Archive for 2012:
Believe it or not, financial planning is so simple it’s ludicrous…
Step 1: How To Build Wealth:
Spend less than you earn and invest the savings wisely.
Rinse and repeat until step 2…
Step 2: How To Have Enough To Retire:
Spend less than your investment income and invest the savings wisely.
That’s it. Seriously!
You will enjoy massive financial success if you just run your life from start to finish according to these two sentences. You don’t have to be a financial genius and you don’t have to learn tons of technical mumbo jumbo. Anyone can do it.
It’s so simple it’s a joke… except for one minor, little detail…
Let me start by saying that I’m not the one who said that. In fact, I don’t play the lottery at all. Heck, I don’t even buy scratch-offs or go to the casino to play Hold ‘Em anymore. The person who said that line was a complete stranger who I had never seen before. Secondly, I’m not condemning those who play the lottery for “wasting their money”.
I don’t see the harm in spending a dollar or two twice a week if you have it to spare. That issue is left to the people who want to argue the definition of “wasting” money, or who are holier than thou with the attitude of “if I don’t do it you shouldn’t either”. I just happened to overhear a conversation that didn’t make much sense to me.
I was in the gas station paying for gas (since the terminals on the pumps were down) and one patron commented to their companion that she didn’t play the lottery unless the jackpot was over $50 million when asked if she wanted to go in on some quick picks. My immediate reaction was “that has to be the most ignorant thing (not relative to race, sex, or nationality) I have heard in a long time.”
The ability to make sound financial decisions often declines with age. To help guard against making poor decisions as well as being exploited, it’s important that seniors share financial transactions, decisions, and plans with their spouses, families, and financial advisers. To minimize the risk of being exploited, building a team of financial helpers makes a lot of sense. However, this is also easier said than done. Emotionally, it can be difficult to share or ask for outside help. Independence is a high priority among aging seniors. And independence may be associated with continuing to make key financial decisions without consulting others.
Yet many studies have found that declining analytical and decision skills are associated with even normal aging patterns. As traditional pensions have disappeared, retirees have had to assume primary responsibility for the performance of their retirement investments. Many seniors may not be able to navigate their increasingly complex financial world.
But with the swelling ranks of people in their 70s and 80s, creating an “age aware” process of making and recording financial decisions is increasingly needed. It will save you money and, possibly, the heartbreak of being exploited by someone you thought was looking out for you. Here are ways to protect yourself and avoid unpleasant surprises. Make sure they’re right for you. Discuss them with your family. And consider building a financial support team. You must be able to trust people who have access to your financial records and even accounts.
Afro American Farrah Gray made his first million when he was just 14. Now, he runs a successful portfolio of multiple profitable businesses, and is also a motivational and business public speaker. The lessons to learn from him is never give up, follow your dreams and to not let anything stop you from living up to your dreams.
When I wrote about investing on a budget, I indicated that broker-free investing with a large “do it yourself” type brokerage house such as Vanguard may be ideal. When you have more money to invest, however, you may wish to pursue a more sophisticated investment strategy.
One major consideration is whether you would be better off leaving a professional broker or financial planner handle your investments for you rather than attempting to do it yourself. If you want to be an active investor, it would take a lot of time and expertise to learn the necessary skills to make your personal investing be worth your while. Perhaps you would be better off earning money doing what you do best (i.e. your day job, assuming it does not involve investing), and instead diverting some of that money into a professional’s services.
Note: If the Great Recession has taught us anything, it’s that you ultimately are responsible for your own financial decisions. In other words, even if you have a trusted broker, it’s important to make sure you and your finances are adequately protected.
Kapitall began operations in 2008, starting out as an investing game that later became an investment brokerage service. The concept is to introduce people to investing with the game and — once they feel comfortable trading with artificial accounts — to move over to the real thing.
It’s an exciting concept that may have a place in the investment brokerage industry. In this Kapitall review, we’ll look at the features and potential issues with the service.
You can open a Kapitall account for free through their website. You can start by playing the games, and then move up to the real thing. Once you do, there’s no minimum initial investment, and no required minimum balance. Transaction fees are set reasonably at $7.95 per trade. The site often runs promotions that will allow free trades at certain times.
Kapitall can be an excellent training tool for novice investors, especially the young. It provides an opportunity to “test drive” investing by doing it on paper before venturing into the real thing. You can try out various investment sectors, trading strategies and portfolio mixes without risking real money. And you can work at it for as long as you like until you feel confident about moving onto the real thing, risking real money.
The video game format bridges the gap from game playing to investing in the real world. It can have serious appeal for the video and online game playing crowd. Since it’s mostly young people who participate in these games, it’s a way for them to try their hand at virtual investing and mastering it before doing it for real.
Kapitall can provide a real training tool for novices, but it can also be a testing ground for more seasoned investors to try out strategies through games rather than by committing real money. Finding out in advance that a strategy won’t work can save any investor money.
Potential Issues with Kapitall
The live version of the site offers very limited investment choices, and it doesn’t provide an option for individual retirement accounts. That could be primarily because it’s such a young company — we’ll have to keep on eye on future developments. In the meantime, Kapitall isn’t an option for investors who want the broadest levels of investment diversification or for those who are primarily interested in investing for retirement.
Transaction fees are competitive but a little high for a upstart company. You would expect a new, small investment firm to offer seriously low rates to attract new customers.
Kapitall is not only a new company, but it’s also a very small one. According to their website, they have only 15 employees, some of whom are software engineers, interface designers, game producers, stock traders and technologists. Not only is it s a small staff, but also one that seems conspicuously short of investment professionals.
Thanks to the Internet we’ve all gotten comfortable with upstart companies and concepts that are completely new. Only time will tell if this excitement should also apply to investment brokerages. Kapitall has yet to weather a significant downturn in the financial markets, so it remains to be seen how it will handle the test of time.
The site makes investing a game, and that can be both good and bad. The concept can make investing less complicated, especially to the newcomer. It can give you the ability to experiment without risk and that’s a complete win-win arrangement.
But at the same time, reducing investing to a game — making it fun — may cause investors to under-estimate the seriousness that investing actually requires. For example, the virtual investing game that works so well in rising stock markets could fail miserably in a protracted bear market.
We’ll probably have to wait for the next market downturn to get the full scoop on Kapitall — it only came out in the withering days of the last serious stock market slide. But until then — and maybe even afterward — it can be an excellent place to learn and hone your investing skills.