Be Wealthy & Smart

Learn the 4 steps to automate your personal finances and the apps and websites to help you. Interview with Jen Turrell from the "Financial Fluency, Speaking the Language of Money" podcast. Here are the 4 steps: 1. Automate bills at your own bank for free. Batch your bills on the 5th and the 20th. 2. Set up a separate bill pay checking account that is attached to autopay bills. Add up all your regular bill amounts. Live a month ahead and put a month's expenses in there as a buffer. Automate your savings too. 3. Audit your purchases and see if you can cut any subscriptions or impulse buys for your emergency savings account. 4. Turn on automation and make sure all our bills get paid. Monitor your system. Resources: Book: I Will Teach You to Be Rich by Remit Sethi Apps: Acorns, Digit Websites: Mint.com, Betterment, Motif, Ellevest, WorthFM by DailyWorth Listen to Financial Fluency, speaking the language of money on JenTurrell.com or iTunes.

Learn how to raise kids that are financially fit and savvy with money. Interview with Shannon McLay from Financially-blonde.com. Tweet: Financial literacy begins in the home. @financially-blonde @lindapjones Here are the 7 steps to raising financially fit kids: 1. Say no. Limit the things you say "yes" to and learn to say "no" more often. 2. When you say "yes", have a budget and constraints. A "yes" is not an unlimited budget. Give them parameters and explain the cost to the family. Let them contribute. Give them a dollar limit to pick out a toy. 3. Use cash to teach your kids about money. Let them count the money and be aware of how much they have. Don't hand over credit cards and debit cards or it will become a mindless swiping activity. They don't have an awareness how much something is worth or how much is left on the card. 4. Allow them to fail. It's ok to let kids experience failure with money. Make it as realistic as possible. Let them use their money even if they spend it all and can't buy something else. 5. Let them be responsible for their wants. Parents are covering their needs, let the kids cover their wants. 6. Teach them to work to earn their money. Show them that specific tasks must done to make money. Use rewards charts with points for chores like making their bed, cleaning their room, doing the dishes, etc. You can also create bonus money they can earn. 7. Allow them to participate in family financial decisions. Money is still a taboo topic in peoples' homes, but kids need to know the decisions you're making as parents. Let the kids see your family budget. Talk with them about charitable giving too. Heifer.org – Buy a goat for a community and help cure poverty. Bonus tip: How to get your child to invest! Talk about investing. Let them choose individual stocks. Companies they patronize are a good place to start, ie. Nike and Dunkin' Donuts. Explain how they are part-owner as a shareholder.

Today is listener question Friday. I received an email about asset allocation and I thought that would be a good topic to podcast about. Asset allocation is how you decide to divide up your equities and fixed income (stocks and bonds) as determined by your risk tolerance in order to minimize risk and maximize return. Think of it like a pie that is cut into varying sized pieces. Each piece of the pie is called an "asset class". Asset classes include: large cap growth, large cap value, mid cap growth, mid cap value, small cap growth, small cap value, international stocks, REITs, commodities, emerging markets, bonds and cash. The overriding concept is that it's difficult to determine which asset class (pie piece) will perform the best, so you want to have a little of the important ones. Traditional AA is Aggressive, Moderate and Conservative and most investors feel they fit one of those categories. Aggressive - Has 20 or more years until retirement. Moderate - Has less than 20 but more than 5 to 7 years until retirement. Conservative - Has 5 to 7 years until retirement or is in retirement. The mistake a lot of people make is to be too conservative too soon. Age determines a lot of it. So does risk tolerance. If young and aren't aggressive, won't get to where you want to go because the stock allocation is what is going to get higher compounding rates. So you want to be as aggressive as you can for as long as you can because most of the time this has been in your favor. So what are some traditional asset allocation models? For a long-term growth investor, you should consider an aggressive asset allocation model such as: 90% equities, 10% fixed income. For a moderate investor, you should consider an asset allocation such as: 70% equities, 30% fixed income. For a conservative investor, you should consider an asset allocation such as: 50% equities, 50% income. See www.lindapjones.com/asset-allocation for the asset allocation percentages mentioned on this episode. With interest rates at 30 year lows, you have to be careful about interest rates going up and bond valuations going down.

Learn how to overcome financial stress, why finances can affect your health, what kind of stress money can cause, and how to overcome health issues related to money. According to the American Psychological Association, 73% of respondents cited money as a significant source of stress in their lives…and for people coping with existing health problems financial and interpersonal stress can exacerbate their conditions. It can lead to ulcers, migraines, back pain, anxiety, depression, heart atttacks, lost sleep, marital issues… Three out of 4 Americans are in debt according to the Federal Reserve Survey of Consumer Finances. If you're in debt, tackle it head on. There are many things that are within your control like: a) Talk to the credit card company and asking for a lower interest rate. Many companies will try to accommodate you if you've lost your job or have health issues in the family, for example. b) Talk to a debt consolidation company. Companies can consolidate your debt into one payment and it usually does NOT hurt your credit. Credit is only impacted negatively if you write off a debt. c) Talk to a Financial Planner and see if they can help you reorganize some accounts and get you back on track. You may be able to take money from a Roth IRA for children's college, etc. d) Sell something that will generate cash. Sell a painting, jewelry, sports equipment, an RV or motorcycle to get cash and pay off debt. If you have to pay to insure it, that's even better! e). Get a side hustle. Become an Uber driver, work for TaskRabbit, rent out a room on AirBnB or get a part time job using your talents as a fixer upper, painter or window washer. Here are 5 tips to overcome financial stress: 1. Your stress is caused by how much you worry, not how much you owe so try to worry less by trying to meditate. Meditation can clear your mind and reduce your heart beat. It clears your thoughts and gives your brain a rest. 2. See what really relaxes you. Watching TV might be what you think relaxes you, but it might not. You might actually feel more relaxed by walking, being in nature, gardening, going to the beach, hiking, etc. 3. Exercise. You don't have to go to the gym, you can play music and dance, do lunges across the room, work with hand weights, walk the dog, ride your bike, etc. Be creative about your exercise. Think like a child. Yes, you can go to the gym but you don't have to. 4. Cut out unhealthy habits like smoking or drinking too much, which can leave your brain feeling foggy. 5. Journal your frustration. Get it out of your head and onto paper. It's a confidential way to scream and yell and get your anger out.

Learn the advantages and disadvantages of renting vs. owning a home, how to decide what's right for you and the ONE thing that should be the deciding factor. Advantages of Home Ownership: Forced savings in the form of equity Tax benefits (interest deduction) In control You own the property Can do what you want to it Benefit from prices rising Disadvantages of Home Ownership: Mortgage interest to pay and mostly interest at first Debt around your neck Can be foreclosed Pay for repairs, maintenance, insurance, yard Property tax Advantages of Renting: No real responsibilities other than rent No cost of repair or maintenance No Taxes or insurance Might be less expensive than buying No down payment Opportunity cost of down payment Flexibility to move, change neighborhoods or states Disadvantages of Renting: All the money goes out the door Opportunity cost of down payment - could earn $$ or 0 Can't personalize the rental to your liking or make upgrades At end of 30 years, own nothing You have a landlord Owner is in control - can raise rent, be a bad landlord Owner benefits from price rising You are paying for owner's house Financial Example Rental Own $1,000/mo. $300,000 purchase price x 20% down = $60k $240,000 loan @4.5% interest $1,000/mo. vs. $1,216 (tax deductible) $800 after tax +insurance +maintenance +repairs $1,000 vs. = $1,000 est. Consider: How long you plan to live there Moving is bad - commission, moving costs, remodeling, furniture Overpaying for a home - have to pay off more than it's worth Bubble? One expert stopped here…at $1k vs. $1k Noooo! At end of 30 years, $0 vs. $300,000 (possibly more)! The forced savings is the critical element to consider!

Learn how much money you need to invest in stocks. I worked in the mutual fund industry for most of my career. That's where professional money managers manage a pool of stocks, bonds or a combination on behalf of investors. The investor pays a commission or fee or both for it. One of the reasons mutual funds became so popular in the last 50 years, was not only because of professional management, ease of purchase, good relative performance and diversification was because they had a low minimum initial investment. Prior to mutual funds, you had to buy shares of stock and that could be expensive. Mutual funds had a $500 or $1,000 minimum and to buy 100 shares, called a round lot, of stocks was 100 x $30 = $3,000 for one stock, which offered no diversification. All your eggs were in one basket. Today we have more choices of where to invest money - ETF's are the biggest change. We can invest in unmanaged, diversified baskets of stocks, bonds or both. Instead of having a professional manager, it's a static group of stocks, for example. Could buy a biotech ETF with just biotech companies in it. ETFs are priced like a share of stock, so they require very little money to purchase. But what about if you want to buy shares of stock in a company? How much do you need to have to invest in a single stock or a few stocks? According to my mentor, William J. O'Neill, "You can begin with as little as $500 or $1,000 and add to it as you earn and save more money." O'Neil started investing at age 21 with a 5 share purchase of Proctor & Gamble stock! You can buy shares of one or two companies with $1,000, don't try to buy 10. If you have $10,000, you can buy 3 or 4 good quality stocks. Use my suggestions and only buy companies whose earnings are increasing at an increasing rate. Pay attention to earnings! Don't buy a stock because you like their products! That's only one touch point to consider. IMO, buying individual stocks is a great hobby and valuable skill to learn. But be careful, if you don't know what you're doing, it's easy to lose all your money. If you take the time to learn and study, you can make great returns. For example, if you bought Facebook (FB) just 3 years ago, a $5,000 investment would have grown to $12,000 or 240%! That's not an isolated incident. Action plan: 1. Read "How to Make Money in Stocks" - link is on my Resource page. 2. Get your IBD weekly and start studying what they recommend - the IDB 50. (No, I do not receive compensation for recommending this). 3. Start paying attention to who is beating expectations. If you haven't listened to my podcast about Apple (#125), do that because you'll find out what happens to a stock that misses it's targets. It's companies that BEAT expectations that win, companies that don't lose big.

Learn how to choose a Financial Adviser and what questions to ask for investment advice. Interview with best selling author of Rich as a King, Doug Goldstein. Places to check up on Financial Advisers: Finra.org/brokercheck CFP.net Sec.gov/investor/brokers.htm Doug's book: Rich as a King Doug's website: RichAsAKing.com

Learn 2 ways you can make money during a stock and/or bond market decline: inverse ETFs and Puts. Listener question: Hi Linda, I've been listening to you and I'm concerned about the stock and bond markets. How do you recommend I protect my account? Christy There are 2 ways you can make money during a stock and/or bond market decline: Inverse ETF's and Puts. Inverse ETF's are Exchange Traded Funds that make money (go up) when the market declines. You are buying futures, and this was not possible a decade ag????. It was something only professional traders could do. You have to be very careful, it's not something to buy and hold. You want to trade and be in and out of these. They can move against you quickly. There are about 75 inverse ETF's providing protection on US equites, government and corporate debt, foreign markets and commodities. One of the most popular inverse ETFs is ProShares Short S & P 500 (SH). If the market dropped about 10%, it would go up about 8%. At the time of this recording, the S & P is up 1% and SH is down 1.9%. The other thing you can do is buy puts. Puts are a bet on the direction of the market. If you think a stock or index is going to decline, you can buy a put, where you risk a limited amount for a specified period of time, typically 30 days???. They are based on time and price. If a stock goes below a specified price you are "in the money". Part of the price is determined by the time you are holding the option. As it gets closer to expiration, it loses value. You limit your risk to the amount invested. Can expire worthless. Both of these are difficult to get right because you have to know when to buy and when to sell. Timing in a bear market is tricky. Markets tend to go down a lot faster than they go up. They also tend to rebound sharply, so it's moving in the opposite direction and can cause large changes in the price if you hold too long. The timing is very tricky on either strategy so be very careful when trying to implement them. The other thing you can do is simply wait in cash. By waiting in cash you can wait for a downturn and dollar cost average (that is invest in regular intervals) to buy back in. That will give you a lower average cost basis and allow you to get in at a low price. Bernard Baruch used to say, "Buy when there is blood running in the streets." I say, "Buy when the news is at it's gloomiest. When no one wants to buy, that is the time you'll get the best price." With the stock market in its 7th year of expansion, it's reasonable to take measures against a market decline. Use these strategies judiciously - again, I caution you NOT to buy and hold or worse, buy and forget you own an inverse ETF. They are volatile and can move against you quite easily. Personally, I'm sitting out of stocks and investing in alternatives that are not correlated with the stock market. That way, I can take my time and wait for the right opportunity to get back in. Cycles tell us another big tsunami could be headed our way, so IMO it's a good time to sit out.

Learn are a few of the important terms you need to know as an investor. 1. What is a stock? Shares in a company. A way to raise capital. It creates wealth. Increases in value if growing earnings. Risk is limited to amount invested. Example of Tory Burch - wants to open boutiques worldwide and sells stock in an IPO - Initial Public Offering - to do it and raise capital for boutiques, inventory, etc. 2. What is a bond? An IOU; debt from a corporation, government or municipality. Supposed to be less risky than stocks. Considered more conservative investments. Moves inversely to interest rates. Cycles in interest rates run about 30 years. 3. What is asset allocation? The percentage allocated to stocks and bonds, a virtual pie chart. The most important factor in Modern Portfolio Theory; a finding by Henry Markowitz, Nobel Prize Winner. Asset allocation is where the majority of returns come from. A rising tide lifts all boats. It's not from stock picking or timing the market. It's from the choices you make about where to invest. In theory, should have more stocks when younger and more bonds when older Used to be 100 - (your age) = % in stocks, ex. 100 - 20 = 80% stocks. That's harder to do today since bonds may have a headwind of rising rates, which means lower bond valuations. Asset allocation today requires some creativity how you receive income and reduce risk in your portfolio. 4. What is a dividend? Net profits paid on stock shares or can be kept as retained earnings. The yield on a stock. Usually paid quarterly, but can be a one-time dividend or a regular dividend. It's not guaranteed. Check the track record. Can reinvest dividends or take in cash. High growth companies typically reinvest rather than pay dividends, so dividend paying companies tend to be large, established companies. 5. What is the S & P 500 Index? Standard and Poor's 500 largest companies in US. Many people don't realize it's a market-value-weighted index - a stock market index whose components are weighted according to the total market value of their outstanding shares. The larger the company, the more weight it has in the index. If you want all the companies to be equally weighted, that's a different index fund, but they do exist. An index is a form of measurement - compare competing large cap funds to it's performance. Every manager is paid to outperform an index. Large cap US funds are typically measured against the S & P and how it's performed. 6. What is the Dow Jones Industrial Average? Also called "the Dow", it is an index made up of 30 industrial companies. Invented by Charles Dow back in 1896. An industrial company used to be more steel, railroads, cotton, tobacco, oil, etc. now includes technology companies like Microsoft. It also has companies like Walt Disney, Exxon, GE, Coca Cola, Proctor & Gamble and Apple. Here's some trivia for you: what is the only company in the Dow that is original to the index? General Electric. When people say "the market is up today" they typically mean the Dow. Small number of companies, not as indicative of the broad market. It also is market weighted, so the largest companies carry more weight in the performance of the Dow. 7. What is Nasdaq? Nasdaq stands for the National Association of Securities Dealers automated quotes. Started out as an electronic market in 1971 vs. an open outcry, auction market that the NYSE is. That is humans vs. computers for trading. It began with smaller companies, but now is better known as a technology index because companies like Microsoft and Intel went public there then rather than migrating to NYSE, they stayed in NASDAQ, probably due to electronic nature and seeing the future being more electronic than with human specialists. The term "Nasdaq" is used to refer to the Nasdaq Composite, which has over 3,000 companies that are part of the Nasdaq and includes the world's foremost technology and biotech giants such as Apple, Google, Microsoft, Oracle, Amazon, Intel and Amgen. 8. What is MSCI EAFE Index? The index founded in 1969 includes a selection of stocks from 21 developed markets, but excludes those from the U.S. and Canada. MSCI EAFE stands for Morgan Stanley Capital Index, Europe Australia Far East. Ranks the largest companies outside of the US and Canada. Outside of US only - international or foreign stocks. 9. What are Emerging Markets? Emerging markets are developing economies, many of which are experiencing rapid growth and industrialization. These countries possess securities markets that are progressing toward, but have not yet reached, the standards of developed nations. They are international stock markets that are not as well developed or mature as developed countries. They are loosely defined as having completed certain reforms and economic development programs to open up their economies and emerge onto the global scene and are considered to be fast growing. You tend to hear about the BRICS - Brazil, Russia, India, China, South Africa. 10. What are REITs? Real Estate Investment Trusts A company that owns or finances income producing real estate. A diversified group of real estate and mortgage companies. Commercial real estate, apartment complexes, retail buildings, hospitals, hotels, shopping malls, timber land, etc. Provide income streams in a dividend Must pay out all taxable income as dividends to shareholders. These are a few of the important terms you need to know as an investor. Don't let jargon get between you and your wealth building. Your action step is to research one of these terms even more and find out all the details about it. Whether that's the S & P 500, REITs or dividend paying stocks, take some time to do your own research.

Learn about billionaire Carl Icahn, how he made his money, what stocks he owns and his outlook on the stock and bond market. Carl Icahn is an 80 year old investor worth $20 billion and one of the 50 wealthiest people in the world. He owns 90% of Icahn Enterprises, an investment fund, the symbol is IEP. He's a shareholder activist, one of the original corporate raiders and greenmailers. That means he buys stock in companies and causes contention with management about why their stock is undervalued, to the point that they pay him to get rid of him. He's famous for trying to takeover companies and they either succumb to his management suggestions or pay him to go away. Attempted to takeover Nabisco and was paid $600 million by Philip Morris to go away. Carl Icahn gained fame in the 1980's by taking over and attempting to take over some large companies like Texaco, TWA and American Airlines. He was successful taking over TWA. It went bankrupt and eventually re-emerged. More recently he's been contentious with managements of Netflix, Dell, Family Dollar, Ebay and Apple. With Apple, he wanted them to pay out retained earnings in the form of a dividend and to buy back stock. He has since divested himself of all his Apple stock in the 4th quarter of 2015, which used to be his largest holding. He says it was due to being worried about Apple and things going on in China. I was at the airport last fall and in the CNBC store waiting for my flight. On the TV was Carl Icahn talking about why he expected a big decline in junk bonds and the stock market. He's been very vocal to caution investors, particularly bond investors, because he believes there's trouble ahead. Judging by how he's invested, I'd say he thinks it's soon. His company is short credit default swaps and broad market index swap derivatives, which means he is betting that junk bonds (low rated corporate bonds) and stock market indexes will go down. He says he's more confident about markets dropping 20% than increasing by 20%. His company is 149% net short (due to leverage). Icahn Enterprises has a phenomenal long-term track record, but the last 2 years have been poor. Last year they were down 18% and they are down 12.8% in the 1st quarter of this year. Some of the companies he currently owns includes: Paypal, AIG, Herbalife, and Freeport-McMoran. He is one of the all-time greatest investors - don't rule him out. I always pay attention to what the billionaires are doing because they typically follow cycles, which I do too. It gives you some ability to see what's coming, because cycles repeat at regular intervals. This is something billionaires know, but most investors don't. It's changed my investing perspective in the past few years and something that has allowed our VIP Experience to be up 25% YTD when the S & P is only up 1%. Like Mr. Icahn, I also am expecting some declines in the stock market and have positioned my clients in assets other than stocks.