Simple Wisdom

by Spencer Sherman & Brent Kessel

It happened again last week. I met a well educated investor (a Master's degree in finance) who knew better than to put all his eggs into one basket--but did anyway. He lost 30 years worth of accumulated savings and his residence.

I meet people regularly who invest in complicated and undiversified strategies and deals in the hopes of retiring early or beating the market. While most of these investors have a lot of formal financial education, it is common sense and bringing awareness to our fear and greed that creates financial success. If we all just followed these adages, we would eliminate investment stress, avoid cotastrophe, and most likely make more money:

Don't put all your eggs into one basket.

Invest for the long-term.

Diversify. (Unless it's a very diversified index mutual fund, put no more than 2%-5% of all your money into any one investment, one piece of real estate, one stock)

Start investing on an automatic monthly basis even if you're over your head in credit card and other debt. Start with $50 per month for example. Don't wait for your finances to improve--take advantage of the magic of compounding for a longer stretch of time by acting today rather than tomorrow.

Simple. And rarely followed. But if you want to be one of the few and NOT follow the herd, follow these rules and enjoy financial freedom.

Thrifty Thursday: Putting Savings in Perspective

Saving is hard. Especially for those of us who are prone to instant gratification. It is all too easy to spend that dollar on a delicious candy bar today and forgo the savings tomorrow. Below is a little article written by Spencer Sherman and Brent Kessel. The statements below really help put saving in perspective.

It is useful to keep in mind that the biggest determinant of financial success is your level of spending relative to your income and/or assets.

The reason is that you need about $20 saved in an investment portfolio for every $1 you're going to spend once you stop working and your earned income stops. So if you cut your spending by $1, you've actually just lowered your required savings by $20.

For example, if you can reduce your annual spending from $36,000 to $34,800 or by $1,200 ($100 per month), you've decreased your required savings by $24,000. Instead of needing a nest egg of $720,000 (twenty times $36,000), you only need $696,000 (twenty times $34,800).


How do you reduce spending by $100 per month?..... Keep reading Thrifty Thursdays! Every week we will be posting a savings tip that you can really use.

New York, New York!

A few months ago, I was asked to join the AICPA (American Institute of Certified Public Accountants) Financial Literacy Task force. I was honored to be one of 15 high profile CPA’s from across the country chosen to assist the incredible AICPA staff in moving this initiative forward. In meetings with prospective clients, I have listened to many tales of avoidable wealth tragedies and each time this happens, my personal passion for financial literacy increases.

What a day in New York! Up at 4.30AM and heading to the studio at 5.30AM to do coast to coast interviews. Volunteers, fellow CPA’s Michael Eisenberg and Jordan Amin, and me, donated an evening and a day of our time to discuss the new AICPA poll focused on gauging current financial concerns for Americans. We discussed tips, resources and gave clear and direct advice on getting your financial house in order.

It was a fulfilling day, on many levels. For me it was my first venture in national live media. While I have been quoted in Readers Digest, Money Magazine and Good Housekeeping, live TV and radio are a bit more demanding. No one is going to edit your story or call to verify your quote. What you say in that moment is it!

It was also gratifying to know that lives were touched and perhaps changed by our collective, calm, and poised voices, giving Americans clear direction on navigating the worst financial crisis since the Great Depression.

For those who missed the interviews, the AICPA poll highlights are:

• nearly 5 in 10 Americans said they are concerned about losing their jobs in the near future





• 42% are delaying major life decisions including, home ownership, marriage, children, and retirement





• 2/3rds of adults have reduced their spending





• 44% of consumers feel optimistic about the economic outlook for the US within the next year

The tips given by myself, Michael and Jordan can be summarized as follows:

• The recession is calling us “Back to Basics’ with money and finance:
  o Save!
  o Use credit wisely
  o Plan for your future





• Use budgeting and cash flow analysis as a tool





• If you don’t have a Rainy Day find, start one





• Find creative fun ways to save money such as:
  o Wash your own car as a family project –make it family time
  o Make your own pizza- teach your kids to cook
  o Have a friend over and do your nails together rather than going to a salon
  o Involve your entire family in saving for a special family goal, make it fun and a teaching experience for your kids





• Invest in good times and bad – follow the advice of investing sages of our time, buy when others are selling and sell when others are buying – don’t be a sheeple (sheep- people) and follow the heard





• Financial planning pays! Always!
  The AICPA also offers an advertising-free site with tons more tips, resources, calculators and life cycle advice. Check it out at http://www.360financialliteracy.org/

May prosperity be yours,
Mackey McNeill, CPA/PFS IAR
President and CEO
Mackey Advisors
http://www.cultivatingprosperity.com/
859-331-7755
Mackey@CultivatingProsperity.com

Why Don’t People Under 30 Save Anymore?

I recently did an interview with Craig Clough a staff writer for the web site LifeWhile. The article paints a grim picture for young adults today.

click here to read the article

And get help at www.FeedThePig.org

There is no time like the present to change a habit.

May prosperity be yours,
Mackey McNeill, CPA/PFS IAR
President and CEO
Mackey Advisors
www.CultivatingProsperity.com
Mackey@CultivatingProsperity.com