Hub Blogs contains fresh contributions written by Financial Independence Hub staff or contributors that have not appeared elsewhere first, or have been modified or customized for the Hub by the original blogger. In contrast, Top Blogs shows links to the best external financial blogs around the world.
From Sarah Ban and Michael Gordon at TheSimpleDollar.com, a well-researched and fact-based guide specifically for women. This 5-step post is designed to help women arm themselves with the information that many of them may not have, to help them secure their own financial futures free from outside influence (spouses, parents etc). The steps are as follows:
Step 1: Understand Your Cash Flow
Or: make sure you know where your money is coming from, and going to. The article suggests using financial app Mint to keep track of your expenses. Click the above link to complete a specifically tailored exercise to find out your monthly cash flow.
Step 2: Determine Your Goals and Set Your Budget
Whether it be paying off your various debts or saving to buy your first home, figure out what your goals are and how long it should take to achieve them. The article also has some handy tips to help you cut those costs, many of which are discussed here as well!
Step 3: Eradicate Debt
Remember to prioritize your debt. Paying down that high-interest credit card should take precedence over your low-interest student loan debts.
Step 4: Save!
Packed with more staggering statistics about American women’s financial education, step 4 dives into what women really need to do to prepare themselves for retirement including opting in to your company’s 401 (k) plan. There is also vital information on American healthcare costs, emergency savings, housing and car savings, and different savings vehicles to help you get the most from your hard-earned money.
Step 5: Protect Yourself
After following steps 1-4, you will no doubt be financially secure and confident, however there are always unforeseen circumstances that come out of left field, and it is important to be aware of those circumstances and have a plan in place to help you stay afloat in even the worst of times. By nurturing your credit score, staying on top of housing, and being aware of your marital status’ possibility to change, your ability to adapt to changing financial situations will be greatly strengthened.
Click throughfor a much more in-depth guide that covers just about everything American women need to know to make themselves Findependent.
As this article at Reformed Broker explained on Friday, Lipper data shows that active security selection is on track for its worst performance in 30 years, with 85% of stock-picking fund managers failing to beat their respective indexes. Brown sums up the gap between promise and the reality of fund managers pithily:
“They cannot do what they profess to do on a consistent enough basis to justify the extra trading costs, management fees or tax ramifications.”
Coupled with all the press over the failings of actively managed mutual funds and the cost and tax-advantages of exchange-traded funds (ETFs), and lately ETF-based “robo-adviser” services, it appears the message is finally getting through to ordinary investors. Consider these sales numbers published by Reuters:
“Through Oct. 31, index stock funds and exchange traded funds have pulled in $206.2 billion in net deposits. Actively managed funds, a much larger universe, took in a much smaller $35.6 billion, sharply down from the $162 billion taken in during 2013, their first year of net inflows since 2007…”
Brown suggests active managers need to cut their fees in half (and he’s talking about the U.S., where fees are already lower than their Canadian equivalents).
Picking up on the Thanksgiving theme, Zweig begins by nothing “It’s been another turkey of a year for active stock-pickers.” He notes that the decline is even worse than three months earlier, when he wrote this:
” … active fund management is outmoded, and a lot of stock pickers are going to have to find something else to do for a living.”
However, taking a balanced approach to the issue, Zweig notes that these things go in cycles and there will be times when active managers have their time in the sun and indexing lags. He concludes:
” … most stock pickers are still likely to underperform a comparable index fund over time. But they aren’t going to look quite this bad all the time.”
The other evening ten 60-ish baby boomers got together in a private home in mid Toronto to discuss Boomer retirement and related matters. There were two main groups: most were business owners who have been self-employed for 30 or more years. A handful (including myself and the hostess) had spent most of our careers working as employees in large organizations.
Long-time business owners looking for exit
In both cases, the great question before us was “What do I do with the rest of my life?” The business owners were concerned about exit strategies to monetize their years of sweat equity, which could include outright sale or passing the reins to younger family members.
Long-time employees looking to find a transition business
The other group is considering becoming business owners or entrepreneurs even at this late stage of life, or what I term “Boomerpreneurs.” We may or may not have left the workforce voluntarily but suddenly had some leisure and money to contemplate our next move.
In almost all cases, this was a high-achieving group and while one younger attendee (in his mid 50s) had spent a “mini retirement” of several months in Central America, most of us agreed we were in no way ready for endless days of daytime TV, golf or bridge. Some were conscious of the extended Life Expectancy theme underlying this website’s “Longevity & Aging” section, but others were acutely aware that we all entering the final few laps of the great race of life. The long-time business owners in particular seemed ready for a change, but were aware the transition or exit could well require four or five more years of continued effort.
Actually, this was the second time the group had met. I would have love to have attended the first one in October but had already committed to a three-week trip to Turkey. The focus of the first one was that many baby boomers can expect another 10,000 days of life on the planet, so what’s your plan on how you’re going to spend that time? As the facilitator, Alan Kay (more on him below) put it, it’s all about “repurposing yourself, not a blank canvas.”
Acquiring new skills — at 60
Interestingly, the hostess (one of only two women in the second meeting; the rest were obviously men) experienced almost the same events as I have in 2014. Both of us had quite independently chosen to attend Toastmasters weekly, to hone our public speaking and leadership skills (neither of which suggests sitting before a fire in your rocking chair). She is also attending a Rotman course that prepares you to assume positions on corporate boards. As if that weren’t enough, this high achiever is also taking acting lessons.
Does Business Ownership run in the family?
Her husband, and our host, has long been a business owner. In fact, long ago when I worked on a computer newspaper, I had naively written a piece about him extolling the fact that he was a “27 year old president” of his own computer company. At the salon, he said his own father was a business owner so it seemed a natural step for him at the time. I replied that my father was a high school teacher with security and a Defined Benefit pension plan, which may have explained why I tended to stick with salaried employment within other people’s businesses.
Regrets of the dying
We discussed life purpose, why we are even on the planet, and the five regrets of the dying, a piece published recently in the Globe & Mail. Some felt that one of the advantages of building something even at this stage of life would be to employ the generations following us, including our children.
There was a feeling it’s time to simplify, perhaps to slow down a tad but few seemed to seek a traditional “full-stop” retirement. Call it semi-retirement or phased retirement, depending on circumstances. I didn’t get the impression anyone was suffering financially, so the continued interest in remaining active was more about community, giving back and the like.
Naps in the home office
Some of us work from home, some still go to an office, even if they own the building in which it’s housed. Among the “work-from-home” crowd, which included our host and myself, we confessed there was the advantage of the occasional afternoon nap.
As for the session and what’s next, it’s all rather fluid although the hosts did facilitate an exchange of emails with the intent of connecting on Linked In. Certainly, this web site will happily describe further developments and facilitate communications between members and would-be members. There are, for example, our so-far-dormant discussion forums, which could be used to continue the dialogue in cyberspace. It was just such a salon that spawned the Huffington Post.
Alan Kay, The Glasgow Group
Pending permission from the other participants, I’ve erred here on the side of protecting actual identities but may update this blog or post new ones with actual names and coordinates as they arise. I can say the session was moderated by Alan Kay, who is happy to be identified as “a fully recovered ad guy, facilitating change through tools like stakeholder consultations and roundtables using his Solution Focus expertise.”
And yes, this often means sitting around a kitchen table like the one illustrated above; you can find him via his website here. Or contact me at jonathan@findependenceday.com.
The Globe & Mail’s Rob Carrick has created a really useful decision-tree flowchart to help newcomers to online or discount brokerages choose which best will suit their needs.
You’ll need to zoom in a few times to make this legible on the web. Once you do, go to the top left corner to “Start Here.” Then you answer a series of yes/no questions about what’s most important to you.
For instance, are US$ accounts critical for you or not? How about buying bonds online? Do you just want the cheapest bank-owned discount brokerage, or one where you’re already doing your banking? Do you want deep research and tools?
Just in time for Black Friday, we’re pleased to present this timely blog from Danielle Kubes, the blogger behind the Pretty Little Poor Girl blog. You can also find the piece at her site here. Love that slogan: “Because financial literacy is hot.” With Danielle’s permission we’re running it below at the Hub too, and we hope to run more pieces in the future.
Danielle Kubes, Pretty Little Poor Girl
By Danielle Kubes
Special to the Financial Independence Hub
I only really shop three times a year:
▪ August sales
▪ January sales
▪ Black Friday
It’s a waste of money to buy anything any other time a year. I’m allergic to paying full retail-price for anything so I save up all my money to buy clothes and shoes on sale. And almost everything WILL go on sale eventually.
And by sale, I mean REAL sales. Not those “fake sales,” which are popular with American stores like Bath and Body Works, Ann Taylor and Express. Literally every time I walk into their stores there is “30%” off sweaters, Buy 2 body lotions get 2 free etc.,
If there is ALWAYS a sale, that “sale”price is just the TRUE price.
Which I why I wait until there are legit sales, like when they actually want to move merchandise. Those three time periods are the only time that really happens.
Notes
▪Often Black Friday is NOT the cheapest time to buy things, but it can be if you need something before January, like Christmas gifts, or there is something you need/desperately want that you legitimately feel might be gone by January sales
▪ It’s important to figure out whether further discounts will be applied on Boxing Day, or later in January. This comes with a few years experience shopping sales. I suggest writing down the discounts available this year, so you know what to expect more for next year. They are usually quite similar year-to-year
▪ A week before Black Friday there are usually sales. DO NOT FALL FOR THIS.
▪ For example, this week everything at Old Navy is 30% off. But it will be 50% off on Black Friday.
▪ Ask the salespeople what sorts of sales they will be having Black Friday. Some stores in Canada, especially the Canadians one don’t participate. For these sales you’ll have to wait until after boxing day. But American stores do Black Friday amazingly
▪ In Toronto, I’ve noticed recent American imports Express, Ann Taylor/Loft and JCrew can have amazing Black Friday sales. Don’t bother with Artizia. The best time to shop at Aritzia is in late August and late January. GOLDEN TIP
Danielle Kubes is a freelance journalist in Toronto. She believes in abalanced attitude toward financial independence. What would her weekends bewithout brunch? Sad and lonely. But you can also find her hand-washingclothes to save a few bucks at the laundromat.
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