Archive for April, 2008
Friday, April 18th, 2008
Every Monday, MoneyMinding Members get together on the phone to learn from our advisors, brainstorm with each other and fuel their money mastery fires. This past Monday, the conversation steered to a couple of different opportunities that people could look into as they make money and lifestyle goals. That led to these questions and comments from the participants - I’ve included the answers from two of the MoneyMinding advisors who also participated in the conversation.
Do you have a question for a MoneyMinding Advisor? You can look them up at www.moneyminding.com/mm/find_an_advisor.php
Comment: “Wayne you are totally on- we are doing a great disservice to our youth in not educating them.”
MM Advisor Wayne Nash: “Thank you. Unfortunately, the needed curriculum is unlikely to be offered in the school system any time soon. This is where the MoneyMinding Foundation has a role to play. It is also the need that is being filled by the MoneyMinding Advisors. The more MoneyMinding Advisors out there the more educated the general population will become.”
Question: “Is it feasible to rent your Canadian property in a high end district to live in a place like Costa Rica?”
MoneyMinding Advisor Grant Simpson: ”To live in Costa Rica you have to be aware of the rules of maintaining your residency in your home country. The laws in Canada is that you can not live outside of Canada for more than 180 days without giving up your residency. If this is a decision one is looking at, you have to talk to someone that specializes in residency and non residency laws.”
MoneyMinding Advisor Wayne Nash: “If you mean rent out a home in a high end district in Canada and then live in Costa Rica on the income, why not? For many people living in paradise would cost them HALF of what they already have passively flowing in right now while they need TWICE what they have flowing in to ‘get by’ in North America. Many people work to amass some fortune to ‘retire’ in a place like Costa Rica. What they don’t realize is that they CAN do it now! For more information on offshore living you can contact me at admin@offshoreprofessional.com for a list of resources. I am putting up a website with many links to useful offshore living information and resources soon as well.”
Question: “With regards to Mutual Funds. Is there a good mix at present or are Mutual Funds a lost cause?”
MoneyMinding Advisor Grant Simpson: “Mutual funds are a good investment vehicle, but you have to take the time to learn about which funds to own. Of the more than 5000 funds out there, you can probably say that there are about 100-150 good quality funds , with seasoned managers. The rest of the funds you can throw a dart at them because they are all pretty much the same.
A good portfolio of mutual funds should be 3-5 funds with 10 year track records. Always remember, there are good mutual funds and bad mutual funds.”
Posted in Questions for MoneyMinding | No Comments »
Friday, April 11th, 2008
We’ve been thinking of getting a large ($80,000) leverage loan with deductible insurance and we just pay the interest (while the money supposedly grows) and invest it in mutual funds. We have 6 years to retirement and about $300,000 invested.
Thank you for asking – this is a great question with lots of variables. My initial response though is really a question. I read your question and wondered what deductible insurance was. Then read it several more times and realized you must mean deductible interest. If that’s the case, then my response shifts to the same as it does every time I hear people doing things financially that are obviously above their level of understanding. I have picked up the pieces from more people who have done this very strategy without having a complete picture and the knowledge to do it confidently and safely that I’ve totally lost track of how many. What you are describing is a very good wealth building strategy but in terms of when it makes sense to do it is one of the reasons we have a 12 step process and decision making hierarchy is because youu are considering a step 9 and 11 strategy without having the financial foundation to make this a peaceful and successful plan.
The best thing you have done is to ask. I would be happy to help you develop the knowledge and implement the safety nets to make sure this was appropriate and successful for you – but at this point from your 2 sentences it wouldn’t matter how much you had invested or how many years until retirement – it would not be advisable to do leverage investing – yet.
Congratulations for asking and for taking control. You might consider our new Free 7 day make a difference program to give you some ideas on where to start. Part of that program includes an opportunity to participate in our momentum program to get more detailed answers for you personal situation and the start of the Money Minding Makeover course. You can access it by re-registering at www.moneyminding.com. I hope this helps and I wish you all the peaceful abundance you will deserve.
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Tuesday, April 8th, 2008
Developing and using your spending plan (otherwise known as your cash flow projections) is the key part of putting together your overall business success – in good time or bad. Keep it available to you and up-to-date.
One of the first steps in any business planning, of course, is to write your income goals. And while it seems obvious that you go in to business to make money,
I’m amazed at how many businesses don’t know where to start to make the connection between their goals and the actually financial decisions needed to make them real. They seem to either want someone else to do it for them, or to do it once then set is aside to be reviewed some time in the future – maybe never.
The development of a spending plan is simple.Using a spreadsheet:
- Start by identifying the detailed expenses your business will incur on a monthly basis while doing the work of running the business to make a profit. These will be things like office overhead, staff salaries, marketing expenses, inventory, etc.
- Then calculate how much income you expect to earn from the expenses you plan to incur above. The income might not happen in the exact month the expense was incurred and that’s ok – that’s why you need this document.
- Calculate the difference between the income and expenses and the resulting surplus or deficit will need to be accounted for either through borrowed funds, investment capital or revised expenses on the deficit side, or through re-investment on the surplus side.
- This process continues from month to month and any deficit carries forward and will then very simply give you a clear picture of the impact of more or less sales, and more or less expenses.
Once your initial cash flow spending plan is created it becomes a living, breathing document that guides day-to-day decisions. In a tight economy this is the glue that connects the business to the bigger picture of success or failure.
Posted in Tracy's Thoughts | No Comments »
Wednesday, April 2nd, 2008
This inquiry from the PR Leads service we are subscribed to starts with some very interesting statistics. I thought I’d include it to gove the context to my response.
”The wealthy are in an economic slump. According to Chicago-based Spectrem Group, the number of millionaires in the U.S. grew a meager 2 percent in 2007. That compares with 8 percent growth in 2006, 11 percent in 2005 and 21 percent in 2004. There are now 9.2 million households worth $1 million or more, not including the value of their primary residence, according to Spectrem. Even multi-millionaires are feeling the pinch. Spectrem says the population of people worth $5 million or more also grew 2 percent in 2007, down from 23 percent in 2006 and 26 percent in 2005. What’s going on here? Is the American dream threatened? Are we going to be a nation of paupers in the future?”
The answer to the last question is YES… unless we do something about it.
The conventional approach to managing finances focuses on wealth accumulation, not on creating income stream. This very vertical focus puts excessive emphasis on rates of returns on stock, and real estate assets. The measure of success then becomes the net worth statement which will fluctuate with market movements and create a sense of well-being when markets are on the rise and a sense of fear or scarcity when market conditions are poor.
While there are more and more people with a net worth over $1million dollars or more – these people do not necessarily have the financial training to profit from all market conditions. These are all principles that we teach in the MoneyMinding Makeover system along with the financial foundation to make investment decisions that are appropriate for individual situations in all market environments – without the emphasis being on rate of return and net worth.
Posted in Tracy's Thoughts | 1 Comment »
Wednesday, April 2nd, 2008
Here’s a request from a freelance journalist that came into my inbox this morning:
“I’m looking for someone with experience or knowledge of revising business plans: when it should be done, hidden benefits, little-known aspects, etc.”
My first reaction to this request was one of curiosity since a business plan is the living, breathing document from which all businesses make their decisions. How frequently it gets updated and reviewed is then likely daily for some aspects like finances, or task allocation between support staff or departments; and a weekly review of goals and targets and priorities is also a minimum requirement for growing companies.
The hidden benefits are obvious when you have a plan and are working the plan on a daily basis. There have been so many studies that show that if you have a written goal, you have a 95% higher probability of reaching that goal. So if your business plan and all its contents are the plan to reach the goal, it’s only natural to refer to it and update it almost constantly in order to succeed
So while my initial reaction was one of curiosity about why even ask the question about when to review plans, based on my experience, it’s likely that business owners don’t want to look at this information and would instead focus on doing the parts of their business they enjoy– therefore another question might be why so many business plans are collecting dust?
These are all principles that we teach in the MoneyMinding Makeover system along with the financial foundation to make cash flow projections, raise capital and to manage the money for the company and the owners.
Posted in Tracy's Thoughts | No Comments »