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Financial Advisers – Do You Need Them?

Financial adviser with a thumbs up
financial adviser with a thumbs up

Some people can be really popular like George W, The Joker or those nice people who work for the IRS. But what about ‘the financial adviser’? Well they can actually be of great assistance in planning for retirement or generally investing, but you need to choose someone reliable.

Remember, anyone can call themselves a financial advisor! Or in for that matter financial planner, investment advisor, even retirement specialist. Yes, like one of the transformers they can change shape, but remain virtually the same thing underneath.

So How Do I Know I Need One?

Well everyone knows their own personal situation best and you may have a number of things to consider or just one or two. Planning for retirement for example or looking after some investments can get quite complicated and you may not understand all the jargon or the small print.

Advisers can help you with this, and of course they can spot good opportunities for your money. In short, any form of adviser will take care of the both the complex and little things so you can just get on with your life. Once you’ve considered what your long term plans will be it’s pretty certain you’ll know whether you need one or not.

But I Need a Little More Advice

financial adviser briefing to a young couple

Well that’s fine but the key is to look at the complexities involved in your personal finance very closely. You may have been remarried, been divorced, have a business to run or have other changing personal issues. The rule of thumb seems to be:


Either at or past this threshold there will be both inheritance and tax issues and you need to know exactly how to deal with them. A financial adviser can be a huge boost here. This however, doesn’t mean ‘You’re in over your head’ or it shouldn’t be classed as being in ‘a mess’. It simply means you’ll have the advice of an expert who can enable you to take full advantage all the options out there.

What Do I Need to Do Next Then?

Goals are very important of course and if your financial situation has always been methodical and simple then you can carry on in the same way. You may not need any sort of advisor at all. By the same token if you seem to be indecisive or not sure of anything then an adviser can help sort your future plans and take the stress or anxiety away from you. At the very least he or she will review your savings, investments and long term plans, and help you make a decision as to the best way forward avoiding potential pitfalls.

What Do I Need to Do Next Then?

a very happy family spending their vacation at a beach

What are the plans for the rest of your life? Of course you want to enjoy each moment of life and the here and now is really the most important thing. But it’s best to give some thought to the rest of your days especially if you are in fact nearing retirement age.

If you are still not certain what you’ll do with your finances or if you have any other problems at home, then you should talk to a financial adviser.

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Remember a financial advisor can do you a great service – but make sure you find the right one!


Don’t Destroy Your Net Worth – Part 2

Golden key chain with a car, house and piggy bank
Golden key chain with a car, house and piggy bank

In part one we looked at your net worth again and reminded you of exactly what it was and how you came about it. We began to tell you of the dangers lurking in the shadows ready to eat into your net worth. We looked at how important it was to have a retirement plan regardless of how small it was, and how vital it was to save if you possibly could.

Job hopping was brought into the equation. Then bad debt inevitably came into the argument. We also told you how bad debt wasn’t necessarily a good or bad thing and that balance was the key here. So, if you’re sitting comfortably, then let’s take this on!


And Yet Most People Need a Car? You See Where the Balance Comes in?


As long as you don’t start and add a lot more bad debt to this then things will generally be fine. The car may even be used to make us money, so you have to be sensible here. For those people looking for a career or a good job, then the reality is this will always come at a price in any case!

After all, you can’t become a teacher, doctor or a lawyer without the right education. This also means student debt and extra educational costs. These are all part of life so the truth is we just have to manage them as sensibly as we possibly can, and we can’t do this without borrowing.

At the same time we need a roof over our heads so a mortgage is priceless for many. Yet again balance is the key word here – without this we are lost on the fiscal road for good! But as in life generally there are times when we must make important decisions or take these:

Open Ended Risks

By now it’s quite clear unplanned spending can cause us problems – in the longer term it can also destroy your net worth. What we are doing in the examples of the mortgage, the car and the student loans is clear. Taking open ended risks – hopefully carefully calculated but risks all the same.

You can’t take risks in life as by its very essence this is what life brings with it. What you can do is minimize the number of open ended risks you take – so let’s take a closer view of this!

health insurance

We should remember medical costs are largely responsible for the majority of bankruptcy cases in America. Even youngsters can be afflicted by unseen injury and illness and of course this has to be paid for.

Not having medical insurance then is seem as an open ended risk – you’re just gambling you won’t need anyway fingers crossed, but of course you can’t be certain of this! Likewise if we try and avoid homeowner’s insurance we are taking an open ended risk on our home. If you live in a possible storm endangered area this can be a huge mistake. And of course if these gambles go wrong then our net worth is affected!

So the Upshot?

Well this is quite straightforward – it takes time and huge effort to build up your net worth – but if we aren’t careful then it can be quickly knocked down again. Yes we have to take open ended risks but we must do all we can to ensure our net worth remains in good health. This is all about balance and looking at both the advantages and disadvantages of the choices we make financially. You owe it to yourself to get this right!


Don’t Destroy Your Net Worth – Part 1

currency notes dollars bundles chart
currency notes dollars bundles chart

You may well have read our previous articles explaining the finer points of net worth. And hey……..this is the complete sum of your personal worth so it’s very important. We’ve seen how to build up your net worth by earning more, saving and even investing. But once you get into a really good position it’s easy to knock the castle down.

These next articles then, will look at how not to destroy your net worth. We care about you, so please take heed of the warnings about to come your way. And let’s begin by reminding you of the basics?

Take a look at:

Big Spending Can Wreak Havoc!

Remember your net worth has accumulated simply because you ended up making more money and saving as opposed to the money spent on your liabilities. If the first is greater than the second then of course you have a positive net worth.

measuring net worth by putting assets and liabilities on a weight scale

By the same token you can easily work out if the opposite happens and you spend more than you earn, and dip into savings then your net worth will slide away into the sunset! This might happen because you suddenly start to borrow big on clothes, furnishing, vehicles or credit cards. If your budget remains firm and disciplined then this problem simply won’t arise.

So the lesson here is if you start spending suddenly above your limit then it won’t take long to do long term damage to your financial health! Don’t do it! Don’t spend top money on things you really don’t need or want!


Failure to Make the Most of Your Peak Earning Power!

Oh yes……don’t think we haven’t thought of everything here! Unless as an individual you’re very lucky to be a twenty something entertainer, rock star or professional sportsman or woman, then the chances are you won’t be making big money at this stage. You can’t generalise of course, but people tend to hit the peak earning area in their early 40’s and go on to maximise this until their mid 50’s.

This is because quite a lot of twenty something’s could still be in education especially at the lower end. And let’s be honest? Top earnings arrive with experience and a senior position at work or otherwise. It makes sense right? So there’s one thing you should avoid if you can and that’s: ‘Job Hopping’.

If you change your job frequently or profession for that matter, then this will make it hard for you to maximise earnings. Sometimes for various reasons it can’t be helped of course, but the best way to peak well, is to stay in the same career or choose your jobs very carefully. All of this can have a big impact on your net worth.

Here’s Some Top Advice: If You Have No Retirement Plan in Place Or for That Matter Any Savings, Then Net Worth Simply Won’t Exist!


happy rich matured couple having a vacation

You simply must accumulate your savings but at the same time keep you spending lower than your earnings.

But crucially you really need to have some sort of a retirement plan. If you don’t then it’s easy for this money to be spend each month. This also means the danger of going over your limits.

The fact is with no investments or savings you can seriously hold back or even erase the net worth process big time! But of course there’s one thing that really erode at your net worth over time.

Bad Debt!

Should be a simple concept on the face of things but we don’t always completely understand what debt is? You must remember not all debt is either a thing or a bad thing, and not all of this debt is equal. Some debt we simply need to have – some debt we don’t need to have.

It’s all about balance. Yes be in little doubt debt can be a big threat to your total net worth and your financial standing in the future, so the watchword has to be control! Even if you just start out with small amounts of debt on a credit card for example, this can quite quickly get out of control because of the high interest rates involved.

In part 2 we’ll look more at this and give more advice on just how to stop your net worth crumbling.



money roots plants
money roots plants

If we want to build a decent future in later life its clear simple savings and bank accounts are not the answer. Fluctuating rates of not so great interest won’t help us fulfil our dreams or ensure we have something to fall back on. So for those of us fortunate enough to be able to save we need to enter the world of investing. The financial world away from the vast array of technical terms and financial language isn’t actually as complicated as we think.

So What Kind of Investment are Available

There are investments to suit everyone. You may just be happy to place your savings into one commodity or several. Here are the three best examples for newbie’s carrying the least risk:

  • Bonds

    This product is one of the safest to invest in and just about risk free if the bonds are purchased from a settled Government. When you buy a bond you are simply lending your money to either a firm or a Government, who pay interest on the money. Eventually you’ll get your money plus the interest back. These are categorised under ‘Fixed Income securities’. The flip side is because the risk is minimal, then the returns are also minimal. They are in fact are good place for the Investment beginner.

  • Stocks

    Buying a stock gives you a little piece of a company and means you can attend shareholder meetings and vote. These equities will bring you a share of any company profits or ‘Dividends’. In this case however fluctuations are likely and there’s no guarantee you’ll make money out of this. Some stocks don’t pay dividends either. But this is the worst case scenario and of course they can also give you a very high return in certain cases.

  • Mutual Funds
    representing mutual funds explaination

    When we put a mixture of stocks and bonds together and you buy them in a package this is known as a mutual fund. These can include stocks in various industries, Government bonds, company bonds, etc. They either be largely American or from other countries around the world. The fact is you are putting your own money together with a number of other investors. You pay a fund manager to select various securities and with a specific aim. The concept is you’ll get a better return if a professional does this for you. It also means you can invest and then let someone else get on with managing it for you. Stocks and bonds are also known as equity and debt.

    You should consider all three of these very carefully but of course there are other slightly more complex investments and we can touch on those briefly. These are really for the more experience investor or for someone who wishes to delve much further and invest much more money!

  • Options

    You have the right to buy a stock for example for a set price on a pre-organised date. This carries no obligation though. But you need to fully understand their complexities and the risk before using them.

  • Forex

    You can learn how to trade the forex market and there’s a wealth of information over the internet. Again this can be done in various ways so you need to know what you’re doing.

  • real estate
    Real Estate

    This of course is playing the property market which means taking more risks with your money. If done well the returns can be high but as with any market there are fluctuations.

  • Gold

    Another market with possibilities but you need to know what you’re doing. Again, get it right and the rewards can be pleasing. Professional help is required though.

  • Futures

    These involve signing a contract with another party to buy or sell a chosen asset at an agreed price. The delivery of this will be on an agreed date and time. Futures exchanges act as a go between involving both parties. Once more futures can carry complexities and it’s best to get the best professional advice before going down this road.

    There are various other areas you can get into but you shouldn’t need to worry about such things at the beginning of your investing career. Getting into complex areas immediately will almost certainly get the investor into trouble. The professionals themselves advise on creating a solid foundation with the help of an investment advisor early on. With all of these things it’s essential to carry out plenty of research. An investor needs to feel comfortable in what he or she is doing.

We have discussed portfolios in another article so as not to bombard you with too much information in one go!


Investment Portfolios

What is a Portfolio?

investment portfolio

If you have a number of various investments specifically mixed together with the aim of making a good long term profit, this is known as a ‘Portfolio’. The items included in a portfolio can be anything from equities, art, real estate, commodities, equities. All manner of securities can be placed in there. The way you put together this portfolio will determine both the risk associated with and the expected return in terms of profit. A good investment advisor can help you with this in terms of strategy and goals.

So What Types of Portfolios are There?

Well firstly we need to think along the lines of those investments giving the greatest return. This means we have an aggressive investment strategy, and as such we need to have a high risk threshold in order to deal with any fluctuation. These aggressive portfolios will normally carry a high investment in equities over a long time period.

Conversely if you are an investor putting top priority on safety then you are ‘risk averse’ and will generally invest for the short term. This type of portfolio will consist of fixed income instruments or cash and equivalents. The investor is being both prudent and cautious! Let’s take a closer look at both portfolio strategies!

  • The Aggressive Portfolio
    Arrow chart representing aggressive investment portfolio

    This is really meant for investors with a long term view of the markets and what could be conceived as an average to above risk tolerance. What you are trying to achieve here is to balance the total fund wisely. 45 to 55 per cent of this portfolio would probably be made up of equities. 35 to 40 per cent will be given to bonds and a small percentage: say 5 to 10 per cent will be made up with cash.

    At this point we could break the investments down into categories including both large and small corporations. These would involve firms both in the United States and Internationally.

    You might include both short and long term bonds. More experienced investors will go for a mixture of options and futures. The investor has a limitless number of inroads. The best advisors will help you get the best assets together into a portfolio.

  • The Conservative Portfolio

    We all know what inflation is, and the real goal of a conservative portfolio is to protect ourselves from this. In this portfolio you would see your investments hopefully holding their value. There might be a high level of current income from invested bonds. This would also provide long term growth from equities higher in overall quality.

So What are Portfolios All About?

Arrow chart representing aggressive investment portfolio

If you’re familiar with the term ‘diversification’, then this will tell you all you need to know. Performance in each investment will vary over time, so if one tends to dip, then another might perform really well. You are diversifying so when one set of stocks goes down this won’t take out the entire portfolio etc. You are basically investing in different directions to help keep stability within the portfolio itself. Diversification is an important concept in the world of finance and many studies have been carried out to look at the long term effects more closely.

Spreading investments across differing markets reduces the risk of losses and is actually the financial world’s phrase for ‘common sense’. The investor isn’t putting all their eggs into one basket as the saying goes. The fact is if you have the money to invest in a portfolio, then you can take a methodical and sensible long term approach. Due diligence and good research are very important though! Remember the monetary value of each investment could influence the risk/reward ratio of the portfolio. This is called the asset allocation of the portfolio. There are also many investment opportunities in smaller companies and these generally tend to do well, so choose wisely. The wonderful thing about a portfolio is you can sit back and watch your own nest egg grow for the future.

Things to Note

When you hear the financial world referring to ‘the money market’ or ‘cash’, they are talking about three things. Firstly any short term – fixed investment. Secondly any monies in a savings account or a ‘certificate of deposit’, paying a much higher interest. There’s a plenty of extra information out there and you will certainly benefit with the help form a financial advisor.