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4 Steps to Merging Finances

 1. Focus on Joint Goals, Not Joint Accounts

It’s tempting to get caught up in the logistics of joining your finances. How do you create joint accounts? Which accounts should you join? What if you want to keep some money for yourself? Does that mean your relationship is in trouble?

Ignore all of that. It doesn’t matter. At least not at the start.

What really matters are your joint goals. What are you working towards? What is your shared vision for the life you’re building together?

Start having conversations about what you each value and want out of life. Listen to each other so you can truly understand what’s important to the other person.

Find the goals you already have in common and make those the priorities. And start talking about how you can find middle ground on the others.

This communication is the real key to successfully merging your finances. All the rest is just logistics.

2. Establish Shared Expenses

Top 5 most Ridiculous Recent Firings

 5. Lowering a Flag on Memorial Day

Let’s all agree on a few things for the survival of decent society, O.K.?

Number one, do not harass coffee shop clerks who don’t stroke your holiday ego. They are not in charge of compensating for your discovery that Santa isn’t real; they’re here to make lattes.

Number two, we can and should all chew with our mouths closed.

Number three, when a soldier lowers the flag to half-mast on Memorial Day in honor of some lost friends, the absolute, literal least you can do is leave the guy alone to his ceremony.

Apparently this last was too much for a Charlotte company, which reportedly chose to fire Marine Corps veteran Allen Thornwell for doing just that. His employer said that it was disturbed by Thornwell’s “passion for the flag and (his) political affiliation,” and that’s the double edged sword of at-will employment. Thornwell will hopefully find work soon, but his employer was perfectly free to let him go.

4. Plain Old Racism

Let’s revisit social media,

Amazon May Be About to Pummel America’s Clothing Stores

 Amazon (AMZN) appears to have ambitions to upend the clothing industry, and retailers from Gap (GPS) to Lululemon (LULU) should be frightened.

As TheStreet has reported, based on several recent job postings on Amazon’s site it’s planning to develop its own line of workout apparel. Wall Street is mixed on the potential for Amazon to develop a strong presence — and disrupt the old guard — in the athletic apparel space, however.

“Just because Amazon sells something, it doesn’t mean they’ll blow the competition out of the water,” said Simeon Siegel, executive director and retail analyst at Instinet

There are clear winners in the athletic apparel space and they win because of their product, strong brand loyalty, who’s sponsoring them and what they stand for, Siegel said.  While a workout clothing line from Amazon is “not a good thing,” he does not think athletic behemoths such as Nike (NKE) and Under Armour (UA) should be “quivering” because the e-commerce giant is entering the space.

Bridget Weishaar, senior equity analyst at Morningstar, also does not believe an

Your lifestyle versus your budget

How did this happen?

My sense of these investors is that they earned a great income and never once budgeted to save. Their saving was an accident and something that happened on an ad hoc basis because they never had a spending plan. Your budget is in constant competition with your lifestyle unless you keep it under tight control. Life is about making compromises, but you need to make sure that you take the negativity out of this process and look for positive compromises. What do you really want? Do you want to curb your grocery spending so that you can have one great meal eating out at that fantastic new restaurant? Would you like to send your child to private school or live in the bigger house? Drive the new shiny car or go on a holiday?

You need to decide what makes you happy and spend your money on this. That means you need a budget – something most people don’t have. Once you have worked out what you need every month to cover your lifestyle costs, transfer the difference in your transaction account to another account, where you won’t be tempted to spend

Financial Planing for Women

You need your own will and have to understand the implications of your partner’s estate planning

Chairperson Ronel Williams, says in practice, Fisa often finds that where a woman does not have a lot of assets, or leads a busy life, proper estate planning is neglected.

This could have far-reaching consequences.

Where estate planning is done, it is important to not only consider current circumstances, but to plan for the future, should the situation change, she says.

One example is in cases where a woman’s husband passes away, leaves the bulk of the estate to her and she dies shortly thereafter.

“So then suddenly she does end up with having quite a sizeable estate and her will actually doesn’t reflect the position for her changed financial circumstances.”

She could for example have provided in her will that her estate devolves on her children. If they are still minors (under 18 years) and inherit small amounts, this does not necessarily pose a problem. If, however, her estate is sizeable, the children’s inheritances have to be paid to the Guardian’s Fund unless her will provides for a trust.

While the law allows parties to

The Stock Market and Bank Risk

EXECUTIVE SUMMARY — It is clear that risk-taking by financial institutions is one of the main causes of financial crises and severe recessions. Yet we know relatively little about what gives rise to such risk-taking in the first place. This paper presents evidence that a focus on short-term stock prices induces publicly-traded banks to increase risk relative to privately-held banks. The findings provide support for the view that compensation schemes should require management to hold stock for longer periods to mitigate their incentives to pump up short-term earnings and the short-term stock price.

AUTHOR ABSTRACT

We present evidence that pressure to maximize short-term stock prices and earnings leads banks to increase risk. We start by showing that banks increase risk when they transition from private to public ownership through a public listing or an acquisition. The increase in risk is greater than for a control group of banks that intended but failed to transition from private to public ownership, a result that is robust to using a plausibly exogenous instrument for failed transitions. The increase in risk is also greater than for a control group of banks that were acquired but did not change their

Financial Crisis Caution

Leverage, Transparency, Liquidity

Dean Jay Light began his introductory remarks by characterizing the crisis and collapse of housing prices as a test that has exposed how fragile the recently evolved U.S. financial system is. “Leverage, transparency, and liquidity lie at the heart of much of what’s going on. The system has proven to be unexpectedly fragile in a way that I think nobody I know really understood,” Light said.

To illustrate his point about the interlocking nature of housing and the U.S. financial system, Light said that for decades beginning in the 1930s, the ratio of median home prices to median income remained relatively stable, about 3 to 1. Over the last 20 years, however, the financial markets that financed the housing system in the United States changed remarkably. Local markets once dominated by tightly regulated savings and loans—a simple system of buy and hold—evolved into something much more complicated due in part to the development of mortgage brokers. The new system fueled a bevy of mortgage backed securities and derivatives that were terribly difficult for experts to comprehend, he said.

Too much leverage combined with too little transparency meant that the markets froze. Liquidity

When Good Incentives Lead on Bad Situation

An Experimental Field Study

In an experimental field study, the researchers set out to test the efficacy of three distinct incentive schemes for employees in charge of assessing risk and issuing loans: the origination bonus (in which officers are rewarded a commission for every loan issued); the low-powered incentive (in which officers receive small rewards for loans that perform well and small penalties for loans that perform badly); and the high-powered incentive (in which officers receive big rewards for issuing loans that perform well, but big penalties for loans that default).

To begin, the researchers collected a random sample of actual applications from entrepreneurs seeking commercial loans for the first time. They acquired the loan files from a large commercial lender in India, a country challenged by a dearth of verifiable financial data. As is common in emerging markets, many residents have no personal identification documentation, let alone a credit score. Loan officers often end up relying on qualitative information and intuition, all the while knowing that these loans may be vital to the nation’s economy.

“Small businesses in emerging markets are thought to be among the large engines of employment and economic growth,” Cole

The Small Business Administration

A look under the hood at SBA, however, reveals a small but important agency. In fact, the SBA is perhaps the perfect prototype for a Trump administration agency: a public-private partnership driving valuable outcomes to a critical (but often neglected) part of the economy, all at a low cost to taxpayers.

Gallup and other surveys show high support for small businesses. However, programs that support small businesses are not popular for superficial reasons. Instead it’s because small businesses touch the lives of every American in ways that are not only tangible, but also, in fact, consequential.

Half of the people who work in America either own or work for a small business. And small businesses have created 60 percent of all net new jobs since 1995. Four million Main Street businesses—including neighborhood restaurants, dry cleaners, and local grocery stores—form the backbone of communities across America and they are responsible for about 40 million jobs. And, as Mercedes Delgado and I show inresearch released earlier this year, small business suppliers—locally and across the country—contribute importantly to American innovation and growth.

Small businesses are actually the foundation for economic growth and, with that, critical to policy that

4 Tips to Prepair Your Finances for Your First Baby

1. Track your current expenses

The first step in preparing for the future is knowing exactly what the present looks like. Having a handle on how much money is currently coming in and what it’s being spent on each month will provide the baseline you need to make educated decisions going forward.

You can go over your expenses yourself by looking at receipts and bank statements, or you can use tools like GoodBudget.com and You Need a Budget.They make budgeting easier by automating most of the process, pulling in transactions from bank accounts and credit cards and helping you categorize them.

2. Estimate your new expenses

Having a baby will add some expenses to your monthly budget, but you can get a handle on them ahead of time.

Babycenter has two great tools for estimating the overall costs of raising a childand the specific first-year costs. Use them to get a ballpark figure for baby’s first year, then divide that number by 12 for a monthly amount you can plug into your budget.

3. Build a cash cushion

Take that estimated baby budget and start setting the monthly amount aside insavings account now — before the baby gets here.

Don’t Wait Till Year’s End to Fix Your Finances

Add to an HSA

A health savings account, or HSA, is a powerful tool that many people don’t know much about. If you have a qualifying high-deductible health plan, you can make tax-deductible contributions to an HSA, much like you do with a 401(k). The money also grows tax-free within the account and can be withdrawn tax-free for medical expenses. That’s a triple tax break you won’t find almost anywhere else!

As it turns out, an HSA can also serve as a fantastic retirement account, if you manage it correctly. That triple tax break is too good to ignore, and with the right provider, you can invest the money just like you would within an IRA. So I recently maxed out my HSA contribution for 2015, putting $3,350 into my account and investing it in low-cost Vanguard index funds. (The maximum contribution for individuals is $3,350 in 2015; for families, it’s $6,650).

Make a video for homeowners insurance

I encourage my clients to create a video record of their belongings, which serves two purposes if something were to happen to their home:

  1. It documents their personal possessions for insurance purposes, which increases their chances of getting fully

Give the gift that keeps on giving

This time of year sees both children and adults preparing their wish-lists for the upcoming festive season. But as many South Africans continue to grapple with rising debt, now is a good time to shift the focus from giving material items to providing future financial well-being.

Giving a child an investment as a gift will not only promote a culture of saving from a young age, but will also show them how you can make money grow.

There’s a powerful story of one customer’s commitment to leave a legacy for his family, and the value of sound financial advice. In November 1968, a customer made an initial deposit of  R400 into the Old Mutual Investors’ Fund and 48 years later, his investment is today worth over R600 000.

More precious than the value of his money, however, was the culture of saving and the legacy that he passed on to his children and grandchildren. On special occasions such as Christmas and birthdays, he invested a set amount of money on his children’s or grandchildren’s behalf. With this investment, his daughter was able to provide for her daughter’s schooling.

If South Africa is to develop a generation of

Unplugged Financial Planning

Knowing where you are

Simply put – you need a budget. Don’t frown. Let me explain. Budgeting is not about what you can’t do with your own money, but what you CAN do. Have you ever felt guilty about a purchase? Have you ever thought to yourself in the store “ugh, I should really hold off, we’re trying to be better about this”? Do you feel like all the effort and restraint doesn’t seem to be paying off in your checkbook from month to month anyways so why bother? Know what? A properly executed budget can free you from all that. Really.

To live a better life today and tomorrow, you need a sustainable budgeting process that accounts for your needs, funds your most important and enjoyable wants, and allows you to plan for your future with hope and confidence. Yes, a spending plan is the key to unlocking all of that. The best part is, YOU (along with a spouse if in the picture) are the Chief Financial Officer(s) of your household deciding where the money goes. You work too hard not to spend a bit of time each month telling your money what to do. Money

Three ways to give your children a financial

Give presents that mean something

Of course children love toys and having something to play with, but not every present they receive has to give them instant gratification. Putting money in a unit trust or stock broking account might not sound like the most exciting gift in the world, but it can be very rewarding.

For a start, it gives them some sense of having their own savings and some money of their own to look after. Over time, it’s also the best way to teach them about different savings products, asset classes, and things like interest and dividends, as they can see for themselves how they work.

A low-cost online stock broking account could even allow them to make their own decisions about what stocks to invest in. At an early age their decisions are not likely to be influenced by rigorous analysis, but they can still invest in companies that they know something about.

Involve them in their own savings

If you are saving for your child’s education, are they aware of it? Do they know that you are putting away money every month, where it is going, and what it

For a Successful Financial Plan

On the surface, the cost of a financial plan is simple: generally between $2,000 and $4,000, depending on its complexity and where you live.

But dig deeper and you’ll find that the plan’s success also depends on you spending time to implement it.

Consider the case of a young physician who recently came to my office inquiring about a financial plan. His primary issues were cash flow with tax considerations, debt service and investment advice. I suggested he would also need an insurance review and estate planning, since he had none. At the conclusion of our getting-acquainted meeting, my colleagues and I quoted a fee for the financial plan and what it would include. He decided to work with us.

Next we had a goal-setting meeting and collected his pertinent financial documents such as his tax return, investment statements, debt statements and more. We provided risk-tolerance questions and discussed his short- and long-term goals in greater detail. Then there was an interim meeting where we reviewed his goals — to be sure we prioritized them correctly — his risk-tolerance results and his investment analysis.

A couple of weeks later, we had a plan-delivery meeting, where we reviewed

Don’t Make These 5 Mistake

1. Obsess Over Investment Strategy

There’s often this feeling that if you can just find the perfect investment strategy, your financial success will be guaranteed.

So you read articles, listen to the experts on TV, and tinker with your investments, all with the hope of finding an edge that puts you over the top.

But here’s the truth: the returns you earn, good or bad, have almost no impact on your bottom line until you’re a decade into the process.

What does matter, a lot, is your savings rate. It may not be sexy, but simply saving enough money is far more important than any other investment decision you can make.

2. Forget About Irregular Expenses

If you’ve tried budgeting before and it hasn’t worked, chances are you’ve been undone by all the unexpected expenses that keep popping up.

Your car needs a new tire. Your daughter has to go to the doctor. Your friend gets married in another state.

Here’s the thing: a good budget knows that these kinds of expenses aren’t unexpected. You may not know when they’re coming, but you do know they’re coming.

How to Save Money for a New Car

The first step one should take is to identify the investment objective. In this case that is a car, with an assumed cost of R300 000 at the end of a five-year term horizon. It is important to understand this time horizon as well as your appetite for risk to decide on the most suitable investment vehicle.

Some of the most popular after-tax investment vehicles include endowments, unit trusts and the tax free savings accounts. These vary in terms of accessibility and tax implications and we would need to know the clients full financial situation before recommending a suitable product.

For a client who wants to lock their investment for a five-year period, an endowment would be a vehicle to consider. We do, however, have to take into account their marginal tax rate when making this decision.

This is because endowments are taxed within the fund at a set rate of 30%. This benefits investors who have a marginal tax rate greater than that, but can be prejudicial if their tax rate is lower.

Because the money in an endowment is taxed within the fund, your withdrawals are tax free. In order to get this benefit, however, endowments have a minimum investment time horizon

Financial Planner

On my blog, one of the topics I like to cover is explaining how the personal financial advice industry works. Most people get financial advice from someone who is a salesman of insurance, annuities, mutual funds, and other products. You can also get help from someone whose main profession is something related like a CPA or lawyer who offer advice as a side business. The best way to get advice however, is from someone who functions as a consultant.

There are financial advisors out there that charge by the hour for financial advice. They often call themselves financial planners to distinguish themselves from financial advisors. You can find these financial planners through industry associations like the Garrett Planning Network and NAPFA.org.

I say it’s best to work with a consultant style of advisor because the consultant works only for you. Ask yourself what someone’s motivation is. A financial advisor employed by an insurance company or investment company (like Merrill Lynch, Morgan Stanley, Fidelity, Vanguard, etc.) has sales managers above them making sure they sell a certain number of contracts every month. You don’t want to be one of those sales targets. It may work out for you, and there

Two Big Reasons to Watch Your Investment

1. Low Fees Lead to Better Returns

This is pretty counterintuitive. We’re used to better things costing more money and cheap alternatives meaning important sacrifices. But it’s the exact opposite when it comes to investing.

In 2010, Morningstar released the results of a study in which they found that cost was the single best predictor of a mutual fund’s future investment return. The lower the cost, the better the future return. In other words, in investing, the cheap alternatives aren’t a sacrifice at all. They’re actually the higher quality items and they increase your odds of success.

2. Even Small Fees Cost You a Lot of Money!

You may think that a 1% difference in cost isn’t that big a deal, but over long periods of time it adds up to a huge difference. Let’s put aside the fact that lower cost investments typically outperform and assume that you’ll get a 6% return no matter what.

Now let’s say that you’re saving $5,500 per year (the annual maximum for an IRA) and you have two investment choices: an index fund that costs 0.10% per year or an actively managed fund that

5 Things Not to Worry About Investing

1. What the Stock Market Has Done Recently

The US stock market dropped 24.63% over the first 68 days of 2009 in the midst of the housing crisis and international financial meltdown. Bad sign, right? Sure, except that the total return for the year ended up being a positive 29%.

Or how about the two years from September 1998 to August 2000 when the US stock market increased by 25% per year, only to decrease by 21% per year over the next two years.

In other words, you shouldn’t spend any time worrying about what the stock market has done recently because it doesn’t in any way predict what it will do going forward.

2. What “Experts” Think the Stock Market Is Going to Do Next

Did you know that active investment managers underperform basic index funds year after year? Or that “expert” prognosticators are wrong more often than they’re right?

Even the experts have no idea what the stock market is going to do next. The less you pay attention to their predictions, the calmer you’ll feel and the more likely you’ll be to succeed.

3.