Free Online Wealth Summit – Vanguard Senior Analysts on Active vs. Passive Investing

wealth-summit

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Free Online Wealth Summit – Vanguard Senior Analysts on Active vs. Passive Investing

 The stock and bond markets can be a fearful and terrifying place, especially considering their effect on your financial portfolio. No one wants to see red numbers on their account statement after all. Unfortunately, that’s part of investing.

On average, the stock market enters bear market territory (a drop of twenty percent or more) about one in every four years. We’re eight years into a bull market now without really coming close to bear market territory.

I found some insight from two of Vanguard’s senior analysts over at the Wealth Summit.  The Wealth Summit is a collection of interviews and panels with thirty or so money experts. Companies like Vanguard, TIAA, and Dimensional Fund Advisors have speakers at the Summit. There’s a New York Times bestselling author as well.

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FINANCIAL HAPPINESS

financial satisfaction

I like reading the latest financial tips as much as the next person, but sometimes it’s redundant.  I know how to budget, save, and spend responsibly.  I don’t need a daily article telling me to do all those things, I can write a book on that.  (Oh wait, I did.)  Anyways, instead of dwelling on the next money crisis or offering another seven-point list on how to side-hustle, let’s celebrate some financial success.

 

Yes, things are tough when you’re young because, like most, you may have started with zero, or negative zero, if you had student loans. After some time goes by, the small actions count.  Little by little, the emergency fund gets funded, the necessities are bought, then the pleasures can follow.  One day, going to work may not feel so bad and your life won’t depend on your next paycheck.  It’s when you realize that you have money left over from your last paycheck.  You get a few raises and promotions and there’s finally more money than month with a small checking account buildup.  The money gods have smiled on you and you can start moving on to bigger and better.  This is what’s known as financial satisfaction.

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Your Financial Neighborhood

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What zip code is your financial neighborhood?  90210, the world of glamour and wealth, or 05501*, where the lowest reported taxable income is earned?

You live in a physical neighborhood with houses, driveways, and landscape.  It’s the backdrop of your life, where you sleep, keep your belongings, and invite your friends to.  But you also have a financial neighborhood.  This is also the backdrop of your life and how you design your standard of living.  Is your scenery opulent or sparse, or somewhere in the middle?

Figuratively speaking, your financial neighborhood is where you live in monetary terms.  There is a range of wealth within your financial neighborhood where some are on the high end and some are on the low end.  You are most likely aware of the level or lack of wealth in your financial neighborhood and identify your space within the spectrum.  As expected, the essence of your financial familiarity is learned from family.  On a subliminal level, the comfort level associated with those surroundings is deeply embedded in your mind. There’s no doubt it’s safe and predictable.

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Self-Evaluating Your Financial Behavior, Part II

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This is a continuation on evaluating your financial behavior.  See Part I for identifying your goals, gathering your financial records, and getting real with money attitudes.

The backdrop for each step describes what a financial planner would direct you to do; the self-study action is included.

These last three points put the plan in motion.

4)Develop and Present a Recommendation

Financial Planner Action: Communicate a plan, make recommendations, and identify alternative options.  At this phase, the financial professional may sense resistance and ambivalence from their client.  Financial psychology* suggests engaging the client in dialogue that fosters the client’s positive changes.  This method of conversing provokes the client to recap their goals and why the goals are important.  Instead of being directed by an outsider, which is typically not well-received, the client feels a sense of empowerment and autonomy.

Self-Evaluation:  This is where you decide what changes you’re going to make and is most likely the part where your well-intentioned launch could lie like an unhatched egg.  You’ve reached this segment, but your avoidance may kick on.  Vacuuming dust bunnies and pulling weeds might look exciting compared to figuring out how to manage your wallet.  If you sense hesitancy, acknowledge it, but don’t judge yourself.  Identify your resistance and figure out ways around it.  You should be sitting on that egg like a stubborn hen, not avoiding it.

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Self-Evaluating Your Financial Behavior, Part I

financial behavior

THIS POST MAY CONTAIN AFFILIATE LINKS.  SEE MY FULL DISCLOSURE FOR DETAILS.

Self-Evaluating Your Financial Behavior, Part I

If you were to sit down with a financial planner, you might expect to state your goals and come away with directions for allocating your money.  You might expect to be sold a life insurance policy or have your money transferred to accounts that are under the control of the advisor.

A CFP® follows specific steps to align the client with a sound financial plan.  These steps involve establishing a relationship, gathering data, analyzing the current financial status, developing a recommendation, implementing the suggestions, and monitoring the plan.

A comprehensive evaluation of your financial status should integrate your underlying money motives and help you understand how you are managing yourself and your money.  This is critical knowledge because you are the only person that will take the necessary actions.

Dr. Brad Klontz is my hero on this topic.  Dr. Klontz combines behavioral finance and financial psychology into standard financial planning procedures. He’s the Dr. Phil of finances.  If you need help getting real with your finances, Dr. Klontz has your remedy.  In case you haven’t made the connection between your behavior and your financial status, read below where I’ll translate Dr. Klontz’s recommendations for conducting client meetings into self-evaluative introspection and actions.   If you understand your motives and harness that energy, you will be better empowered to make smarter financial decisions.

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Mid-Year Financial Checklist

financial checklist

Usually I wait until December 31st or January 1st to assess my financial condition.

I ask myself the following  questions:

  • How much have I saved?
  • Is my money in the right accounts?
  • Is my retirement account percentage enough?
  • Do I have a balance in my Flexible Spending Account?
  • Have I contributed enough to my IRAs (deductible or non-deductible)?
  • Have I donated as much as I wanted to?

With the blur of the holidays fuzzing out my faculties, I decided that halfway through the year is probably a better time to check my financial diagnostics.  By December I don’t remember anything and I don’t have time to fix anything to fall within the calendar year.

This weekend’s activities involved conquering a mountain of laundry and getting to my fiscal monitoring.  Here’s a list of things I took care of and recommend:

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Your Health Is Your Most Valuable Asset

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Because I feel that every aspect of life overlaps with financial success, I feel strongly about a topic that most people don’t consider related.  In fact, most take it for granted and neglect it when it needs everyday attention.  Here we go: Everyone must take charge of their health.  OK, I can feel the collective groan.  You mean I have to eat chunks of tofu?  Um, no, but it would help to put down the donuts.

Here’s the downside of not managing your health.  Feeling like a slug all the time might be a hint.  Having minor, chronic discomfort is another clue, whether it be from digestion, skin problems, allergies, or constantly getting a cold.

Here’s my day when I don’t eat right, exercise, or sleep well: cranky, no focus, foggy-headed, lethargic.  I can’t read anything beyond a third-grade level and I don’t want anyone near me.  After a few days, it’s like I’ve chosen Door #1 to the dark vortex that brings on depression.  Eventually, everyone will run from me but I don’t care because all I want to do is lay down.

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Financial Freedom – Get It

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If my head were to split open, blobs of financial material would spill out.  The latest stock prices of Amazon, Veeva, Comcast/how much I plan to save this month/the order that my bills need to be paid to meet my savings plan/ Trump’s tax proposal and his idea of tax rates that are going to enhance working lives/what sector of the stock market is on the verge of growth/how much I plan to spend this month.  Small splashes of yoga poses that I plan on attempting might be in the brain matter, but at a minimal level.  I gave up on twisting myself into a helix years ago.  What I’m getting at is the majority of my mind is focused on financial elements.  I realized that most people don’t have a grip on this topic and I had an idea to put it into a book.

 

In How Ally Found Her Financial Freedom, I take the reader through common financial problems – no idea how to manage money, accumulating debt, little knowledge of financial instruments.  Ally is a working professional with no money management skills. She’s deep in debt and wonders why she impulsively spends money.  Ally acknowledges that she doesn’t have all the answers and finds a mentor.  Cue Victoria, a family friend that Ally feels has the accomplishments and successes that Ally longs for.   Victoria commits to her mentor role, providing sound advice and guidance.  Ally is compelled to examine how she thinks about money, especially her personal money script.  She’s challenged to think about money every day and remain disciplined.  Ally takes bite-size actions, baby steps to pursue financial contentment.

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