Building Wealth

For the first 30 or so years of working, saving and investing, you’ll be first in the mode of getting out of the hole (paying down debt), and then building your net worth (that’s wealth accumulation.). But don’t forget, wealth accumulation isn’t the ultimate goal. Decumulation is! (a separate category here at the Hub).

How to develop a Financial Independence mindset if your parents were reckless spenders

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By Alex Lawson

Special to the Financial Independence Hub

Our parents are our first teachers. We learn our values, our habits, life skills, relationship skills, and many other things from our parents, long before we venture out on our own.

One of the things that people pick up on is financial habits, good or bad. If your parents were reckless spenders, chances are you’re already headed down the same path. The good news is that it’s possible to change your mindset and learn to manage your finances so that you don’t make the same mistakes they did.

Separate yourself from them

The first thing you need to do is realize that you are your own person capable of making your own choices. Don’t tell yourself you’re irresponsible with money just because that’s how you grew up. Make the decision to be different and start telling yourself the opposite. Reinforce the idea that you can be financially responsible and independent regardless of how you grew up, and you’ll be able to start making better choices.

Decide on your goals

Many people that had financially irresponsible parents have never been taught to think about the future. Planning for retirement should begin as soon as you leave college. Do you think you’ll want to retire with enough money to live comfortably as you have been, or are you planning on securing complete financial independence by the time you’re 30? The process for saving and investing will be completely different based on your goals. Begin saving aggressively when you’re young so that your money will have more time to grow.

Make saving a priority

If your parents were reckless spenders, they probably didn’t teach you anything about saving. One of the biggest keys to financial independence is learning how to save properly, so that you can be prepared for both unexpected problems and for your future. Build savings into your budget before you even look at what type of housing you can afford. A good rule is to start saving 10% of every paycheck and live off what is left over until you reach the goal of three times your monthly income. Then, when your car breaks down or if you lose your job, you will have an emergency fund to rely on without having to go into debt. Continue Reading…

The 7 most common trading mistakes

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By Alana Downer

Special to the Financial Independence Hub

With the ever-increasing popularity in trading, be it stocks, Forex or cryptocurrency, more and more people are becoming involved. Some are getting rich while others find themselves learning the hard way. Of course, beginner mistakes are almost inevitable when a new trader enters the market, but with some research and careful planning, some mistakes can easily be avoided. Here are seven of the most common trading mistakes you should recognise and avoid in 2018.

1.) Catch a falling knife

As a new trader, a common mistake is thinking that a dip has run its course. A common mentality, especially in crypto trading is to “buy the dip,” however just because an asset is cheap, be it stock, a forex trade or cryptocurrency, doesn’t mean it can’t get cheaper. Many people buy in, anticipating a reversal, only to see the price drop further.

It’s much better to have a “price confirmation” approach, where you wait for the market to reverse before you enter. To do this effectively, you need something that can be objectively defined such as a price moving above an average or the completion of a head and shoulder pattern.

2.) Holding on to losing trades

Another popular crypto mentality is to “Hodl”, which is simply a misspelling of hold. This isn’t exclusive to crypto, however, and most new traders have likely lost money this way. A trade going against you, especially as a new trader, never feels good and instead of getting rid of it, as you may have planned, you hold on to it, hoping it will reverse.

One simple tactic to avoid hanging on to a losing trade is to ask yourself “would I enter this trade today, at this level?” If the answer is no, it’s probably best to get rid of it.

3.) Listening to hot tips or FUD

The internet, your friends and your family may be full of advice and “hot tips.” Trade recommendations for all markets can be found everywhere. The rumours might be right, or they might be horribly wrong but it’s important to remember they’re just rumours. Do your own research, and decide if it’s something you agree with. At the end of the day you’re trading with your own money, so your choices need to be your own.

Similarly, there can be a lot of fear, uncertainty and doubt (FUD) floating around in today’s climate of viral and fake news. Again, do your own research and learn as much as you can about any recommendations you are following.

4.) Taking uncomfortable risks Continue Reading…

7 steps to Financial Independence

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By Laura Martins

Special to the Financial Independence Hub

Financial Independence (aka “Findependence”) is something that many of us are working towards, but which very few actually achieve. Having a high-paying job alone does not guarantee financial independence. While making more money does make Findependence easier to achieve, the important thing to focus on is what you do with your money, rather than how much you earn.

It’s also important to understand that financial independence will take time and planning. With the right goals and steps in place, Findependence can be achieved, but it’s important to be persistent and patient.

In most cases, financial independence doesn’t mean you won’t work ever again, but it brings freedom so you can enjoy your life and work on the things that matter to you. Here are seven key steps to develop financial independence.

1.) Get to know your money

Before you can begin to work on your financial independence, it’s imperative that you know exactly what your money is doing. You must know how much is coming in, and how much and where you are spending it.

Develop a habit of checking your bank account. Ignoring it is one of the fastest ways to lose track and lose money. It might seem obvious, but developing financial independence means spending less than you earn.

Spend a few weeks or months tracking your finances and create a budget. It’s important that it’s realistic so you can stick to it.

2.) Remove non-essentials

Once you understand your finances, it’s time to find the areas where you can save more. This is one of the hardest parts on the journey to financial independence, but also one of the most important steps.

Look at your spending and assess what you don’t need. In other words, you should try to minimize your non-essential expenses. That might mean cancelling your gym membership, reducing the amount of streaming services you pay for or making more meals at home. While these things might seem small, they will all add up, and after a few months it might make a noticeable difference to your bank account.

3.) Increase your income

Now that you understand your finances and have your spending under control, it’s time to start saving more. Continue Reading…

Help your company thrive by tracking Key Performance Indicators (KPIs)

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By Gary Bordeaux

Special to the Financial Independence Hub

One of the defining characteristics that distinguishes successful companies from their less successful counterparts is the ability to learn from their mistakes. When developing the world’s first bagless vacuum cleaner, for example, James Dyson created 5,127 prototypes. Rather than giving up after each unsuccessful attempt, he analyzed the failed prototypes and used that information to develop a better product. By taking a similar approach and tracking key performance indicators (KPIs), you can identify problematic areas in your company and sow the seeds for long-term success.

What are KPIs?

A KPI is any measurable metric of a business’s success in its respective industry or field or work. They can be expressed as static figures, percentages, ratios or other values. A common KPI used by retail companies is sales. Expressed as a static figure, the number of sales a company generates in a defined period directly reflects its level of success. If a company experienced low sales in a period, it can change its operations to improve this KPI.

Another common KPI used in the retail industry is shrink rate. This metric reveals the percentage of a company’s products that are lost due to shoplifting, fraud, employee theft, damage and employee error. According to The Balance, the average shrink rate among retailers is 2 per cent, meaning roughly one out of every 50 products retail companies purchase cannot be sold.

Advanced KPIs

There are also more advanced KPIs that companies can track to measure their success. When selling products online, for instance, companies can track their shopping cart abandonment rate. Defined as the percentage of a website’s shoppers who add a product to their cart but do not complete their purchase, it helps e-commerce companies identify problems with their site.

According to a study conducted by Baymard Institute, the average shopping cart abandonment rate in the e-commerce industry is 69.23 per cent. E-commerce companies can lower this rate by connecting with shoppers who abandon their cart and encouraging them to return. Some of the most common reasons cited for abandoned shopping carts include high shipping costs, forced account registration and a long checkout process.

Why you should track KPIs

So, why should you spend your time and resources tracking KPIs? Continue Reading…

Retirement Is not Rocket Science

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By Billy and Akaisha Kaderli

Special to the Financial Independence Hub

Getting your house in order for retirement or financial independence is not that difficult. Many investment professionals, journalists, and commentators seem to complicate the issue to the point that even we can’t understand it. Safe withdrawal rates, stocks, bonds, balanced funds, commodities, options, laddered portfolios, annuities, offshore accounts, hedge funds … are you kidding? No wonder some people are confused and scared!

What’s a person to do?

First, you need to recognize your needs. Let’s be realistic here. How much are you spending now? Not how much do you make a year, but how much are you paying out? With today’s computer tools, this is a very easy task to compute. Or you can do what we did: Create a chart on a piece of paper and add to it daily.

Date Cumulative spending Day# Cost/p/day Times 365
1/1/2018 $24.00 1 $24.00 $8760
1/2/2018 $99.00 2 $49.50 $18,068
1/3/2018 $144.00 3 $48.00 $17,520
1/4/2018 $244.00 4 $61.00 $22,265
1/5/2018 $314.00 5 $62.80 $22,922

(These figures are for illustrative purposes only.)

The longer you keep track of current consumption, the more confident you’ll become of your future spending habits.

Once you know your expenditures per year, take a look at where that money is going. If it’s to pay credit card bills or other consumer debt, you need to pay that off first. It’s fine to use credit cards as long as you completely pay off your balance monthly. And stay out of debt. I know this is not easy, but it’s your future, and the money you were paying in interest can now be invested.

With your debts paid off, you can commit to financial independence. Analysts say a guideline of 25 times your annual capital outlay should be enough to sustain your current lifestyle. With the data you’ve collected in your chart, you can easily calculate a target amount. It’s really that simple.

How do you get there?

Continue Reading…