', Arial, Helvetica, sans-serif;">Brokers can head off potential issues while putting together the policy application. <a href="https://www.insuremetoo.com/customer-insurance-help/how-to-report-car-insurance-claim-ontario.html" target="_blank">Insurance claim</a> managers see non-disclosure at the root of many of the difficulties that arise in the claims process. For example, a client goes scuba-diving several years before the application is drafted and the broker omits this detail because it seems dated and irrelevant. That could be construed as non-disclosure and invalidate the contract. Though not a frequent occurrence, non-disclosure of details not connected to cause of death can lead to withholding of payment.</span><br />
<span class="Apple-style-span" style="font-family: 'Helvetica Neue', Arial, Helvetica, sans-serif;">Notwithstanding diligence during the application, a delay can arise if the beneficiary named in the will is not the individual named in the policy, a situation that sometimes arises when the client remarries. The legal implications vary from province to province, observes Susan St. Amand, a certified financial planner and president of Ottawa-based Sirius Financial Services, but payout delays are possible and may involve lengthy and costly negotiations.</span><br />
<span class="Apple-style-span" style="font-family: 'Helvetica Neue', Arial, Helvetica, sans-serif;">This scenario underlines the need for detailed note-taking and file-keeping, she suggests. In the event of legal proceedings, the notes and files may prove that the client mentioned in conversation an intention to change beneficiaries but had not proceeded, perhaps due to time constraints. </span><br />
<span class="Apple-style-span" style="font-family: 'Helvetica Neue', Arial, Helvetica, sans-serif;">Another challenge occurs when the client dies in another jurisdiction, as when a snowbird dies in Florida. This can involve getting detailed documentation from several doctors or medical institutions in the foreign jurisdiction, a potentially time-consuming and expensive process, St. Amand explains, adding that fees for reports will have to be paid in advance. For the broker, that means alerting the estate executor to the possibility of a large bill against the estate and suggesting that the necessary funds be set aside.</span><br />
<span class="Apple-style-span" style="font-family: 'Helvetica Neue', Arial, Helvetica, sans-serif;">With CI or LTD claims, problems can arise outside of the actual claims process since the client may not be psychologically prepared for a diagnosis of cancer or other critical ailment. “Any assistance you can give them to provide them with guidance and comfort around what the insurance carrier is trying to get is helpful on both sides of the equation,” St. Amand says. This helps the insurer resolve the claim and helps the client in dealing with the stress of diagnosis. </span><br />
<span class="Apple-style-span" style="font-family: 'Helvetica Neue', Arial, Helvetica, sans-serif;">The broker may expedite the information gathering process by obtaining the client’s authorization to communicate directly with the doctor, and providing the doctor or even several doctors with a list of questions to be answered in letter form and attached to the claim forms. “Facilitation of communication between parties is one of the most valuable roles we play at claim time,” she says.</span><br />
<span class="Apple-style-span" style="font-family: 'Helvetica Neue', Arial, Helvetica, sans-serif;">An LTD claim can become a matter of negotiation when it becomes a residual claim. This occurs when a high-net-worth client suffering from a disability elects to continue working but with a reduced schedule. An individual serving as vice president of marketing and whose ailment impedes his performance in a family firm can make a claim for the cost of hiring someone to assume some of his responsibilities. </span><br />
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<span class="Apple-style-span" style="font-family: 'Helvetica Neue', Arial, Helvetica, sans-serif;">Similarly, some ailments that qualify for LTD, such as Alzheimer’s disease and cancer, can be progressive, meaning a transition over time from partial disability—during which the individual can delegate some responsibilities—to complete disability. For the <a href="http://www.thinkinsure.ca/index.php">broker</a>, this again means guiding the client, or, with the client’s authorization, communicating directly with the doctor about the documentation required.</span><br />
<span class="Apple-style-span" style="font-family: 'Helvetica Neue', Arial, Helvetica, sans-serif;">When an insurer declines a claim the broker and client have several choices, including litigation and case management, which may turn the tide in the client’s favour.</span><br />
<span class="Apple-style-span" style="font-family: 'Helvetica Neue', Arial, Helvetica, sans-serif;">Dr. Raymond Rupert, founder of Toronto-based Rupert Case Management Inc., notes one case where two insurers declined claims for CI and LTD. The client had become confused and unable to work or function well for two years, but doctors had not arrived at a clear diagnosis that conformed to the language of the client’s policy. “He couldn’t remember things. There was clearly a cognitive issue,” Rupert recalls. </span><br />
<span class="Apple-style-span" style="font-family: 'Helvetica Neue', Arial, Helvetica, sans-serif;">Rupert examined “four inches of medical files” looking for gaps in the analysis. Examination of the client’s background revealed a period where he played semi-pro hockey, and received several blows to the head. Medical scans provided evidence of multiple areas of stroke in the brain—he had suffered hockey players’ concussion syndrome. His online journal provided further evidence. “He had developed several areas of damage that were stroke-like and the sum total of all of these strokes was this thinking disorder,” Rupert says. </span><br />
<span class="Apple-style-span" style="font-family: 'Helvetica Neue', Arial, Helvetica, sans-serif;">This work provided enough evidence to underpin the successful claim for the payouts.</span><br />
<em><span class="Apple-style-span" style="font-family: 'Helvetica Neue', Arial, Helvetica, sans-serif;"><strong>Al Emid</strong>, a financial journalist, covers insurance, investing and banking.</span></em><br />
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<span style="font-size: x-small;">About me: I give Economic, Social and Global trend briefings from some of the world's brightest minds at my blog </span><a href="http://saveriomanzo.com/"><span style="font-size: x-small;">http://saveriomanzo.com/</span></a><span style="font-size: x-small;"> and </span><a href="http://saveriomanzo.blogspot.com/"><span style="font-size: x-small;">http://saveriomanzo.blogspot.com/</span></a><span style="font-size: x-small;">. I also provide true and tested </span><a href="http://financialconcepts.ca/"><span style="font-size: x-small;">financial planning </span></a><span style="font-size: x-small;">and </span><a href="http://wealthconcepts.ca/"><span style="font-size: x-small;">wealth advice</span></a><span style="font-size: x-small;">. Most recently, over the past few years, I have become </span><a href="http://feelgreengood.com/"><span style="font-size: x-small;">socially conscious </span></a><span style="font-size: x-small;">and have been attempting to practise ways in which I can live my life more </span><a href="http://feelgreengood.blogspot.com/"><span style="font-size: x-small;">environmentally friendly</span></a><span style="font-size: x-small;">. Along with some truly exceptional friends, we provide <a href="http://www.biz-advisor.ca/">consulting</a> and <a href="http://www.biz-advisor.ca/">business development</a> for small-medium sized businesses. </span><span style="font-size: x-small;">In addition, I truly believe in being </span><a href="http://zealousaltruism.blogspot.com/"><span style="font-size: x-small;">philanthropic</span></a><span style="font-size: x-small;">, giving and doing unto other as we would have them do unto us. Some of my fondest resources are from </span><a href="http://www.ritholtz.com/blog/"><span style="font-size: x-small;">Barry Ritholtz of The Big Picture</span></a><span style="font-size: x-small;">, </span><a href="http://www.gluskinsheff.com/"><span style="font-size: x-small;">David Rosenberg </span></a><span style="font-size: x-small;">and what Warren Buffett of </span><a href="http://www.berkshirehathaway.com/"><span style="font-size: x-small;">Berkshire Hathaway</span></a><span style="font-size: x-small;"> is up to behind the scenes, as an example.</span> saverio manzo <br />
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<br />Saverio Manzo bloghttp://www.blogger.com/profile/13340379232831747256noreply@blogger.com1tag:blogger.com,1999:blog-4407324024445834948.post-78702855222425621512011-05-06T06:43:00.001-07:002011-05-06T06:43:33.093-07:00Smart Financial Management<div style="margin-bottom: 0px; margin-left: 0px; margin-right: 0px; margin-top: 0px;"><span class="Apple-style-span" style="font-family: 'Trebuchet MS', sans-serif; font-size: 16px;">If you are unable to take care of your finances and you desperately want to take control over it, you must use money management tips. Gaining the knowledge of practical money management tips not only enables you to gain peace of mind by helping you live within your means but also helps improve your monetary condition. This article provides you with information about how you can manage your money on your own in a better way.</span></div><div class="MsoNormal"><div style="margin-bottom: 0px; margin-left: 0px; margin-right: 0px; margin-top: 0px;"><span style="font-size: 12pt;"><span class="Apple-style-span" style="font-family: 'Trebuchet MS', sans-serif;"><br />
</span></span></div></div><div class="MsoNormal"><div style="margin-bottom: 0px; margin-left: 0px; margin-right: 0px; margin-top: 0px;"><span class="Apple-style-span" style="font-family: 'Trebuchet MS', sans-serif;"><b><span style="font-size: 12pt;">Tips to manage money</span></b><span style="font-size: 12pt;"><o:p></o:p></span></span></div></div><div class="MsoNormal"><div style="margin-bottom: 0px; margin-left: 0px; margin-right: 0px; margin-top: 0px;"><span style="font-size: 12pt;"><span class="Apple-style-span" style="font-family: 'Trebuchet MS', sans-serif;">If you want to take control over your finances, you can either manage it on your own or you may hire a <a href="http://www.creditmagic.org/"><span style="color: blue;">credit counseling</span></a> agency to provide you with professional help to manage money in a methodical way. However, if you have time to do it on your own, you can save a lot of cash by not hiring a credit counseling agency to assist you to manage it.<o:p></o:p></span></span></div></div><div class="MsoNormal"><div style="margin-bottom: 0px; margin-left: 0px; margin-right: 0px; margin-top: 0px;"><span style="font-size: 12pt;"><span class="Apple-style-span" style="font-family: 'Trebuchet MS', sans-serif;">Thus, here are some tips you may use in order to manage your money on your own.<o:p></o:p></span></span></div></div><div class="MsoNormal"><div style="margin-bottom: 0px; margin-left: 0px; margin-right: 0px; margin-top: 0px;"><span style="font-size: 12pt;"><span class="Apple-style-span" style="font-family: 'Trebuchet MS', sans-serif;"><br />
</span></span></div></div><div class="MsoNormal"><div style="margin-bottom: 0px; margin-left: 0px; margin-right: 0px; margin-top: 0px;"><span class="Apple-style-span" style="font-family: 'Trebuchet MS', sans-serif;"><b><span style="font-size: 12pt;">1 . Create a budget</span></b><span style="font-size: 12pt;"> – Track your income and your expenses and find out if your expenditures are more than your income. Also make sure to start a spending plan and take note of your daily expenses regularly. This may be time consuming but it will help you analyze your financial situation. List your spending, both the fixed ones like house and car payments as well as the flexible ones such as the electric and phone bills. This kind of a breakdown will help you get an idea about your financial standing.<o:p></o:p></span></span></div></div><div class="MsoNormal"><div style="margin-bottom: 0px; margin-left: 0px; margin-right: 0px; margin-top: 0px;"><span class="Apple-style-span" style="font-family: 'Trebuchet MS', sans-serif;"><span style="font-size: 12pt;"><br />
</span></span></div></div><div class="MsoNormal"><div style="margin-bottom: 0px; margin-left: 0px; margin-right: 0px; margin-top: 0px;"><span class="Apple-style-span" style="font-family: 'Trebuchet MS', sans-serif;"><b><span style="font-size: 12pt;">2 . Review your credit report</span></b><span style="font-size: 12pt;"> – Get a copy of your credit report and review it thoroughly. Investigate if there are any inaccuracies in your credit report such as typing mistakes or out-dated information. Immediately take up steps to remove such erroneous information from your credit report.<o:p></o:p></span></span></div></div><div class="MsoNormal"><div style="margin-bottom: 0px; margin-left: 0px; margin-right: 0px; margin-top: 0px;"><span class="Apple-style-span" style="font-family: 'Trebuchet MS', sans-serif;"><span style="font-size: 12pt;"><br />
</span></span></div></div><div class="MsoNormal"><div style="margin-bottom: 0px; margin-left: 0px; margin-right: 0px; margin-top: 0px;"><span class="Apple-style-span" style="font-family: 'Trebuchet MS', sans-serif;"><b><span style="font-size: 12pt;">3 . Automate your finances</span></b><span style="font-size: 12pt;"> – In order to automate your financial life, you must contact your mutual fund or broker to have monthly investments routed from your bank. Make sure to do the same for all your monthly utility, phone and cable bills. This will ultimately help you stick to your budget and you will never have to pay a late fee again.<o:p></o:p></span></span></div></div><div class="MsoNormal"><div style="margin-bottom: 0px; margin-left: 0px; margin-right: 0px; margin-top: 0px;"><span class="Apple-style-span" style="font-family: 'Trebuchet MS', sans-serif;"><span style="font-size: 12pt;"><br />
</span></span></div></div><div class="MsoNormal"><div style="margin-bottom: 0px; margin-left: 0px; margin-right: 0px; margin-top: 0px;"><span class="Apple-style-span" style="font-family: 'Trebuchet MS', sans-serif;"><b><span style="font-size: 12pt;">4 . Check your bank statement </span></b><span style="font-size: 12pt;">– Be careful to read your bank statement regularly. Though each checking statement may differ according to the specific kind of account or bank, yet there are some basic types of entries that you must take note of. Be cautious about any transactions that you think is not yours as they signify that your checking account is in trouble.<o:p></o:p></span></span></div></div><div class="MsoNormal"><div style="margin-bottom: 0px; margin-left: 0px; margin-right: 0px; margin-top: 0px;"><span class="Apple-style-span" style="font-family: 'Trebuchet MS', sans-serif;"><span style="font-size: 12pt;"><br />
</span></span></div></div><div class="MsoNormal"><div style="margin-bottom: 0px; margin-left: 0px; margin-right: 0px; margin-top: 0px;"><span class="Apple-style-span" style="font-family: 'Trebuchet MS', sans-serif;"><span style="font-size: 12pt;">Apart from managing your present finances, you must start accumulating cash for your future. It is preferable to start saving for your future as soon as</span><span style="font-size: 12pt;"> you have got your first job. This will help you attain a considerable growth in your savings over the tim</span></span><span style="font-family: 'Times New Roman', serif; font-size: 12pt;">e.<o:p></o:p></span></div></div><div style="margin-bottom: 0px; margin-left: 0px; margin-right: 0px; margin-top: 0px;"><span style="font-family: 'Times New Roman', serif; font-size: 12pt;">Submitted by <span style="color: blue;"><a href="http://www.advisorworld.com/thu-10292009/gweston" title="View user profile.">gweston</a>, Advisor World</span></span></div><div style="margin-bottom: 0px; margin-left: 0px; margin-right: 0px; margin-top: 0px;"><br />
</div><div style="margin-bottom: 0px; margin-left: 0px; margin-right: 0px; margin-top: 0px;"></div><div style="margin-bottom: 0px; margin-left: 0px; margin-right: 0px; margin-top: 0px;"><span style="font-size: x-small;">About me: I give Economic, Social and Global trend briefings from some of the world's brightest minds at my blog </span><a href="http://saveriomanzo.com/"><span style="font-size: x-small;">http://saveriomanzo.com/</span></a><span style="font-size: x-small;"> and </span><a href="http://saveriomanzo.blogspot.com/"><span style="font-size: x-small;">http://saveriomanzo.blogspot.com/</span></a><span style="font-size: x-small;">. I also provide true and tested </span><a href="http://financialconcepts.ca/"><span style="font-size: x-small;">financial planning </span></a><span style="font-size: x-small;">and </span><a href="http://wealthconcepts.ca/"><span style="font-size: x-small;">wealth advice</span></a><span style="font-size: x-small;">. Most recently, over the past few years, I have become </span><a href="http://feelgreengood.com/"><span style="font-size: x-small;">socially conscious </span></a><span style="font-size: x-small;">and have been attempting to practise ways in which I can live my life more </span><a href="http://feelgreengood.blogspot.com/"><span style="font-size: x-small;">environmentally friendly</span></a><span style="font-size: x-small;">. Along with some truly exceptional friends, we provide <a href="http://www.biz-advisor.ca/">consulting</a> and <a href="http://www.biz-advisor.ca/">business development</a> for small-medium sized businesses. </span><span style="font-size: x-small;">In addition, I truly believe in being </span><a href="http://zealousaltruism.blogspot.com/"><span style="font-size: x-small;">philanthropic</span></a><span style="font-size: x-small;">, giving and doing unto other as we would have them do unto us. Some of my fondest resources are from </span><a href="http://www.ritholtz.com/blog/"><span style="font-size: x-small;">Barry Ritholtz of The Big Picture</span></a><span style="font-size: x-small;">, </span><a href="http://www.gluskinsheff.com/"><span style="font-size: x-small;">David Rosenberg </span></a><span style="font-size: x-small;">and what Warren Buffett of </span><a href="http://www.berkshirehathaway.com/"><span style="font-size: x-small;">Berkshire Hathaway</span></a><span style="font-size: x-small;"> is up to behind the scenes, as an example.</span> saverio manzo</div><div style="margin-bottom: 0px; margin-left: 0px; margin-right: 0px; margin-top: 0px;"><br />
</div><div style="margin-bottom: 0px; margin-left: 0px; margin-right: 0px; margin-top: 0px;"><a href="http://www.everyoneweb.com/saveriomanzo/"><span style="font-size: xx-small;">http://www.everyoneweb.com/saveriomanzo/</span></a><span style="font-size: xx-small;"> </span><a href="http://saverio-manzo.jimdo.com/"><span style="font-size: xx-small;">http://saverio-manzo.jimdo.com/</span></a> <a href="http://saverio-manzo.yolasite.com/"><span style="font-size: xx-small;">http://saverio-manzo.yolasite.com/</span></a><span style="font-size: xx-small;"> </span><a href="http://saverio-manzo.webs.com/"><span style="font-size: xx-small;">http://saverio-manzo.webs.com/</span></a><span style="font-size: xx-small;"> </span><a href="http://saverio-manzo.weebly.com/"><span style="font-size: xx-small;">http://saverio-manzo.weebly.com/</span></a> <a href="http://saveriomanzo.terapad.com/"><span style="font-size: xx-small;">http://saveriomanzo.terapad.com</span></a><span style="font-size: xx-small;"> </span><a href="http://www.shareowners.org/profile/SaverioManzo"><span style="font-size: xx-small;">http://www.shareowners.org/profile/SaverioManzo</span></a> <a href="http://www.linkedin.com/pub/saverio-manzo/b/995/63"><span style="font-size: xx-small;">http://www.linkedin.com/pub/saverio-manzo/b/995/63</span></a><span style="font-size: xx-small;"> </span><a href="http://twitter.com/saveriomanzo"><span style="font-size: xx-small;">http://twitter.com/saveriomanzo</span></a> <a href="http://www.facebook.com/people/Saverio-Manzo/854720596?ref=search"><span style="font-size: xx-small;">http://www.facebook.com/people/Saverio-Manzo/854720596?ref=search</span></a></div>Saverio Manzo bloghttp://www.blogger.com/profile/13340379232831747256noreply@blogger.com0tag:blogger.com,1999:blog-4407324024445834948.post-43300474225774622652011-04-14T15:09:00.001-07:002011-04-14T15:09:54.075-07:00Close Deals Like Warren Buffett<div class="MsoNormal"><span style="font-family: Arial, sans-serif; font-size: 10pt;"><a href="http://dealbook.nytimes.com/2011/04/05/steinhardt-talks-of-buffetts-snow-job/">Warren Buffett might be catching a lot of flack</a> these days, but I think if you want to know about closing big deals, he’s still the guy to watch. Why? The man knows how to talk about money when he’s dealmaking.<o:p></o:p></span></div><div class="MsoNormal"><br />
</div><div class="MsoNormal"><span style="font-family: Arial, sans-serif; font-size: 10pt;">Buffett is famous for doing ginormous deals with as little information as a few pages of business plans and the standard financials a company would submit to a bank to qualify for a loan. What he has when he goes into any conversation is an encyclopedic knowledge of how businesses work financially. He knows “their money,” “their wallet,” and how investments and outcomes should work. Follow his lead and you will close more business.<o:p></o:p></span></div><div class="MsoNormal"><br />
</div><div class="MsoNormal"><span style="font-family: Arial, sans-serif; font-size: 10pt;">Here are seven things I’ve learned as I’ve watched Buffett from afar:<o:p></o:p></span></div><div class="MsoNormal"><br />
</div><ol start="1" style="margin-top: 0cm;" type="1"><li class="MsoNormal" style="mso-list: l0 level1 lfo1;"><span style="font-family: Arial, sans-serif; font-size: 10pt;">Know the other guy’s money - How they make it, how they count it, how they spend it. This is obviously much easier to do for publicly traded companies. For privately held companies, the numbers are fairly easy to estimate, at least the cost of goods sold and probably the cost of sale. These numbers are critical to discussing the possibilities of working together. Too often the discussion stops at budget. When you don’t know, ask. Not the trade secrets, but at least the industry averages. This provides a basic framework for the discussion.<o:p></o:p></span></li>
</ol><div class="MsoNormal" style="margin-left: 36.0pt;"><br />
</div><div class="MsoNormal"><span style="font-family: Arial, sans-serif; font-size: 10pt;">2. Know the other guy’s wallet - How does this sale impact any of these critical numbers? The terms of the deal should be looked at from their side of the table first, then yours.<o:p></o:p></span></div><div class="MsoNormal"><br />
</div><div class="MsoNormal"><span style="font-family: Arial, sans-serif; font-size: 10pt;">3. Start discussing the money early - You know you are going to discuss the money later. Early in the conversation, you do not have enough information for precision. Instead, you have an understanding of the economics of the prospect’s industry, so you have enough to determine if a deal makes any sense at all. Use that economic information and industry knowledge to frame a shared understanding of the reality of the money for this opportunity.<o:p></o:p></span></div><div class="MsoNormal"><br />
</div><div class="MsoNormal"><span style="font-family: Arial, sans-serif; font-size: 10pt;">4. Use ranges to qualify and disqualify - Understand early (and throughout the discussion) whether you and your prospect are in the same arena. By using ranges of prices, cost structures, yields, and performance you can both be sure that you are dealing in a shared reality rather than getting to the end and finding yourselves so far apart that there is permanent damage done to the relationship.<o:p></o:p></span></div><div class="MsoNormal"><br />
</div><div class="MsoNormal"><span style="font-family: Arial, sans-serif; font-size: 10pt;">5. Speak the language of investment and outcomes - Every large sale is an investment on both parts in an outcome. When you move the conversation from price to investment and cost to outcomes you are focusing on the business impact rather than budget impact. This is the language of large sales.<o:p></o:p></span></div><div class="MsoNormal"><br />
</div><div class="MsoNormal"><span style="font-family: Arial, sans-serif; font-size: 10pt;">6. Don’t discount early - I regularly hear fearful “deal makers” use language like, “Let’s not let money get in the way of working together.” There’s a word for this that is not used in polite company. This is the language of discounting before the scope has been clearly defined. The sales person believes that he is being clever by taking money off the table. What he has really done is to take margin off the table, his and his company’s margin. If qualifying investment and impact has been made up front, then this point does not need to be made again.<o:p></o:p></span></div><div class="MsoNormal"><br />
</div><div class="MsoNormal"><span style="font-family: Arial, sans-serif; font-size: 10pt;">7. Don’t negotiate until it’s time - Work on the deal points one at a time. Work through the investment and outcome ideas clearly, then negotiate. True, all of these points require negotiation. However, too often the conversation turns to negotiations too early before real scope and deliverables have been defined. Which means that the whole is reduced to the little parts before the shared picture of the whole has been established.<o:p></o:p></span></div><div class="MsoNormal"><br />
</div><div class="MsoNormal"><span style="font-family: Arial, sans-serif; font-size: 10pt;">Side Note: I watched a deal unravel recently because the players did not observe these guidelines. The sale involved the installation of a point-of-sale system into a retail chain. The details are complicated as many large deals are, but the numbers were simple:<o:p></o:p></span></div><div class="MsoNormal"><span style="font-family: Arial, sans-serif; font-size: 10pt;">If you calculated the investment necessary for the system, the transaction cost was going to be >5% of the transaction revenue value. That’s more than the cost of the charge card processing fee! Never going to work regardless of the reporting bells and whistles, speed to data consolidation and so on.<o:p></o:p></span></div><div class="MsoNormal"><br />
</div><div class="MsoNormal"><span style="font-family: Arial, sans-serif; font-size: 10pt;">This violates rules 1-5. The selling team did not understand the fundamental money issues of their prospect. They had not asked, done their research or even estimated. They were focused on the features of their system and what they had heard the IT people say would be the selection criteria without working through the money issues. That always leads to disaster.<o:p></o:p></span></div><br />
saverio manzo<br />
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<span style="font-size: x-small;">About me: I give Economic, Social and Global trend briefings from some of the world's brightest minds at my blog </span><a href="http://saveriomanzo.com/"><span style="font-size: x-small;">http://saveriomanzo.com/</span></a><span style="font-size: x-small;"> and </span><a href="http://saveriomanzo.blogspot.com/"><span style="font-size: x-small;">http://saveriomanzo.blogspot.com/</span></a><span style="font-size: x-small;">. I also provide true and tested </span><a href="http://financialconcepts.ca/"><span style="font-size: x-small;">financial planning </span></a><span style="font-size: x-small;">and </span><a href="http://wealthconcepts.ca/"><span style="font-size: x-small;">wealth advice</span></a><span style="font-size: x-small;">. Most recently, over the past few years, I have become </span><a href="http://feelgreengood.com/"><span style="font-size: x-small;">socially conscious </span></a><span style="font-size: x-small;">and have been attempting to practise ways in which I can live my life more </span><a href="http://feelgreengood.blogspot.com/"><span style="font-size: x-small;">environmentally friendly</span></a><span style="font-size: x-small;">. Along with some truly exceptional friends, we provide <a href="http://www.biz-advisor.ca/">consulting</a> and <a href="http://www.biz-advisor.ca/">business development</a> for small-medium sized businesses. </span><span style="font-size: x-small;">In addition, I truly believe in being </span><a href="http://zealousaltruism.blogspot.com/"><span style="font-size: x-small;">philanthropic</span></a><span style="font-size: x-small;">, giving and doing unto other as we would have them do unto us. Some of my fondest resources are from </span><a href="http://www.ritholtz.com/blog/"><span style="font-size: x-small;">Barry Ritholtz of The Big Picture</span></a><span style="font-size: x-small;">, </span><a href="http://www.gluskinsheff.com/"><span style="font-size: x-small;">David Rosenberg </span></a><span style="font-size: x-small;">and what Warren Buffett of </span><a href="http://www.berkshirehathaway.com/"><span style="font-size: x-small;">Berkshire Hathaway</span></a><span style="font-size: x-small;"> is up to behind the scenes, as an example.</span> saverio manzo<br />
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http://www.thinkinsure.ca/Saverio Manzo bloghttp://www.blogger.com/profile/13340379232831747256noreply@blogger.com1tag:blogger.com,1999:blog-4407324024445834948.post-36961963977652967432011-02-26T09:49:00.000-08:002011-02-26T09:49:48.928-08:00Rich Man, Poor Man (The Power of Compounding)<div class="MsoNormal" style="margin: 0cm 0cm 0pt;"><b><span style="color: black; font-family: "Times New Roman", "serif"; font-size: 12pt; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-CA;">by Richard Russell</span></b><b><span style="color: black; font-family: "Times New Roman", "serif"; mso-bidi-font-size: 10.0pt; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-CA;"><a href="http://ww1.dowtheoryletters.com/" target="_blank"><i><span style="color: blue; font-size: 12pt;">Dow Theory Letters</span></i></a></span></b><span style="color: black; font-family: "Georgia", "serif"; mso-bidi-font-family: "Times New Roman"; mso-bidi-font-size: 10.0pt; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-CA;"></span></div><div class="MsoNormal" style="margin: 0cm 0cm 0pt;"><i><span style="color: black; font-family: "Times New Roman", "serif"; font-size: 12pt; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-CA;">Recently by Richard Russell: <a href="http://www.lewrockwell.com/spl3/russell-the-red-arrows.html" target="_blank"><span style="color: blue;">The Red Arrows</span></a></span></i><span style="color: black; font-family: "Georgia", "serif"; mso-bidi-font-family: "Times New Roman"; mso-bidi-font-size: 10.0pt; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-CA;"></span></div><div class="MsoNormal" style="margin: 0cm 0cm 0pt;"></div><table align="right" border="0" cellpadding="0" cellspacing="0" class="MsoNormalTable" style="mso-cellspacing: 0cm; mso-padding-alt: 0cm 0cm 0cm 0cm; mso-table-anchor-horizontal: column; mso-table-anchor-vertical: paragraph; mso-table-left: right; mso-table-lspace: 2.25pt; mso-table-rspace: 2.25pt; mso-table-top: middle; mso-yfti-tbllook: 1184; width: 315px;"><tbody>
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<div class="MsoNormal" style="margin: 0cm 0cm 0pt;"><b><span style="color: black; font-family: "Times New Roman", "serif"; font-size: 12pt; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-CA;">MAKING MONEY</span></b><span style="color: black; font-family: "Times New Roman", "serif"; font-size: 12pt; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-CA;">: The most popular piece I’ve published in 40 years of writing these Letters was entitled, “Rich Man, Poor Man.” I have had dozens of requests to run this piece again or for permission to reprint it for various business organizations.</span></div><div class="MsoNormal" style="margin: 0cm 0cm 0pt;"><br />
</div><div class="MsoNormal" style="margin: 0cm 0cm 0pt;"><span style="color: black; font-family: "Times New Roman", "serif"; font-size: 12pt; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-CA;">Making money entails a lot more than predicting which way the stock or bond markets are heading or trying to figure which stock or fund will double over the next few years. For the great majority of investors, making money requires a plan, self-discipline and desire. I say, “for the great majority of people” because if you’re a Steven Spielberg or a Bill Gates you don’t have to know about the Dow or the markets or about yields or price/earnings ratios. You’re a phenomenon in your own field, and you’re going to make big money as a by-product of your talent and ability. But this kind of genius is rare.</span></div><div class="MsoNormal" style="margin: 0cm 0cm 0pt;"><br />
</div><div class="MsoNormal" style="margin: 0cm 0cm 0pt;"><span style="color: black; font-family: "Times New Roman", "serif"; font-size: 12pt; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-CA;">For the average investor, you and me, we’re not geniuses so we have to have a <b><a href="http://www.thinkinsure.ca/index.php">financial plan</a></b>. In view of this, I offer below a few items that we must be aware of if we are serious about making money.</span></div><div class="MsoNormal" style="margin: 0cm 0cm 0pt;"><br />
</div><div class="MsoNormal" style="margin: 0cm 0cm 0pt;"><b><span style="color: black; font-family: "Times New Roman", "serif"; font-size: 12pt; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-CA;">Rule 1: Compounding</span></b><span style="color: black; font-family: "Times New Roman", "serif"; font-size: 12pt; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-CA;">: One of the most important lessons for living in the modern world is that to survive you’ve got to have money. But to live (survive) <i>happily</i>, you must have love, health (mental and physical), freedom, intellectual stimulation – and money. When I taught my kids about money, the first thing I taught them was the use of the “money bible.” What’s the money bible? Simple, it’s a volume of the <i>compounding interest tables.</i></span></div><div class="MsoNormal" style="margin: 0cm 0cm 0pt;"><br />
</div><div class="MsoNormal" style="margin: 0cm 0cm 0pt;"><span style="color: black; font-family: "Times New Roman", "serif"; font-size: 12pt; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-CA;">Compounding is the royal road to riches. Compounding is the safe road, the sure road, and fortunately, anybody can do it. To compound successfully you need the following: perseverance in order to keep you firmly on the savings path. You need intelligence in order to understand what you are doing and why. And you need a knowledge of the mathematics tables in order to comprehend the amazing rewards that will come to you if you faithfully follow the compounding road. And, of course, you need time, time to allow the power of compounding to work for you. </span></div><div class="MsoNormal" style="margin: 0cm 0cm 0pt;"><br />
</div><div class="MsoNormal" style="margin: 0cm 0cm 0pt;"><span style="color: black; font-family: "Times New Roman", "serif"; font-size: 12pt; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-CA;">Remember, compounding <i>only works through time.</i></span></div><div class="MsoNormal" style="margin: 0cm 0cm 0pt;"><br />
</div><div class="MsoNormal" style="margin: 0cm 0cm 0pt;"><span style="color: black; font-family: "Times New Roman", "serif"; font-size: 12pt; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-CA;">But there are two catches in the compounding process. The first is obvious – compounding may involve sacrifice (you can’t spend it and still save it). Second, compounding is boring – b-o-r-i-n-g. Or I should say it’s boring until (after seven or eight years) the money starts to pour in. Then, believe me, compounding becomes very interesting. In fact, it becomes downright fascinating!</span><span style="color: black; font-family: "Georgia", "serif"; mso-bidi-font-family: "Times New Roman"; mso-bidi-font-size: 10.0pt; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-CA;"></span></div><div class="MsoNormal" style="margin: 0cm 0cm 0pt;"><span style="color: black; font-family: "Times New Roman", "serif"; font-size: 12pt; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-CA;">In order to emphasize the power of compounding, I am including this extraordinary study, courtesy of <i>Market Logic</i>, of Ft. Lauderdale, FL 33306. In this study we assume that investor (B) opens an IRA at age 19. For seven consecutive periods he puts $2,000 in his IRA at an average growth rate of 10% (7% interest plus growth). After seven years this fellow makes NO MORE contributions – he’s finished.</span><span style="color: black; font-family: "Georgia", "serif"; mso-bidi-font-family: "Times New Roman"; mso-bidi-font-size: 10.0pt; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-CA;"></span></div><div class="MsoNormal" style="margin: 0cm 0cm 0pt;"><span style="color: black; font-family: "Times New Roman", "serif"; font-size: 12pt; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-CA;">A second investor (A) makes no contributions until age 26 (this is the age when investor B was finished with his contributions). Then A continues faithfully to contribute $2,000 every year until he’s 65 (at the same theoretical 10% rate).</span><span style="color: black; font-family: "Georgia", "serif"; mso-bidi-font-family: "Times New Roman"; mso-bidi-font-size: 10.0pt; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-CA;"></span></div><div class="MsoNormal" style="margin: 0cm 0cm 0pt;"><span style="color: black; font-family: "Times New Roman", "serif"; font-size: 12pt; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-CA;">Now study the incredible results. B, who made his contributions earlier and who made only seven contributions, ends up with MORE money than A, who made 40 contributions but at a LATER TIME. The difference in the two is that <i>B</i> <i>had seven more early years of compounding than A</i>. Those seven early years were worth more than all of A’s 33 additional contributions.</span><span style="color: black; font-family: "Georgia", "serif"; mso-bidi-font-family: "Times New Roman"; mso-bidi-font-size: 10.0pt; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-CA;"></span></div><div class="MsoNormal" style="margin: 0cm 0cm 0pt;"><span style="color: black; font-family: "Times New Roman", "serif"; font-size: 12pt; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-CA;">This is a study that I suggest you show to your kids. It’s a study I’ve lived by, and I can tell you, “It works.” You can work your compounding with muni-bonds, with a good money market fund, with T-bills or say with five-year T-notes.</span><span style="color: black; font-family: "Georgia", "serif"; mso-bidi-font-family: "Times New Roman"; mso-bidi-font-size: 10.0pt; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-CA;"></span></div><div class="MsoNormal" style="margin: 0cm 0cm 0pt;"><br />
</div><div class="MsoNormal" style="margin: 0cm 0cm 0pt;"><b><span style="color: black; font-family: "Times New Roman", "serif"; font-size: 12pt; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-CA;">Rule 2: DON’T LOSE MONEY</span></b><span style="color: black; font-family: "Times New Roman", "serif"; font-size: 12pt; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-CA;">: This may sound naive, but believe me it isn’t. If you want to be wealthy, you must not lose money, or I should say must not lose BIG money. Absurd rule, silly rule? Maybe, but MOST PEOPLE LOSE MONEY in disastrous investments, gambling, rotten business deals, greed, poor timing. Yes, after almost five decades of investing and talking to investors, I can tell you that most people definitely DO lose money, lose big time – in the stock market, in options and futures, in real estate, in bad loans, in mindless gambling, and in their own business.</span></div><div class="MsoNormal" style="margin: 0cm 0cm 0pt;"><br />
</div><div class="MsoNormal" style="margin: 0cm 0cm 0pt;"><b><span style="color: black; font-family: "Times New Roman", "serif"; font-size: 12pt; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-CA;">RULE 3: RICH MAN, POOR MAN</span></b><span style="color: black; font-family: "Times New Roman", "serif"; font-size: 12pt; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-CA;">: In the investment world the wealthy investor has one major advantage over the little guy, the stock market amateur and the neophyte trader. The advantage that the wealthy investor enjoys is that HE DOESN’T NEED THE MARKETS. I can’t begin to tell you what a difference that makes, both in one’s mental attitude and in the way one actually handles one’s money.</span><span style="color: black; font-family: "Georgia", "serif"; mso-bidi-font-family: "Times New Roman"; mso-bidi-font-size: 10.0pt; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-CA;"></span></div><div class="MsoNormal" style="margin: 0cm 0cm 0pt;"><span style="color: black; font-family: "Times New Roman", "serif"; font-size: 12pt; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-CA;">The wealthy investor doesn’t need the markets, because he already has all the income he needs. He has money coming in via bonds, T-bills, money market funds, stocks and real estate. In other words, the wealthy investor never feels pressured to “make money” in the market.</span><span style="color: black; font-family: "Georgia", "serif"; mso-bidi-font-family: "Times New Roman"; mso-bidi-font-size: 10.0pt; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-CA;"></span></div><div class="MsoNormal" style="margin: 0cm 0cm 0pt;"><span style="color: black; font-family: "Times New Roman", "serif"; font-size: 12pt; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-CA;">The wealthy investor tends to be an expert on values. When bonds are cheap and bond yields are irresistibly high, he buys bonds. When stocks are on the bargain table and stock yields are attractive, he buys stocks. When real estate is a great value, he buys real estate. When great art or fine jewelry or gold is on the “give away” table, he buys art or diamonds or gold. In other words, the wealthy investor puts his money where the great values are.</span><span style="color: black; font-family: "Georgia", "serif"; mso-bidi-font-family: "Times New Roman"; mso-bidi-font-size: 10.0pt; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-CA;"></span></div><div class="MsoNormal" style="margin: 0cm 0cm 0pt;"><span style="color: black; font-family: "Times New Roman", "serif"; font-size: 12pt; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-CA;">And if no outstanding values are available, the wealthy investors waits. He can afford to wait. He has money coming in daily, weekly, monthly. The wealthy investor knows what he is looking for, and he doesn’t mind waiting months or even years for his next investment (they call that patience).</span><span style="color: black; font-family: "Georgia", "serif"; mso-bidi-font-family: "Times New Roman"; mso-bidi-font-size: 10.0pt; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-CA;"></span></div><div class="MsoNormal" style="margin: 0cm 0cm 0pt;"><span style="color: black; font-family: "Times New Roman", "serif"; font-size: 12pt; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-CA;">But what about the little guy? This fellow always feels pressured to “make money.” And in return he’s always pressuring the market to “do something” for him. But sadly, the market isn’t interested. When the little guy isn’t buying stocks offering 1% or 2% yields, he’s off to Las Vegas or Atlantic City trying to beat the house at roulette. Or he’s spending 20 bucks a week on lottery tickets, or he’s “investing” in some crackpot scheme that his neighbor told him about (in strictest confidence, of course).</span><span style="color: black; font-family: "Georgia", "serif"; mso-bidi-font-family: "Times New Roman"; mso-bidi-font-size: 10.0pt; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-CA;"></span></div><div class="MsoNormal" style="margin: 0cm 0cm 0pt;"><b style="mso-bidi-font-weight: normal;"><span style="color: black; font-family: "Times New Roman", "serif"; font-size: 12pt; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-CA;">And because the little guy is trying to force the market to do something for him, he’s a guaranteed loser.</span></b><span style="color: black; font-family: "Times New Roman", "serif"; font-size: 12pt; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-CA;"> The little guy doesn’t understand values so he constantly overpays. He doesn’t comprehend the power of compounding, and he doesn’t understand money. <i>He’s never heard the adage, “He who understands interest – earns it. He who doesn’t understand interest – pays it.”</i> The little guy is the typical American, and he’s deeply in debt.</span><span style="color: black; font-family: "Georgia", "serif"; mso-bidi-font-family: "Times New Roman"; mso-bidi-font-size: 10.0pt; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-CA;"></span></div><div class="MsoNormal" style="margin: 0cm 0cm 0pt;"><br />
</div><div class="MsoNormal" style="margin: 0cm 0cm 0pt;"><span style="color: black; font-family: "Times New Roman", "serif"; font-size: 12pt; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-CA;">The little guy is in hock up to his ears. As a result, he’s always sweating – sweating to make payments on his house, his refrigerator, his car or his lawn mower. He’s impatient, and he feels perpetually put upon. He tells himself that he has to make money – fast. And he dreams of those “big, juicy mega-bucks.” In the end, the little guy wastes his money in the market, or he loses his money gambling, or he dribbles it away on senseless schemes. In short, this “money-nerd” spends his life dashing up the financial down-escalator.</span></div><div class="MsoNormal" style="margin: 0cm 0cm 0pt;"><br />
</div><div class="MsoNormal" style="margin: 0cm 0cm 0pt;"><span style="color: black; font-family: "Times New Roman", "serif"; font-size: 12pt; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-CA;">But here’s the ironic part of it. If, from the beginning, the little guy had adopted a strict policy of never spending more than he made, if he had taken his extra savings and compounded it in intelligent, income-producing securities, then in due time he’d have money coming in daily, weekly, monthly, just like the rich man. The little guy would have become a financial winner, instead of a pathetic loser.</span></div><div class="MsoNormal" style="margin: 0cm 0cm 0pt;"><br />
</div><div class="MsoNormal" style="margin: 0cm 0cm 0pt;"><b><span style="color: black; font-family: "Times New Roman", "serif"; font-size: 12pt; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-CA;">RULE 4: VALUES</span></b><span style="color: black; font-family: "Times New Roman", "serif"; font-size: 12pt; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-CA;">: The only time the average investor should stray outside the basic compounding system is when a given market offers outstanding value. I judge an investment to be a great value when it offers (a) safety; (b) an attractive return; and (c) a good chance of appreciating in price. At all other times, the compounding route is safer and probably a lot more profitable, at least in the long run.</span><span style="color: black; font-family: "Georgia", "serif"; mso-bidi-font-family: "Times New Roman"; mso-bidi-font-size: 10.0pt; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-CA;"></span></div><div class="MsoNormal" style="margin: 0cm 0cm 0pt;"><i><span style="color: black; font-family: "Times New Roman", "serif"; font-size: 12pt; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-CA;">Reprinted with permission from <a href="http://ww1.dowtheoryletters.com/" target="_blank"><span style="color: blue;">Dow Theory Letters</span></a>.</span></i><span style="color: black; font-family: "Georgia", "serif"; mso-bidi-font-family: "Times New Roman"; mso-bidi-font-size: 10.0pt; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-CA;"></span></div><br />
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<span style="font-size: x-small;">About me: I give Economic, Social and Global trend briefings from some of the world's brightest minds at my blog </span><a href="http://saveriomanzo.com/"><span style="font-size: x-small;">http://saveriomanzo.com/</span></a><span style="font-size: x-small;"> and </span><a href="http://saveriomanzo.blogspot.com/"><span style="font-size: x-small;">http://saveriomanzo.blogspot.com/</span></a><span style="font-size: x-small;">. I also provide true and tested </span><a href="http://financialconcepts.ca/"><span style="font-size: x-small;">financial planning </span></a><span style="font-size: x-small;">and </span><a href="http://wealthconcepts.ca/"><span style="font-size: x-small;">wealth advice</span></a><span style="font-size: x-small;">. Most recently, over the past few years, I have become </span><a href="http://feelgreengood.com/"><span style="font-size: x-small;">socially conscious </span></a><span style="font-size: x-small;">and have been attempting to practise ways in which I can live my life more </span><a href="http://feelgreengood.blogspot.com/"><span style="font-size: x-small;">environmentally friendly</span></a><span style="font-size: x-small;">. Along with some truly exceptional friends, we provide <a href="http://www.biz-advisor.ca/">consulting</a> and <a href="http://www.biz-advisor.ca/">business development</a> for small-medium sized businesses. </span><span style="font-size: x-small;">In addition, I truly believe in being </span><a href="http://zealousaltruism.blogspot.com/"><span style="font-size: x-small;">philanthropic</span></a><span style="font-size: x-small;">, giving and doing unto other as we would have them do unto us. Some of my fondest resources are from </span><a href="http://www.ritholtz.com/blog/"><span style="font-size: x-small;">Barry Ritholtz of The Big Picture</span></a><span style="font-size: x-small;">, </span><a href="http://www.gluskinsheff.com/"><span style="font-size: x-small;">David Rosenberg </span></a><span style="font-size: x-small;">and what Warren Buffett of </span><a href="http://www.berkshirehathaway.com/"><span style="font-size: x-small;">Berkshire Hathaway</span></a><span style="font-size: x-small;"> is up to behind the scenes, as an example.</span> saverio manzo <br />
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<a href="http://www.everyoneweb.com/saveriomanzo/"><span style="font-size: xx-small;">http://www.everyoneweb.com/saveriomanzo/</span></a><span style="font-size: xx-small;"> </span><a href="http://saverio-manzo.jimdo.com/"><span style="font-size: xx-small;">http://saverio-manzo.jimdo.com/</span></a> <a href="http://saverio-manzo.yolasite.com/"><span style="font-size: xx-small;">http://saverio-manzo.yolasite.com/</span></a><span style="font-size: xx-small;"> </span><a href="http://saverio-manzo.webs.com/"><span style="font-size: xx-small;">http://saverio-manzo.webs.com/</span></a><span style="font-size: xx-small;"> </span><a href="http://saverio-manzo.weebly.com/"><span style="font-size: xx-small;">http://saverio-manzo.weebly.com/</span></a> <a href="http://saveriomanzo.terapad.com/"><span style="font-size: xx-small;">http://saveriomanzo.terapad.com</span></a><span style="font-size: xx-small;"> </span><a href="http://www.shareowners.org/profile/SaverioManzo"><span style="font-size: xx-small;">http://www.shareowners.org/profile/SaverioManzo</span></a> <a href="http://www.linkedin.com/pub/saverio-manzo/b/995/63"><span style="font-size: xx-small;">http://www.linkedin.com/pub/saverio-manzo/b/995/63</span></a><span style="font-size: xx-small;"> </span><a href="http://twitter.com/saveriomanzo"><span style="font-size: xx-small;">http://twitter.com/saveriomanzo</span></a> <a href="http://www.facebook.com/people/Saverio-Manzo/854720596?ref=search"><span style="font-size: xx-small;">http://www.facebook.com/people/Saverio-Manzo/854720596?ref=search</span></a>Saverio Manzo bloghttp://www.blogger.com/profile/13340379232831747256noreply@blogger.com0tag:blogger.com,1999:blog-4407324024445834948.post-41926575721314301032011-01-04T17:53:00.000-08:002011-01-04T17:53:18.732-08:00Your Financial Check-up<b>Doing a little homework prior to your annual review with your adviser can keep your financial goals on track. <br />
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Even the best laid plans can go astray if you don’t monitor your progress. That’s why one of the keys to making sure that your financial dreams actually come to pass is the annual review. This is where you get to sit down with your planner to explore how realistic the current financial plan is, what’s changed over the past year, and what, if anything, is going wrong. <br />
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At this review your adviser will probably want to address whether or not there have been any significant changes—in your life or your finances—since the initial meeting. He or she will want to review any new short-term plans, such as a kitchen renovation, that could significantly impact your cash flow. Your planner will also check to make sure your spending is in line with the proposed plan. Finally, your planner may go over the legal components of your plan, such as your power of attorney documents and wills to see if they need updating, and review your insurance (life and home) to make sure you’re not over- or under-insured.<br />
The annual meeting is a great way to make sure you’re not veering off course, but Lenore Davis, partner at Victoria-based financial planning firm Dixon, Davis & Company, says you should track your progress all year long. She suggests a financial diary in which you can make notes throughout the year about what’s working and what isn’t, or jot down items you want to bring up at the review. “Then periodically throughout the year, review what you’ve written down.”<br />
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Right before your appointment with your planner, go back through your notebook and create a list of actions you still need to take, and flag any questions or concerns you would like to address. This will give you more control over what’s addressed at the annual meeting, plus it will send a message to your adviser that you expect a bit of back-and-forth dialogue on issues that are important to you.<br />
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When you’re keeping your diary, you can make note of anything you want, but you should be sure to include the following:<br />
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• your current and future job situation (particularly early termination or a recent promotion or big raise)<br />
• any changes to your retirement plans (such as when you hope to retire, and what you want to do during your golden years)<br />
• any changes in marital status or family situation, including separation or divorce<br />
• thoughts about moving (from a smaller home to a bigger home, or to a different city altogether)<br />
• questions about purchasing additional property (such as a cottage)<br />
• any changes to your debt (the amount, the interest rate, where it’s held)<br />
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By reviewing your major concerns and future goals, you’re more likely to maximize the benefits of hiring a planner—such as seeking advice on certain decisions, or asking his opinion on different options. It’s the primary reason why Lance Howard, founder of Lance Howard Group in London, Ont., encourages his clients to seek advice on any decision that involves a large sum of money. “My role isn’t to talk you out of spending money, but to remind you of how your current decisions will impact your future goals.” <br />
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For instance, one long-term client phoned Howard recently agonizing over a new car purchase. He didn’t know if he should accept the 0% financing option from the dealership, pay for the car outright from his portfolio, or avoid the cost of car ownership by taking a lease offer instead. “I ran a few scenarios and helped him to make a decision that fit with his long-term financial goals,” says Howard. “At the end of the day, he just wanted to know: ‘Can I afford this? Do I have options?’ I was able to answer that question, and help maximize his savings.” As Howard constantly reminds the people he works with—you’re paying for the advice, and it’s not limited to life-altering events.<br />
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In fact, while annual reviews are important, having access to your adviser’s expertise all year round is one of the biggest benefits to hiring a financial planner. “Annual reviews are in place for your adviser to report back to you, but two-way communication throughout the year is critical for a good, long-term relationship,” says Davis. She says a professional planner will welcome emails and phone calls throughout the year. “Life happens in between review meetings, so contact—both formal and casual—is critical.”<br />
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Karen Diamond, partner at Diamond Retirement Planning in Winnipeg, agrees. “I love it when people contact me before making a major decision. I consider it an asset because you’re contacting me when something is on your mind, and that’s the most relevant time to discuss significant choices.” <br />
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She adds that advisers “are not parents—we’re not going to slap you on wrist when you want to spend.” Instead, your planner will help you to figure out the impact of your decision on your current financial plan, then try to find the most sensible way to execute the decision, if that’s your wish. Consider it a sober-second opinion from a professional with your best interests at heart.<br />
<h3 style="margin: 12pt 0cm 3pt;"><span style="font-family: Arial;">5 reasons financial plans go wrong</span></h3><h3 style="margin: 12pt 0cm 3pt;">Give your plan a fighting chance by avoiding these common mistakes</h3>Your financial plan can get sidetracked for a lot of reasons: a market crash, an unexpected illness, a pension that goes bust. But the following five pitfalls are preventable—avoid them and you can at least give your plan a fighting chance.<br />
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<strong>1. You don’t follow your plan</strong><br />
The best plan in the world won’t do you any good at all if you don’t follow it. If you find yourself ignoring your plan completely, you probably have a deeper problem. It could be that you’re simply not ready to change. Or perhaps you haven’t yet identified the right goals.<br />
Don’t feel you have to adopt the same financial goals as everyone else. Whether it’s starting your own business, taking a year off to explore Africa, or retiring to Paris, find the goals that most inspire you, and you’ll find sticking to your plan much easier.<br />
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<strong>2. Your plan is too ambitious</strong><br />
The main symptom of an unrealistic plan is perpetual overspending, says Karen Diamond, partner at Diamond Retirement Planning. If you consistently go over budget—even by just 10% or 20%—that will have a big impact on your long term projections. It’s better to have a more realistic plan that you stick to than an overly ambitious plan that you can’t follow. Consider asking your adviser to draw up a new plan that requires a bit less saving. <br />
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<strong>3. You expect sky-high returns</strong><br />
Your adviser probably isn’t the next Warren Buffet, no matter how much you wish he were. That means you should expect market returns at best for equities, and less for fixed income. Better to plan for market returns and be pleasantly surprised if you exceed your expectations than to count on making 12% a year and find out later that you’ll never meet your goals.<br />
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<strong>4. Your priorities have changed, but not your plan</strong><br />
Your life is a work in progress, and you’ll experience many unexpected twists and turns along the way. Your plan should be a work in progress too. As you age and your priorities change it’s important to let your adviser know so your plan can evolve with you.<br />
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<strong>5. You’re not talking to your planner enough </strong><br />
Probably the most damaging—and most preventable—plan saboteur is a communication breakdown between you and your adviser. “You have to keep working on the relationship and staying in touch,” says Diamond. She suggests making a list of your top concerns and questions and connecting with your adviser regularly by email, phone, or at the annual face-to-face review. “If you have a communication breakdown, then other problems soon arise and before you know it, the plan and the partnership are derailed.”<br />
<div class="meta" style="margin: auto 0cm;">By <a href="http://www.moneysense.ca/author/moneysense-staff/" title="Posts by MoneySense staff"><span style="color: blue;">MoneySense staff</span></a> | <span class="moneysense-magazine">From MoneySense Magazine</span>,</div><br />
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<span style="font-size: x-small;">About me: I give Economic, Social and Global trend briefings from some of the world's brightest minds at my blog </span><a href="http://saveriomanzo.com/"><span style="font-size: x-small;">http://saveriomanzo.com/</span></a><span style="font-size: x-small;"> and </span><a href="http://saveriomanzo.blogspot.com/"><span style="font-size: x-small;">http://saveriomanzo.blogspot.com/</span></a><span style="font-size: x-small;">. I also provide true and tested </span><a href="http://financialconcepts.ca/"><span style="font-size: x-small;">financial planning </span></a><span style="font-size: x-small;">and </span><a href="http://wealthconcepts.ca/"><span style="font-size: x-small;">wealth advice</span></a><span style="font-size: x-small;">. Most recently, over the past few years, I have become </span><a href="http://feelgreengood.com/"><span style="font-size: x-small;">socially conscious </span></a><span style="font-size: x-small;">and have been attempting to practise ways in which I can live my life more </span><a href="http://feelgreengood.blogspot.com/"><span style="font-size: x-small;">environmentally friendly</span></a><span style="font-size: x-small;">. Along with some truly exceptional friends, we provide <a href="http://www.biz-advisor.ca/">consulting</a> and <a href="http://www.biz-advisor.ca/">business development</a> for small-medium sized businesses. </span><span style="font-size: x-small;">In addition, I truly believe in being </span><a href="http://zealousaltruism.blogspot.com/"><span style="font-size: x-small;">philanthropic</span></a><span style="font-size: x-small;">, giving and doing unto other as we would have them do unto us. Some of my fondest resources are from </span><a href="http://www.ritholtz.com/blog/"><span style="font-size: x-small;">Barry Ritholtz of The Big Picture</span></a><span style="font-size: x-small;">, </span><a href="http://www.gluskinsheff.com/"><span style="font-size: x-small;">David Rosenberg </span></a><span style="font-size: x-small;">and what Warren Buffett of </span><a href="http://www.berkshirehathaway.com/"><span style="font-size: x-small;">Berkshire Hathaway</span></a><span style="font-size: x-small;"> is up to behind the scenes, as an example.</span> saverio manzo <br />
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<a href="http://www.everyoneweb.com/saveriomanzo/"><span style="font-size: xx-small;">http://www.everyoneweb.com/saveriomanzo/</span></a><span style="font-size: xx-small;"> </span><a href="http://saverio-manzo.jimdo.com/"><span style="font-size: xx-small;">http://saverio-manzo.jimdo.com/</span></a> <a href="http://saverio-manzo.yolasite.com/"><span style="font-size: xx-small;">http://saverio-manzo.yolasite.com/</span></a><span style="font-size: xx-small;"> </span><a href="http://saverio-manzo.webs.com/"><span style="font-size: xx-small;">http://saverio-manzo.webs.com/</span></a><span style="font-size: xx-small;"> </span><a href="http://saverio-manzo.weebly.com/"><span style="font-size: xx-small;">http://saverio-manzo.weebly.com/</span></a> <a href="http://saveriomanzo.terapad.com/"><span style="font-size: xx-small;">http://saveriomanzo.terapad.com</span></a><span style="font-size: xx-small;"> </span><a href="http://www.shareowners.org/profile/SaverioManzo"><span style="font-size: xx-small;">http://www.shareowners.org/profile/SaverioManzo</span></a> <a href="http://www.linkedin.com/pub/saverio-manzo/b/995/63"><span style="font-size: xx-small;">http://www.linkedin.com/pub/saverio-manzo/b/995/63</span></a><span style="font-size: xx-small;"> </span><a href="http://twitter.com/saveriomanzo"><span style="font-size: xx-small;">http://twitter.com/saveriomanzo</span></a> <a href="http://www.facebook.com/people/Saverio-Manzo/854720596?ref=search"><span style="font-size: xx-small;">http://www.facebook.com/people/Saverio-Manzo/854720596?ref=search</span></a>Saverio Manzo bloghttp://www.blogger.com/profile/13340379232831747256noreply@blogger.com0tag:blogger.com,1999:blog-4407324024445834948.post-46797576568897778522010-12-13T15:38:00.000-08:002010-12-13T15:38:16.759-08:00Doing Business in the new ‘Age of Austerity’We see the term “austerity” far too often these days in the media, largely due to the financial collapse of Greece and followed by Ireland and England most recently. To them, austerity means a lot of change: severe government cut-backs that change the picture dramatically from a way of life that was so easy. It’s a form of fiscal surgery that takes years – if ever at all – to recover from. The basis of this was excessive government spending prior to and following the Great Depression of 2008-2009. And whilst there are numerous countries around the globe showing similar health diagnosis, especially a looming, highly-likely candidate the USA, Canada will come out of this new age better than most. <br />
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For weeks now I have tried to encapsulate a blog posting that put Canada and Canadians in prospective to what is happening in Europe, around globe and will be forthcoming in the USA. The key to it, after all, is a matter of country and government financial health – we in Canada had our mild version of austerity measures in the early 1990’s for nearly a decade. This is thanks in part to the Federal Liberal party at the time led by Jean Chrétien and Paul Martin. They took fiscal steps to clean our financial house (a real mess at the time) that is now paying big dividends. We as a country, from a fiscal, financial and banking standpoint – are the envy of the world. This doesn’t mean easy street for us, but it will be a lot less severe in years to come when compared to many of our neighbours.<br />
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- Saverio Manzo<br />
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<strong>Surviving the age of austerity</strong><br />
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<strong><em>We won’t see plentiful jobs, rising housing prices and surging stocks for a while, but follow these tips and you can still realize your dreams.</em></strong><br />
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American bond guru Bill Gross calls it “<a href="http://www.pimco.com/Pages/PrivatesEyeBillGrossAugust2010.aspx">the new normal</a>.” Bank of Canada Governor Mark Carney warns of “unusual uncertainty.” CIBC World Markets chief economist Avery Shenfeld labels it simply the “Great Disappointment.” Whatever you call the times we’re living in, it’s pretty obvious they ain’t great. <br />
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In every city, town and village across Canada, across the U.S., across Europe, it’s slowly sinking in: the party is over, at least for a while. The U.S. housing market catastrophe and the subsequent global stock market meltdown may be largely behind us, but in their wake we’ve been left with an unpleasantly persistent aftermath: sluggish growth, high unemployment rates, soaring personal and government debt, teetering house prices, and a dampened investment environment. <br />
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Add it all up—and throw in the fact that we’ve already done pretty much everything we can to stimulate our ailing global economies—and it really does look like we’re entering a new age of austerity. Some economists are saying that today’s sluggish real (inflation adjusted) gross domestic product (GDP) growth rate of about 2% a year could even become the new “cruising speed” for the Canadian economy—a big comedown from the 3% annual growth we’ve typically seen in the past. And let’s not even get started on the disastrous “double dip” scenarios sketched out by the economic bears. <br />
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In this environment, many of the assumptions of the past—house prices will always rise, interest rates will always fall, there’s a better job just around the corner—can no longer be counted on. That doesn’t mean you should load up on ammo and head for the hills. It just means acting a bit more defensively when it comes to your finances, at least for a while. <br />
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So what exactly should you be doing to survive—even thrive—in this age of austerity? Read on and we’ll take you through each of the specific threats on the horizon, and how you can protect yourself against each one. We’ll look at how to prosper in the new job market, what to do if you’re buying a house, how to invest your money defensively, and how you can adjust your retirement plans to stay on track. In the end, you’ll see that despite the challenging times, with a bit of belt-tightening, you can still keep your dreams within reach. <br />
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<strong>Threat # 1: No new jobs</strong><br />
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Gone are the days when jobs were plentiful and employers focused on attracting and retaining talent. While the total number of people employed in Canada has recovered to where it was before the recession, much of the recovery has consisted of part-time work and service sector jobs. Unemployment has remained stubbornly high at about 8%, and more Canadians are finding themselves jobless for long periods. <br />
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The current situation is hard on many of us, but it’s worst for those trying to get into the job market for the first time. “It’s like the classic saying, you want me to have experience but you won’t hire me, so how do I get experience?” asks Brodie Metcalfe, 24, who graduated last spring from the University of Victoria with a B.A. in the humanities. He’s looking for work in the field of advocacy and community development, but he’s not having much luck. “Most of the organizations that normally would be hiring are not doing so because the government funding cuts have been pretty drastic.” <br />
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Those who already have jobs are having an easier time, but they’re still finding fewer opportunities to get ahead. Promotions are scarce and there aren’t many opportunities to jump to greener pastures, so workers are tending to stay put. Many human resources experts had thought the generation of employees now in their 20s, 30s and 40s were inveterate job-hoppers by nature, but now they’re seeing the whole market freeze up. “A lot of people are surprised,” says Claude Balthazard of the Ontario-based Human Resources Professionals Association. “They used to think of it as a generational thing—this is how this generation is—now they’re realizing that the economy was shaping those attitudes.” <br />
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Few economists see a big improvement in the coming years. “Economy-wide job creation is unlikely to be rapid enough to put a meaningful dent in the average unemployment rate,” wrote TD Bank economists Derek Burleton and Shahrzad Mobasher Fard in a recent commentary. They see unemployment continuing to hover at about 8% through 2011, before edging down to 7.5% by the end of 2012. Wage growth is expected to stay low at 2% or less for the next few years, except in a few of the more robust sectors. <br />
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<strong>How to protect yourself </strong><br />
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More than ever before, education is the armour you need to survive in the current market. Craig Riddell, professor of economics at the University of British Columbia, says you can expect a good educational payoff whether you go to university, community college or acquire a skilled trade, he says, although university tends to pay off better than college. And if those financial advantages aren’t enough, Riddell says research has also found that higher education tends to yield better health, longer life and higher levels of life satisfaction. <br />
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If you’re an older worker with a job, but you feel like you’re spinning your wheels, consider enhancing your professional skills by working on a professional qualification or degree on the side. It also pays to focus on opportunities that might exist within your existing firm. Many employers are reluctant to hire new staff right now, so you might be able to grab an inside opportunity that normally would have been posted for outside applicants. Barbara Moses, a career expert and author, says if you get the chance, you might also consider a lateral move within your company to broaden your skills—such as moving from marketing manager to communications manager. That won’t provide immediate advancement, but there’s a good chance it will improve your long-term potential and pay off down the road. <br />
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If you’re in the later stages of your career, you’re likely caught between realizing your early retirement dreams and staying in your job a bit longer for safety. If you are truly weary of working, you may be able to move up your retirement date by scaling back your retirement plans. Other workers prefer not to quit work entirely, but to scale back to part-time work to bring in some income and stay engaged. <br />
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In some fields, you might find temporary or contract positions for short-term or part-time jobs, which tend to be relatively common in troubled times because employers are reluctant to commit to permanent hiring. If you’re an older worker with specialized skills who has worked for one employer for a long time, “adjusting your expectations is a key,” says Riddell of UBC. “On average, such workers are unemployed much longer after losing their jobs than younger workers, and a huge part of that is their expectations are unrealistically high given the labour market they now face.” <br />
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<strong>Threat #2: Home prices dip</strong><br />
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Previous generations did well by riding the decade-long surge in home prices, but most economists agree that’s all over now. Prices in most large Canadian cities are very high relative to incomes and a slow-growth economy is unlikely to produce the rising incomes necessary to fuel a continuing boom. Economists don’t know whether prices will fall a little, a lot, or stay about the same, but no one sees significant increases in the foreseeable future. <br />
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“It’s always been ‘Buy a house. It’s a good investment,’” says Patricia Gibson, who would like to settle down with her husband Tony in pricey Vancouver (we’ve changed the Gibsons’ names and some details to protect their privacy). “I know that’s how it was for my parents and how they viewed it. But I don’t see that anymore, because Vancouver prices are ludicrous. You pay $800,000 for a shack.” <br />
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Many Canadians are borrowing every penny they can to get into the market, but if you stretch to buy a house with a long amortization now, you might find yourself weighed down for years, even if prices stay steady. That’s because your income isn’t as likely to grow quickly going forward, so you may not be able to make extra payments. Plus, while huge mortgages with long amortizations are easy to carry at today’s exceptionally low interest rates, those interest rates could easily rise in the future. “If you take a 35-year amortization and you’re making minimum payments and your salary isn’t going up fast, you’re going to haul that anchor for your whole working lifetime,” says Malcolm Hamilton, actuary and partner with Mercer Human Resource Consulting. <br />
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<strong>How to protect yourself</strong><br />
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Interest rates are enticingly low and your bank will happily lend you absurdly large sums, so it’s up to you to show restraint. “The bank was willing to throw $800,000 at us—I started laughing at them,” says Patricia. No less an authority than Bank of Canada Governor Mark Carney has been travelling the country telling Canadians to resist the temptation to load up on low-interest debt. “This cannot continue,” he told an audience in Windsor, Ont., in late September. He hinted that one possible scenario is that house prices could tumble, leaving you holding the bag with a monster mortgage. “While asset prices can rise or fall, debt endures,” he said pointedly. <br />
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If you must buy right now, buy a place you can really afford. Patricia and Tony are both in their late 30s and want children, so they say it’s likely they’ll buy within the next 10 months, despite the crazy Vancouver market. “Tick-tock, tick-tock, that’s my biological clock,” says Patricia. But they’ve put off thoughts of a dream home until the economy improves. “We don’t need the granite counter tops for now. We just need a structurally sound home we can pay off in a reasonable amount of time.” They have their sights set on paying perhaps $600,000 for a 1,600-sq-ft townhouse. They expect to cover 20% to 30% of the cost with a down payment, and they want a 20- to 25-year amortization. In an era when housing may no longer be an investment, but just a place to live, the Gibsons realize they need to be careful about how much debt they take on and how long they take to pay it off. <br />
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<strong>Threat #3: Freedom 67 </strong><br />
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Borrowing has kept the world economy afloat during the recent recession, but governments have quickly accumulated debt to the point where it’s becoming a problem. Most international comparisons find that Canada’s combined federal and provincial debt is low to middling compared to other developed countries, so we’re not as badly off as some. Still, Canadian provincial and federal governments have been busy concocting plans to cut their deficits (which only slows the rate of debt growth) and ultimately start to pay down some of the debt itself. <br />
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It’s not going to be easy. They don’t want to do it too abruptly, for fear of knocking down the fragile recovery. But they don’t want to do it too slowly, either, for fear that the debt problem spirals from bad to worse. “The situations that governments are in today are astonishingly bad,” says economist William Robson, president of the C.D. Howe Institute. “It’s not like anything we’ve seen before. Looking around the world, Canada may be one of the less ugly contestants in this very unpleasant beauty contest. But at some point someone is going to say, you know what, they’re all ugly!” <br />
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Compounding the problem is the rising government cost of looking after aging baby boomers. According to a recent study by Robert Brown, professor of actuarial science at the University of Waterloo, governmental costs that can be attributed to an aging population will really start to bite around 2016, and they will keep increasing until they peak around 2031. <br />
<br />
Some expect that the Canadian government will eventually be forced to raise the official retirement age from 65 to 67, or even higher. Other countries, like the U.S. and Germany, are already raising the official retirement date to 67 through a gradual phase-in program. For governments, getting people to work longer has the two-fold advantage of generating more taxes while reducing the cost of government benefits, says Brown. With a phase-in program, raising the official retirement age may have little or no impact on those already retired or about to retire, but it could have a big impact on the more distant retirements of Canadians who are still in their middle and younger years. <br />
<br />
<strong>How to protect yourself </strong><br />
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There’s no easy way to deal with this risk, other than to be prepared. Like those in Europe and the U.S., Canadians will simply need to get used to the idea of getting a little less help from the government while paying more in taxes. Canadians who are middle-aged or younger will likely at some point see the official retirement age push past age 65. That would mean Canada Pension Plan and Old Age Security payments might start a year or two later. It would be harder to retire in your early 60s, like most Canadians do today, because it is expensive to bridge the costs of fully supporting yourself until the government programs for seniors kick in. <br />
<br />
On the up side, of course, is the fact that today’s young Canadians will probably live longer than those on the cusp of retirement right now. That means they may actually enjoy just as many retirement years as earlier generations did—they’ll just start a little later. The key is to consider this possible freedom-67 scenario when you’re doing your retirement planning so you’re not caught off guard. You may have to save a bit more, or you might have to work a little longer. But as long as your health is good, working longer could actually make things easier. After all, you’ll be able to spread your retirement saving over more working years, and hopefully you’ll still enjoy a couple of decades of stress-free living in your golden years. <br />
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<strong>Threat #4: Sluggish markets</strong><br />
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In the heady days before the crash, Heather and Mark Mitchell, a couple living in a small town just outside of Calgary, were right on the verge of their dream retirement. They had almost all of their money in stocks, and their adviser had even persuaded them to borrow an extra $200,000 to invest in stocks to goose their hoped-for returns (and their adviser’s commissions along the way). <br />
<br />
The crash was a horrible, unexpected shock. Their retirement portfolio, once valued at $850,000, was decimated. Today Heather is 54 and Mark is 60 (we’ve changed their names and some details to protect their privacy), and even after the subsequent partial recovery, their holdings are down almost 40%, with a current value of $525,000. “We were naïve,” says a chastened and wiser Heather about investing so heavily in stocks. And as for borrowing to invest, “We were dumb and greedy, which is a diabolical combination.” <br />
<br />
The crash reminded all investors how disastrous it can be to have almost all your nest egg in risky investments like stocks. Today, there is more of a focus on “return of capital, not return on capital,” a phrase coined by investment guru Mohamed El-Erian, co-chief investment officer of Pacific Investment Management Co. (PIMCO). Individual and institutional investors alike have gradually moved enormous sums from riskier investments like stocks into safer fixed-income investments like bonds and GICs. Bond funds have had record inflows of cash, and U.S. private-sector pension plans have cut their stock exposure from almost 70% in the mid-2000s, to only 45% this year. <br />
<br />
Unfortunately, partly because everyone wants to be in safe investments, that means returns on fixed income investments have sagged. If you had your nest egg primarily in GICs or investment-grade bonds before the crash, you avoided the stock market meltdown and did well in the immediate aftermath. But now record-low interest rates will ensure minuscule income going forward. Because of dampened performance expectations for both fixed income and equities over the next few years, economist Don Drummond says investors should lower their expectations. You should expect a total rate of return of 4% to 7% a year (not adjusted for inflation) on a typical diversified portfolio over the coming years, he says, even though surveys show many investors still think they will get well over 8%. <br />
<br />
<strong>How to protect yourself</strong><br />
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Some say the fact that many types of investments fell in lock-step during the crash means that diversification doesn’t work, but that’s not true. Almost everyone suffered, but those with properly diversified portfolios suffered less. Going forward, the situation is uncertain, and it’s at times like this, when no one really knows which asset classes will outperform or lag, that diversification makes the most sense. <br />
<br />
The best way to protect yourself from the unexpected is to set a long-term asset allocation that fits your time horizon and risk tolerance and stick with it. The classic starting point is to devote 40% to 60% of your entire portfolio to stocks, and the rest to fixed income investments. Consider increasing your fixed income exposure as you get older, so that you’re less likely to be sideswiped by a crash just as you close in on retirement. One approach is to set the percentage of your portfolio dedicated to fixed income equal to your age—so if you are 55, for instance, then you would put 55% of your portfolio in bonds and GICs. It also makes sense in your senior years to consider adding annuities to your portfolio between the ages of 65 and 75. <br />
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Within the fixed-income portion of your portfolio you should avoid investing heavily in long-term bonds. The current unusual situation in the markets has bid up bond prices and pushed down yields. Inflation is very low due to the troubled economy, and investors have been flocking to government bonds for safety. Many economists fear the current flood of monetary stimulus from central banks will eventually rouse more inflation. That in turn would cause central banks to increase interest rates, which could push down long-term bond prices dramatically. Having most of your fixed-income investments in relatively short-term bonds, real-return bonds, or laddered GICs will provide some insulation against these risks. <br />
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After considering all the rotten things that could happen over the next few years, you may be getting discouraged. Don’t be. It’s always a good idea to try to predict what threats could derail your financial plans—but at the same time, there’s no reason to throw away your dreams. Letting yourself get so depressed about the future that you give up altogether is worse than being a little too optimistic. <br />
<br />
You may need to make a few adjustments to your plans to prepare for this new age of austerity, but for most people, they needn’t be drastic. As the Gibsons realized, a little bit of extra saving each month goes a long way if you start well ahead of retirement and you are consistent. And as the Mitchells found, you can adapt to almost any situation more easily than you think, by adjusting your priorities and expectations. <br />
<br />
Many of those adjustments are simply a return to the timeless personal finance basics that have worked wonders for generations: educate yourself, get a good job, save for the future, pay down your mortgage quickly, invest for the long run. If you have been following those principles all along, you might not have to change a thing. And when economic conditions improve—and they will—you could find that you’re far better off than you expected. <br />
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By David Aston<br />
<br />
Edited by Saverio Manzo<br />
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<script src="http://www.brainyquote.com/link/quotebr.js" type="text/javascript">
</script><br />
<span style="font-size: x-small;">About me: I give Economic, Social and Global trend briefings from some of the world's brightest minds at my blog </span><a href="http://saveriomanzo.com/"><span style="font-size: x-small;">http://saveriomanzo.com/</span></a><span style="font-size: x-small;"> and </span><a href="http://saveriomanzo.blogspot.com/"><span style="font-size: x-small;">http://saveriomanzo.blogspot.com/</span></a><span style="font-size: x-small;">. I also provide true and tested </span><a href="http://financialconcepts.ca/"><span style="font-size: x-small;">financial planning </span></a><span style="font-size: x-small;">and </span><a href="http://wealthconcepts.ca/"><span style="font-size: x-small;">wealth advice</span></a><span style="font-size: x-small;">. Most recently, over the past few years, I have become </span><a href="http://feelgreengood.com/"><span style="font-size: x-small;">socially conscious </span></a><span style="font-size: x-small;">and have been attempting to practise ways in which I can live my life more </span><a href="http://feelgreengood.blogspot.com/"><span style="font-size: x-small;">environmentally friendly</span></a><span style="font-size: x-small;">. Along with some truly exceptional friends, we provide <a href="http://www.biz-advisor.ca/">consulting</a> and <a href="http://www.biz-advisor.ca/">business development</a> for small-medium sized businesses. </span><span style="font-size: x-small;">In addition, I truly believe in being </span><a href="http://zealousaltruism.blogspot.com/"><span style="font-size: x-small;">philanthropic</span></a><span style="font-size: x-small;">, giving and doing unto other as we would have them do unto us. Some of my fondest resources are from </span><a href="http://www.ritholtz.com/blog/"><span style="font-size: x-small;">Barry Ritholtz of The Big Picture</span></a><span style="font-size: x-small;">, </span><a href="http://www.gluskinsheff.com/"><span style="font-size: x-small;">David Rosenberg </span></a><span style="font-size: x-small;">and what Warren Buffett of </span><a href="http://www.berkshirehathaway.com/"><span style="font-size: x-small;">Berkshire Hathaway</span></a><span style="font-size: x-small;"> is up to behind the scenes, as an example.</span>Saverio Manzo bloghttp://www.blogger.com/profile/13340379232831747256noreply@blogger.com0tag:blogger.com,1999:blog-4407324024445834948.post-61791299971501868402010-12-10T18:36:00.000-08:002010-12-10T18:36:12.262-08:00How the ongoing sluggish economy affects usTwo years after the onset of the Great Recession, the Canadian economy is more tortoise than hare. Craig Alexander, chief economist at Toronto-based TD Bank Financial Group, forecasts modest economic growth of 2% in 2011 and 2.5% in 2012. He expects services, particularly business services, to outperform most other sectors, and that retail and wholesale trade will do decent business, too. But Alexander figures that manufacturing, transportation and construction are in for trying times. On the whole, his prognosis, like that of most economists, is for lukewarm growth over the next several years. “Things aren’t going to be terrible,” he says, “but they’re not going to be great.”<br />
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<strong>Focus on financial fixes</strong><br />
Canadians are swimming in debt. Household debt as a share of disposable income has climbed from 80% in the early 1990s to a record 134% today, says Pedro Antunes, director of national and provincial forecasting at the Ottawa-based Conference Board of Canada. With interest rates ultra-low, this massive debt load wouldn’t be a concern if Canadians were on a sound financial footing. But they’re not. Antunes deems the situation “very precarious” for many consumers: “As interest rates start to rise, debt-service charges will grow very quickly.”<br />
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<span style="font-family: "Times New Roman"; font-size: 12pt; mso-ansi-language: EN-CA; mso-bidi-language: AR-SA; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-CA;">Consumer-spending specialists point to signs that maxed-out Canadians are seeking guidance about getting their fiscal houses in order. Fully a third of the respondents to a recent Manulife Bank survey ranked being debt-free as their top financial priority, scoring it 10 out of 10. </span><br />
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<span style="font-family: "Times New Roman"; font-size: 12pt; mso-ansi-language: EN-CA; mso-bidi-language: AR-SA; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-CA;"><strong>Emphasize value for money</strong><br />
Today’s consumers are interested in value above all. That doesn’t just mean discount pricing, says Stephens; Canadians want great quality or a great price. A value-conscious consumer might buy an $80 T-shirt because it’s superbly made and in a timeless style, so she can justify the expense as providing many years of use. She might also buy an $8 T-shirt because she can’t resist the price and she’s out little even if it lasts only five washes. What she isn’t interested in is a $45 T-shirt. “To portray value, you have to get out of the middle,” says Stephens.<br />
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At the low end, consumers are increasingly willing to sacrifice frills for a good price, particularly for transactional purchases. Jeremy Gutsche, founder of Toronto-based TrendHunter.com, pinpoints “unservice,” such as hotels at which guests check themselves in, as a defining trend. At the same time, many customers frustrated with the erratic quality of low-cost furniture, appliances and building materials are willing to pay more for big-ticket items that will last. “It comes down to the old saying that people are too poor to buy cheap,” says John Williams, senior partner at Toronto-based retail consultancy J.C. Williams Group.<br />
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<span style="font-family: "Times New Roman"; font-size: 12pt; mso-ansi-language: EN-CA; mso-bidi-language: AR-SA; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-CA;"><span style="font-family: "Times New Roman"; font-size: 12pt; mso-ansi-language: EN-CA; mso-bidi-language: AR-SA; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-CA;">By <span class="tdpageauthor">Deborah Aarts</span></span></span></span><br />
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<script type="text/javascript" src="http://www.brainyquote.com/link/quotebr.js"></script><br />
<span style="font-size: x-small;">About me: I give Economic, Social and Global trend briefings from some of the world's brightest minds at my blog </span><a href="http://saveriomanzo.com/"><span style="font-size: x-small;">http://saveriomanzo.com/</span></a><span style="font-size: x-small;"> and </span><a href="http://saveriomanzo.blogspot.com/"><span style="font-size: x-small;">http://saveriomanzo.blogspot.com/</span></a><span style="font-size: x-small;">. I also provide true and tested </span><a href="http://financialconcepts.ca/"><span style="font-size: x-small;">financial planning </span></a><span style="font-size: x-small;">and </span><a href="http://wealthconcepts.ca/"><span style="font-size: x-small;">wealth advice</span></a><span style="font-size: x-small;">. Most recently, over the past few years, I have become </span><a href="http://feelgreengood.com/"><span style="font-size: x-small;">socially conscious </span></a><span style="font-size: x-small;">and have been attempting to practise ways in which I can live my life more </span><a href="http://feelgreengood.blogspot.com/"><span style="font-size: x-small;">environmentally friendly</span></a><span style="font-size: x-small;">. Along with some truly exceptional friends, we provide <a href="http://www.biz-advisor.ca/">consulting</a> and <a href="http://www.biz-advisor.ca/">business development</a> for small-medium sized businesses. </span><span style="font-size: x-small;">In addition, I truly believe in being </span><a href="http://zealousaltruism.blogspot.com/"><span style="font-size: x-small;">philanthropic</span></a><span style="font-size: x-small;">, giving and doing unto other as we would have them do unto us. Some of my fondest resources are from </span><a href="http://www.ritholtz.com/blog/"><span style="font-size: x-small;">Barry Ritholtz of The Big Picture</span></a><span style="font-size: x-small;">, </span><a href="http://www.gluskinsheff.com/"><span style="font-size: x-small;">David Rosenberg </span></a><span style="font-size: x-small;">and what Warren Buffett of </span><a href="http://www.berkshirehathaway.com/"><span style="font-size: x-small;">Berkshire Hathaway</span></a><span style="font-size: x-small;"> is up to behind the scenes, as an example.</span><br />
<br />
Saverio ManzoSaverio Manzo bloghttp://www.blogger.com/profile/13340379232831747256noreply@blogger.com0tag:blogger.com,1999:blog-4407324024445834948.post-64927295774908719752010-11-11T17:35:00.001-08:002010-11-11T17:35:35.660-08:00Fixed or Variable? The perennial mortgage questionAs a financial planner I have been asked this question over the past fifteen years far too many times to count. My basic and fundamental answer has never changed, regardless of what situation we find ourselves economically or on the interest rate yield curve. <br />
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History and statistics don’t lie: A variable rate mortgage or loan has proven to be the cheapest form of borrowing in nearly every 5-year cycle over the past 100 years. <br />
<br />
I only deviate from this stance when a friend, a family member or anyone seeking advice expresses to me some form of concern for the “unknown” – the simple little fact that rates, especially variable – can change drastically without any given notice. Some folks just can’t stomach a variable rate today and not knowing what that rate might be 6 months let alone 5 years from now. And heck, can you blame them? At 3.75% on a 5-year mortgage why take the risk?<br />
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So the real answer: keep in mind history and statistical truths BUT follow your own risk tolerance and ‘sleepful night’ mindset. - Saverio Manzo<br />
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Another Prospective By Tom Bradley <br />
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Last week a friend asked me what his daughter should do with her mortgage. The bank was giving her the option of going with a variable rate mortgage at 2.5% or a 5-year fixed at 3.75%.<br />
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Investment professionals get asked this question all the time by friends and family. I’ve come to learn that the askers have way more interest in this topic than anything I could ever tell them about our funds or their portfolio. This is ‘food on the table’ stuff.<br />
<br />
So how did this investment professional answer the question?<br />
<br />
With regard to the lower variable rate, there is no free lunch here. Research reveals that going variable saves money over the long run (Note: 30 years of declining rates, since 1980, has a huge influence on the numbers), but it comes with the risk that monthly payments will go through the roof if rates rise significantly. A borrower should only go the variable route if she/he has the resources and stomach to absorb a big increase for an extended period of time.<br />
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As for the fixed rate mortgage, we have to keep in mind that 3.75% for 5 years is an UNBELIEVABLE rate. Yikes! Knowing you’re going to have low monthly interest payments until 2015 sounds pretty good. We shouldn’t forget that we’re living in an artificially low rate environment right now. It won’t always be like this.<br />
<br />
As an investor, I’m always comparing reward versus risk. There is a good chance that a variable rate mortgage will win over the next 5 years, but the potential risk is substantial. It seems to me the borrower has a chance of winning small or losing big. Go fixed.<br />
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(Note: With regard to the numbers, I’m simplifying grossly here. Rates and conditions are different in each situation. And I’m told that variable mortgages are available at lower rates.)<br />
<br />
<script type="text/javascript" src="http://www.brainyquote.com/link/quotebr.js"></script><br />
<br />
<span style="font-size: x-small;">About me: I give Economic, Social and Global trend briefings from some of the world's brightest minds at my blog </span><a href="http://saveriomanzo.com/"><span style="font-size: x-small;">http://saveriomanzo.com/</span></a><span style="font-size: x-small;"> and </span><a href="http://saveriomanzo.blogspot.com/"><span style="font-size: x-small;">http://saveriomanzo.blogspot.com/</span></a><span style="font-size: x-small;">. I also provide true and tested </span><a href="http://financialconcepts.ca/"><span style="font-size: x-small;">financial planning </span></a><span style="font-size: x-small;">and </span><a href="http://wealthconcepts.ca/"><span style="font-size: x-small;">wealth advice</span></a><span style="font-size: x-small;">. Most recently, over the past few years, I have become </span><a href="http://feelgreengood.com/"><span style="font-size: x-small;">socially conscious </span></a><span style="font-size: x-small;">and have been attempting to practise ways in which I can live my life more </span><a href="http://feelgreengood.blogspot.com/"><span style="font-size: x-small;">environmentally friendly</span></a><span style="font-size: x-small;">. Along with some truly exceptional friends, we provide <a href="http://www.biz-advisor.ca/">consulting</a> and <a href="http://www.biz-advisor.ca/">business development</a> for small-medium sized businesses. </span><span style="font-size: x-small;">In addition, I truly believe in being </span><a href="http://zealousaltruism.blogspot.com/"><span style="font-size: x-small;">philanthropic</span></a><span style="font-size: x-small;">, giving and doing unto other as we would have them do unto us. Some of my fondest resources are from </span><a href="http://www.ritholtz.com/blog/"><span style="font-size: x-small;">Barry Ritholtz of The Big Picture</span></a><span style="font-size: x-small;">, </span><a href="http://www.gluskinsheff.com/"><span style="font-size: x-small;">David Rosenberg </span></a><span style="font-size: x-small;">and what Warren Buffett of </span><a href="http://www.berkshirehathaway.com/"><span style="font-size: x-small;">Berkshire Hathaway</span></a><span style="font-size: x-small;"> is up to behind the scenes, as an example.</span>Saverio Manzo bloghttp://www.blogger.com/profile/13340379232831747256noreply@blogger.com0tag:blogger.com,1999:blog-4407324024445834948.post-55202266217096171642010-10-07T16:57:00.001-07:002010-10-07T16:57:54.403-07:00Financial planning pays offThe value of <a href="http://wealth-concepts.blogspot.com/">financial advice </a>has gotten a much-needed leg-up as strong evidence has emerged linking <a href="http://financial-concepts-now.blogspot.com/">financial planning</a> to emotional well-being.<br />
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An online study involving 7,300 English-speaking Canadians proves there are tangible benefits for those who're engaged in compressive <a href="http://wealthconcepts.ca/">financial planning</a>. The results of the study, commissioned by the Financial Planning Standards Council (FPSC), were revealed at a Financial Planning Week event in Toronto.<br />
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Comprehensive financial planning benefits people both financially and emotionally, said Tamara Smith, VP, marketing and consumer affairs, FPSC. "In Canada its need has never truly been easy to prove," said Smith. "With this in mind, we developed a comprehensive study to evaluate Canadians financial planning activities and to measure the impact of financial planning or lack thereof on peoples' lives."<br />
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While the study clearly establishes the benefits of planning, what may be surprising is just how profound these results are and the relationship between financial planning and emotional well-being of Canadians, regardless of their age or <a href="http://wealth-concepts.blogspot.com/">net worth</a>.<br />
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"There is real empirical evidence that Canadians engaged in financial planning are far better off that those who are not," said Smith. "The study revealed those who were doing no financial planning were almost twice as likely to feel the stress of feeling that they barely get by every month."<br />
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Those lacking a <a href="http://saveriomanzo.com/">financial plan </a>are also twice as likely to feel their finances are out of control. The negative impact financial stress can have on Canadians' lives, their <a href="http://feelgreengood.com/">health</a> and their relationships has been well-documented.<br />
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"Canadians with comprehensive financial planning are almost three times as likely to feel they do not gave to worry about money than those who're doing nothing."<br />
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Those with comprehensive financial plans feel they are better prepared to deal with financial emergencies and manage through difficult <a href="http://saveriomanzo.blogspot.com/">economic times</a>, this according to the study. Integrated financial planning is also said to instill confidence about reaching a wide spectrum of life goals and affords a better understanding of individual financial needs.<br />
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"These results further underscore how salient comprehensive financial planning can be for one’s financial and emotional well-being and not just in good times but particularly through the tougher times as Canadians have recently experienced," said Smith.<br />
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For the first time since the early 70s, Canadians' personal saving rates are at an all time low, yet as debt soars these folks stand out. "Those that are engaged in a planning report have better saving habits than those who don’t have a plan."<br />
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Those with a plan are saving for a variety of things that are important to them. The same goes for those saving for retirement and emergency situations.<br />
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"Canadians who engage in comprehensive financial planning are more than twice as likely to be saving for their retirement," said Smith adding they are also almost twice as likely to be saving for an emergency fund. "It is important to note these Canadians are saving for both short and long-term goals. They are balancing their needs and wants, and finding the right mix of living for today as well as saving for tomorrow.<br />
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People who are wealthier tend to be more optimistic about their finances. "Of course, we also know that the wealthier you are the more likely you are engaged in financial planning in a meaningful way."<br />
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The survey evaluated the results of high-net worth participants separately to eliminate net worth as a potential influencer. One of the key findings from this study reveals that regardless of the net worth, financial planning tended to increase optimism and confidence.<br />
Filed by Vikram Barhat - Senior Writer<br />
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BTYB: Saverio ManzoSaverio Manzo bloghttp://www.blogger.com/profile/13340379232831747256noreply@blogger.com0tag:blogger.com,1999:blog-4407324024445834948.post-71220304022457958652010-10-05T21:48:00.000-07:002010-10-05T21:48:15.510-07:00A Plan for your Present – and FutureWhether it's ensuring that you have sufficient income in to and throughout retirement or a goal that's still decades away, planning your current and financial future is one of your most important priorities. Your financial well-being depends, largely, on the decisions you make today. That's why it's so important to explore the benefits of financial planning and how it can potentially help you improve your financial picture. <br />
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At Financial Concepts, we believe that financial planning is a highly personal process. Our financial professionals utilize a personal inventory process to help you identify and prioritize the financial goals that are unique to your situation. <br />
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We will cover such topics as:<br />
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Addresses what you care most about;<br />
Identifies your financial objectives and recommends solutions to help work toward them; <br />
Creates a plan of action that addresses your specific financial needs; <br />
Helps you stay focused on achieving both your short and long-term financial goals, and;<br />
Reflects life’s changes as they occur. <br />
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You know what you want in life. Financial Concepts can help you answer your financial questions and develop a plan that’s focused on helping you work toward your goals. By beginning the process of developing a financial analysis and plan today, you provide yourself with better opportunities to achieve the financial future that you would like to enjoy tomorrow.<br />
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We truly hope that you not only enjoy this site but make fruitful financial decisions – for yourself and your family - because of it!<br />
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Sincerely, <br />
Saverio ManzoSaverio Manzo bloghttp://www.blogger.com/profile/13340379232831747256noreply@blogger.com0