“Hesitation is often like procrastination. One may have vague doubts and feel a need to mull things over; meanwhile, other issues intrude on thought and no decision is taken.”
— Robert J. Shiller, Economist
Save. Save. Save. It’s a staple of personal advice and financial planning. If you’re planning to either start saving or saving more this year, our top piece of advice is simply just to start.
The worst mistake you can make is not even trying. No matter how rational you are, money has a strong emotional component. Even the highest performing people can find excuses why not to tackle a specific goal.
The simplest way to push through this inaction is to educate and empower yourself. Of course, step one is working with professionals like us. Money can be emotional, we’re only human after all. But if you give yourself the right perspective, you can add some sanity.
Working Better With Your Your Advisor
If your goal is to boost your savings, share this objective with your financial advisor. In turn, your advisor can review your finances to find savings opportunities.
In business terms, this is called cash flow management. The concept of cash flow isn’t just about money in the bank; it’s a more global perspective of understanding the full mechanics of your cash inflows and outflows. In other words, you can start looking at your personal finances like you would a business.
Work with your advisor to see if there are tools you can use to help better share financial information. With the rise of cloud-based technology, many time-consuming and manual bookkeeping functions are now as simple as a scan or a click.
Use Your Savings for Investing
“Inflation is taxation without legislation.”
— Milton Friedman, Economist
Personal finance guru and author of Rich Dad, Poor Dad, Robert Kiyosaki, notes that having your savings in a savings account is one of the least effective ways to capitalize on your efforts.
Why? In today’s economy, the interest you earn in a savings account is often negated by the rate of inflation and subsequent cost of living increases. The tax laws in North America also tend to punish tradition savings as spending is what greases the wheels of the economy. This is why you should look for ways to maximize your return on investment by seeking better investment opportunities.
Consider this example from Kiyosaki’s blog:
If you had stuffed $1,000 in cash under your mattress 50 years ago, today it would have the same buying power as only $137.45 did in 1968.
However, that same amount invested with compound interest would have grown to about $20,000, assuming a 6% rate of return. Even if you only earn a 4% rate of return, it still grows to around $7,000.
Explore Your Investment Options
“A good financial plan is a road map that shows us exactly how the choices we make today will affect our future.”
— Alexa Von Tobel, Finance Expert
When it comes to investment there are a number of options you can consider. However, you need to know which ones are right for you. As your advisor, we work with you to choose the investment opportunities that fit your lifestyle, life stage and risk tolerance. We’ll build you an investment plan with a range of options and recommendations. We’ll also help you implement your choices and monitor the results.
Next Steps
If you’re a client, contact your advisor and let them know about your goals. If you want to learn more about working with us for financial planning or creating an investment portfolio, contact us.
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