Women are prone to giving away their power when it comes to their money. In my financial coaching and interaction with women and money over the years, I’ve seen the smartest, strongest women do this over and over. This has got to stop in our time so that the younger women who are watching us are not afraid to own their power around their money. The risk is too huge to not own your own financial wellbeing.

Takeaway From Personal Experience

For years, I have struggled with this same power. On the one hand, I have been drawn to investing since my early twenties. On the other hand, I struggled with internal demons that pulled me away from my passion around investing. They led me to make mistakes with my money, underutilizing my skills and strengths, and not living fully. Then one day I chose to stop. In this post, I’ll show you the steps I took that I have also used with my financial coaching clients.

Finding The Cure…

Are you growing your money to the best of your ability? Do you make less than you know you can? Are you playing small? Does the word wealth make you cringe? If so, there’s a very good reason. There’s also a cure. Let’s dig in.

Step 1: Notice the mistake

Here are some common money mistakes that women make…

• You bought the $500 dress on your credit card that you had vowed to stop using and pay off.
• You pretended to understand how your money was invested when you met with your financial advisor.
• Your net worth dropped 50% even though you knew you had too much money in the stock market.
• You knew the home purchase was a little too expensive based on your income, and now you feel pinched every month to maintain your standard of living.
• You didn’t feel comfortable with handing over your life savings to your husband’s golf buddy, but you did it anyway. Now your investments aren’t growing, and you don’t want to offend anyone.
• Your friend’s cousin offered to pay you for your consulting work, but it felt wrong to take her money.

Noticing the mistake is just that. It doesn’t involve beating yourself up. Be detached from the mistake. This will allow you to solve it. Beating yourself up will lead to feeling bad and staying in negative patterns. You’ll feel defeated.

Forgiving Mistakes

Odds are you make the same mistake over and over, year after year. We often pretend not to know what the mistake is, but we know deep inside. When you allow yourself to simply notice your mistakes, instead of self-bashing, you are free to improve your actions. You avoid your own wrath. Be forgiving and loving to yourself.

As you’ll see in the remainder of this post over the next two weeks, there is a reason for your money mistakes. When you nail that reason, you can change your money mistakes to positive actions. What are your common money mistakes?

Discover the 3 Investing Myths that sabotage wealth building for investors here now in my free guide.

Step 2: Dig to the Source of the Mistake…

You have, hopefully, come clean with your money mistakes by now. In today’s post, we’ll delve into Step 2. This little process will allow you to do some free financial coaching on yourself while stepping into your power.

Below, I have repeated the above scenarios, typical thought processes with money power avoidance, and common excuses.

• You bought the $500 dress on your credit card that you had vowed to stop using and pay off.

You felt pressured by the sale person once she helped you and told you how great the dress looked on you.

It’s her fault.

• The dress was a designer dress marked down 50%, so it was a great purchase.

You’re saving money.

You’ll miss out!

• You pretended to understand how your money was invested when you met with your financial advisor.

You know so little about investing, you are afraid you’ll look stupid if you ask questions. Plus, you don’t even know what to ask.

Who has time to learn about investing? Besides, you leave your life savings to a pro to manage for you so you don’t need to know anything about it.

• Your net worth dropped 50% even though you knew you had too much money in the stock market.

You “heard’ from top financial experts in the news that you should have your money in the stock market if you want to have enough money to retire one day.

The financial experts are supposed to know, not you!

• You knew the home purchase was a little too expensive based on your income, and now you feel pinched and stressed every month to maintain your standard of living.

Your kids and husband loved the house! They were all so excited. How could you ruin it for them?

You thought for sure your household income would continue to rise, but then the recession hit. It’s the economy’s fault you’re struggling! (And the government! The big bank should have forewarned you that the house was too expensive.)

• You didn’t feel comfortable with handing over your life savings to your husband’s golf buddy but did it anyway. Now your investments aren’t growing, and you don’t want to offend anyone.

Your husband did have a good point that you could trust someone you know not to steal your money.

Your husband had a great point. Besides, you don’t really know enough about investing to hire a financial advisor.

• Your friend’s cousin offered to pay you for your consulting work, but it felt wrong to take her money.

Now you’re frustrated that you aren’t utilizing your skills to increase your income.

You were taught that you should help others. Besides, that’s how you are; it’s in your nature.

This should be leading to some money ahas by now. Next week I’ll post why we do these seemingly crazy things that feel so right at the time.

If you want to keep moving forward toward financial freedom, click here now to get my Financial Freedom Checklist. It’s my rock solid, hold myself accountable list of things that I KNOW I need to do to build wealth.

The post How to Stop Giving Away Your Money Power appeared first on Financial Woman.

Brenè Brown has had a massive influence on women everywhere. She first inspired me when she spoke about parenting at my son’s school many years ago. Brenè’s success has catapulted since her Ted Talk went viral. Brene’s book was required reading by my Episcopal priest, and she was brought up in my Course in Miracles class recently. She’s everywhere, and with good reason!

Shame: A Nasty Obstacle…

In this post we’ll apply some of Brenè’s core principles to women and money. Brenè’s many years of research on the topic of women and their emotions, especially around shame, offers us insightful avenues for personal growth as well as owning our financial power.

Shame is a nasty obstacle that frequently blocks the path to financial freedom. From my clients and the many women over the years I have spoken with about money, I’ve seen financially destructive actions driven by shame. It plays out as avoiding our money, under utilizing our skills, and giving away our power around money to the men in our lives. Here is how I have personally seen this dynamic in my own life, and how I broke free of unhealthy emotions negatively affecting my own financial power.

Under Utilizing Your Skills

Brenè Brown says that we need to risk being criticized as an outcome of being seen. She’s been criticized horribly at times. Somehow knowing that someone as dedicated and skilled as Brenè has been criticized makes it easier to accept my own criticism. This acceptance invites us to expand beyond our comfort zone. Expansion is required for creating and leading wealth beyond where you are right now.  

Brenè states that the world needs your gifts, and I wholeheartedly agree. Every woman has special and unique skills that can contribute to the world and enhance income. Those gifts are what I wrote about in the Give portion of my book, Earn, Grow, Give. Likewise, you also have the ability and gift of managing your money to create and grow wealth. Like most women, you probably just haven’t seen wealth leadership role modeled so it feels wrong deep inside. When something feels wrong, we just know we’ll face criticism for it.

Fear of Criticism

Fear of criticism has certainly held me back in the past. Therefore, it’s kept me from speaking up when meeting with financial advisors, or when I had something meaningful to contribute to a financial discussion. In my thirties, I received a copy of a letter from my financial advisor to his management service stating that my fees should be raised, and they were. When I asked him why my fees increased, he said he didn’t know. I stood my ground on firing him. Finally, I subsequently learned that at a dinner party, he had labeled me as the “most intense” woman he had ever known. Really? I was criticized for standing in my power.

Hence, for years, this triggered shame for me. It felt bad, as though I was a bad person for having such a strong investing interest. Recently, it was crystal clear that what he did was wrong. I had a copy of the letter, and he had lied. I realized that what seemed intense to him was a woman who actually looked at the fees she was paying him, asked why they had increased, and made a decision to stop working with him because he was dishonest. (I could have lived with an explanation, but not a lie.) This would have been perfectly normal for a man, right?

Here the thing: Women strive to please everyone. This accommodating behavior has been role modeled since the beginning of time. We were told in subtle, usually unspoken messages: Don’t be strong. Don’t show your power, especially around money!

I have had multiple clients tell me it feels wrong to ask their financial advisor what their fees are. Yet, asking the price of a new purse feels as right as sunshine. We must own our right to manage our money!

Ask Yourself…

Is risking criticism holding you back from creating the life you really want? Whether this means increasing your fees, asking for a raise, or confirming your wealth management fees, fearing criticism around change can definitely keep us stuck in our current reality. Are you happy with where you are now financially?

What Is That Icky Feeling: Guilt or Shame?

Dr. Brenè Brown points out that shame focuses on you as a person, while guilt focuses on your behavior. Shame triggers thoughts of  “I am bad”. Guilt triggers  “I did something bad.” Addiction, depression, aggression, violence, bullying, eating disorders and suicide are all highly correlated with shame. The interesting point is that guilt is inversely related with those negative experiences. Guilt is an emotional discomfort that you feel for something you’ve done or not done based on your values. In other words, guilt can hold you accountable, making it a helpful emotion. I sort of love that, don’t you?

How Is It Related To Money?

Now, take a deep breath and think about your top money mistakes. What’s the feeling you have related to them? Is it shame or guilt? My bet is that it’s guilt.

Guilt may be what you feel over not investing your money better, spending more than you make or not reaching your full potential. Think of the value in this awareness for creating and having wealth! What if it drove you to learn how to invest, maximize your monthly cash flow from purposeful spending and make more money? For most women, these are all things that you’ll need to do to create and keep wealth. Use your guilt to hold you accountable to your inner self that knows you can be and have more. 

Furthermore, Brenè explains that we usually hide, blame or rationalize from a place of shame. When you have stepped into your power by asking for a raise, or making an investing decision not aligned with your spouse, have you ever had a deep feeling of wrongness about your action that led you to rationalize and back down? I have sure done this. It makes so much sense based on Brene’s explanation of rationalizing away shame based actions.

Guilt, on the other hand, leads us to try to make better decisions that align with our values. 

Is shame keeping you from reaching your financial potential? Does it feel wrong to have power around your money? Are you standing your ground with your spouse, financial advisor or other male in your life? If not, is shame at the core?

Confidence Is Key

Confidence is the first step in standing ground. The first step to confidence is knowledge. Besides, without knowledge, do you really have the right to stand your ground? It’s my belief that we get the right to stand our ground when we have the knowledge we need to hold that ground. Gaining that knowledge is laughing in the face of shame based behaviors.

An overwhelming obsession of ending the financial gap between men and women led me to create an eBook with things you must know before you invest any money anywhere. Get my free investing eBook here. Feel free to share it with any woman who could benefit:)

Source: Austin Woman, 2012

The post Happy, Guilty or Shameful about Your Money? appeared first on Financial Woman.

Do you have that subtle but constant nagging fear that you won’t have enough money? Are you wondering how to build wealth? What is enough money, really? Our minds tend to harbor worst case scenarios based on our brains evolving from our cave days. This survival mentality does have some merits, though, as long as it doesn’t keep us stuck in scarcity. The survival related fear is not having food and shelter.

Let’s crush this fear right now so you can shift to a mindset of confidence and creativity. That’s where you’ll build wealth.

Here’s how to crush that sabotaging fear. Grab your money journal, which I know you have by now if you’re a regular Financial Woman reader.

The fear ends when you feel at peace with money. Get okay in your mind with money by doing this process that I call the Money Survival Equation.

1. Determine Minimal Lifestyle Expenses

Forget all your current monthly expenses and lifestyle obligations right now that feel burdensome.

Make a list of everything you would need to pay for to live a safe and secure lifestyle in a small home or apartment, food, and absolute mandatory expenses. Include health insurance, but not expensive supplements, for example. Include a standard model android, not an iPhone and iPad or two. Think fun road trip, not Europe.

You get the idea.

Total the amount.

2. Cover Minimal Expenses

Think of a skill set that you could outsource as a service or as a consultant. Examples are managing social media, business headshots, videography for weddings, catering, building websites, accounting, legal or consulting. The list is endless. (Want some help? Click here now to get my Free Income Ideas Evaluation) 

Multiply the number of hours you could bill. About 10 to 40 hours a week, depending on other commitments, is usually doable. Multiply this by your potential hours. Deduct probable expenses, remembering that with many businesses, such as consulting, there are almost none.

Deduct your minimal lifestyle expenses from your potential income.

Note that you can almost certainly reduce your taxes if you’re tracking your business expenses and have a legitimate business. A legitimate business is one where you’re trying to make money. Are you following a plan to do that? If you’re not, then dump the business idea and move to the next idea. If you are, then deduct all legitimate business expenses before your income is calculated. I call this bringing your expenses above the tax line.

Back to your Money Survival Equation. Are you covered? Do you have enough money to live?

Yes? Nice. Doesn’t that feel great to know?

Now, do you desire more than just the minimal survival lifestyle? If the answer is yes, keep reading so you can get your equation number up.

The reality is that there are only two parts of the equation, income and expenses. That’s a pretty simple equation. It’s the same for everyone.

Think Expansion & Leverage

However, you can step into financial creativity to boost that equation. Begin by asking yourself how can you increase your income number.

Are you a therapist? Think group programs?

Are you a teacher? Think group tutoring for private school students.

Are you a doctor? Are there add on products you can sell, such as supplements?

Can you provide your services in a more affluent area?

Would a certification allow you to raise your fees?

Would an add on skill allow you to raise your fees?

Can you add an online element to your business; such as selling on Etsy or putting your service on outsource websites? This can allow you global expansion.

Other random ideas are to rent a room on Airbnb, pet sit and take in a roommate.

Shifting Your Thinking

By doing all of the above things, you are shifting your thinking from fear to financial creativity. Now, this will blow your mind:) What if you controlled your expenses? And what if your income exceeded your expenses because this expansion and leveraging income really works? (It does!) Then you’d have “extra” money to invest!

What if you increased your investing skills? What if you spent a few hours one month learning how to have more money? Having more money is a skill that can be learned, like other skills, but you have to spend the time learning.

What if you learned how to grow your money and you actually did it?

Think knowledge and action, to buy low and sell higher; not day trading, but longer term trends, such as buying when the stock market has dropped and stocks are cheap, or “on the clearance rack”. Or buying when every other house has a For Sale sign in the front yard. This works every few years with stocks, bonds, and real estate (including your home, with tax benefits). Buying cheap and selling high builds wealth over time.

Then, what if you learned to increase your investment income and you did it?

You can choose between dividends, interest, selling call options against stock holdings, and real estate rentals, depending on what works best at any given time.

This is financial creativity.

It’s doable.

It’s fun.

It’s fulfilling.

Decide to have money.

Drop your fears and change your life by learning how to accumulate and build wealth.

Create and live the life you want.

Click here now for my Free Investing Basics eBook to get moving! 

The post How to Overcome Money Fears appeared first on Financial Woman.

If investing feels complex and scary to you, you’re not alone. It feels complex and scary to most people. Part of the reason it feels this way is because financial experts talk with lots of jargon and unknown terms. This feels intimidating. (I’ve discovered that because these experts live in a data and analysis world, this is not any more deliberate than a techie that speaks jargon, but it’s intimidating, nevertheless.)

Add to this intimidation the fact that there’s a lot of emotion tied to money because it provides the most basic of human needs: food and shelter. Money determines the quality of your life; Organic vs pesticides; bus vs jet; hamburger vs. ahi; air conditioning vs. fan and even home vs. shelter.

Later, money determines whether you’ll be struggling to pay your light bills or traveling the world during your golden days, and the worry in the years before then. It determines whether you’ll live in the stinky nursing home with bad food and poor service, or whether you’ll be dining in style with the care that you want, if and when the time comes. Either way, maintaining a good quality lifestyle is on your mind somewhere, even if it’s lurking way in the very back of it.

This all means one thing: Your money is super important in a very, very big way. It is right up there just under health and family importance, and it even directly affects the quality and time you get to spend with your family, and your health, in many ways.

It’s important for sure. Why, then, don’t people spend the time to learn just the basics so they can manage their money well? Because it feels big and intimidating, and we procrastinate what feels big and intimidating, even when it’s very, very important.

Given all of this, it’s no wonder that everyone thinks that investing is too complex. I have some wonderful and exciting news: It’s not. Grasp the 6 investing basics concepts outlined below, and you’ll be well on your way to more confident investing.

# The Big Picture

You may feel unsettled about investing in the stock market. It may feel like this big intimidating arena that you know you need to master. You may keep managing to avoid either investing in it, or understanding it. That’s okay. You’re not alone.

Many people have a constant nagging feeling that they need to be invested in the stock market if they are going to have money for retirement one day. In our culture, the prevailing message about having enough money is this: invest in the stock market or you’ll run out of money! It’s true that investing in the stock market over very long periods of time—exceeding twenty years—has enabled investors to accumulate wealth. A lot of this success is due to the magic of compounding. The other part of the equation is that the stock market does have positive results over very long-term periods.

Wealth Compounding

When the earnings from your investments are put right back into that same investment repeatedly over the years, and that investment has positive long-term performance, your money compounds. Compounding is an ideal way to accumulate wealth, because it requires no work beyond monitoring your money.

You may have experienced wealth compounding when you looked at your investment account for the first time in a long time and noticed that the account increased in value without any work on your part. It feels great! Albert Einstein referred to compound interest as the greatest invention in human history.

All of this is to say that if you have a long time until you’ll need your investment money, investing in the stock market passively makes sense for many people as a core part of their wealth accumulation strategy.

Before you invest in the stock or any other market, however, you’ll do well to look at your Big Money Picture. This is the first step in investing your money anywhere because it lays the foundation for being strategic with your money. Traditional stock investing, as described above, is simply a step in your overall strategy for accumulating wealth, not a guarantee that your money will outlive you.

Steps To The Important Big Picture Money Perspective

1. Where the Heck Am I Now?

First, make a list of everything you own, and subtract everything you owe. This is where you are right now. In investing lingo, it’s your net worth. Once you have this, you can contemplate your next move strategically instead of acting on an assumption that picking some stocks will somehow magically lead to your financial goals. Before you start buying shares of the next Apple, ask yourself these questions to lead your wealth.

2. What do I want my money to do for me?

This question defines the reason you’re investing. The answer to this question would be to either increase your income now, or grow your money over time. (There’s more on this below under the Reason for investing section.) Some awesome investments will do both, but most won’t, so you’ll want a primary reason you’re investing. This primary reason will define the type of investment you’ll buy. Click here to see my video on the Reasons you invest.

3. Do I want to be actively involved in investing?

The answer to this question will lead you toward the type of investing you’ll do. Many successful investors only invest in real estate, or their own small business. These investments both require active involvement.

If you don’t want to be actively involved with your investing, then investing in stocks is an option to consider. You can invest in stocks with or without much involvement. If you’re leaning toward buying individual stocks, ask yourself if you enjoy researching stocks and other investment opportunities. Do you enjoy news about stocks and the economy? If not, you’re probably going to want to buy stock index funds or hire a financial advisor to invest for you.

4. Is investing in the stock or other markets the best use of my money right now?

If you’re paying high interest on any debt, investing may not be the best use of your funds until your debt is paid. Look back to your list of what you owe. Compare the cost of what your loans cost you, after tax, to what you can reasonably expect to make from investing that money.

5. Can I use some of this money to increase my income?

Increasing income is usually at least as important to wealth building as investing is. Ask if there’s a course or certification that could increase your earnings ASAP. Increasing income allows you to accumulate more wealth and live the way you want. As you may have read before here at Financial Woman, you don’t get wealthy through traditional investing unless you already are. Increasing income fuels wealth accumulation.

Do you have an entrepreneurial spirit? Don’t blow lots of your investment money on the remote chance of an idea making millions. Always test income ideas with as little money as possible. Most people can start a small consulting business to increase income right away at virtually no cost. Kendra Scott began her empire selling a few pieces of jewelry to a local Austin store with her baby strapped to her chest. That jewelry required a very minimal investment while testing her market. As we’ve all seen since, Kendra Scott is smart, strategic and has built an empire.

6. Is the investment I am considering expensive or cheap based on history?

The answer to this question is more important the shorter your investing time frame. In other words, will you need or want this money within the next three years vs. in 25 years? Believe it or not, you can buy investments when they are cheap vs. overpriced, just like those cashmere sweaters in May vs. November. Learn more about this important and often overlooked investing paradigm in my free eBook which summarizes all of these important investing basics here.

7. Am I Making Assumptions?

Making assumptions leads to herd mentality. The greatest investors think outside of the box, not with the herd. Don’t limit your thinking to investing only in stocks and bonds. Consider small business income, real estate, and even your own home ownership in your wealth accumulation strategy. Homes are often the biggest investment you make. Is there untapped wealth opportunity there for you?

For example, some savvy couples buy a house that needs TLC, fix it up, and sell it after having lived in it for two years. As I write this, you can sell a home without paying taxes on the gain you make when you sell that house with some very easy rules you’ll need to follow. Think of the incredible value of adding $100,000 tax-free every two or three years to your investment portfolio! Yes, moving is inconvenient, but so is not having enough money to live the way you want. Which one is more inconvenient?

Should your home really be considered an investment? Homes require a lot of your money, and can be used to increase your wealth. If you want them to be a part of your wealth accumulation strategy, then they can be, and they are an investment.

Leading Your Wealth

This unconventional type of thinking is not what you’re going to get mainstream. You’re not going to hear this from a traditional financial advisor, either, because they are almost always focused on investing only in stocks and bonds. This is why you are the best person to lead your wealth. From that leadership, you’ll choose to invest in the stock market if that makes sense for you. You’ll decide whether to hire a financial advisor or do your own investing. You’ll construct ways to increase your income. Investing is way bigger than choosing a few stocks or mutual funds. It’s about wealth creation and accumulation with all of the assets you have, including your skills. Investing is about wealth management. Get comfortable with all of these terms in relation to your money. Lead your wealth.

In other words, look at your Big Picture before throwing money into the stock or bond market. Then make stock investing a part of your overall investment strategy, if it makes sense, to get the results you want from your money. Remember, the B in Bricks stands for your Big Picture.

#2: Reason…

The second investing basic you’ll want to consider before you invest is simply the reason you’re investing. This is so simple, yet it is often overlooked as a starting point. Just ask yourself; What’s the reason I want to invest? Your answer will help you know what to invest in from among the thousands of choices.

Click to Watch my Series about This Important Concept

Reasons For Investing…

There are two main reasons you invest, and a third reason which combines the first two reasons. The very first reason that you would invest is because you want your money to grow over time. That’s also called “capital appreciation” in investing lingo. This makes sense; your capital is your money, and it grows, or appreciates, over time. This is also commonly called “growth” investing.

Investing for Growth…

Growth investing is often associated for future retirement funds because investors are putting aside money with the intention of using that money to live at some point. These investments will ideally increase in value.

Growth investing is usually the goal for young investors. Investments that grow over time are chosen to build and compound, such as high growth stocks, and other types of investments that are undervalued. The intention is that the money will grow and be used later in life.

Investing for Income…

The other main reason you invest is for income. This is for people that have earned or grown enough money so that they can choose to live off their money. Income investing is done by investing in assets that pay an income back to the investor, such as stock dividends, interest, or rental real estate.

Life circumstances other than age can drive an investor’s reasons for investing. While income investing is something that people typically do when they’ve retired, it can also be done for short periods when income is lacking, such as job transitions, or during the launch of a new business.

Growth vs. Income…

Just remember, when growth is your reason for investing, your money is going to increase in value. With income as your reason for investing, your money is going to pay you.

Traditional retirement planning focuses on income investing coupled with withdrawing money to live on during retirement. Think of how nice it would be if you accumulated enough wealth, and had strategic income investments, so that income investing covered your lifestyle expenses. Then you wouldn’t need to worry about running out of money because you withdrew too much. To me, this is true financial freedom.

Combining The Two…

Now, the third reason to invest is both appreciation and income. These are investments that grow or increase in value, and pay income, too. The example I like to give of this ideal scenario is actually not a traditional investment, although there are some traditional investments that appreciate in value and pay income, such as preferred stocks or possibly bonds. But, the example I like to give is rental real estate, because it’s common to invest in rental real estate that appreciates in value, especially when you’re buying into the cycle at the right time.

When you’re paying the right price for the real estate, you’re buying it low-priced. There’s a good probability (my favorite investing word) that it’s going to increase in value, but it’s also going to pay you rental income if you’ve got units that are rented out from that investment in real estate.

Another scenario where you can earn income while your money is growing is from buying dividend paying stocks that are bought near the bottom of a market cycle. If you continue to own the stocks of good companies while the overall stock market rises again, the value increases. The same is true for most bonds.

Recap…

In summary, the second Brick stands for R, and it’s the Reason you invest. You invest for growth, income or both. Once you know this, you have good clues about the type of investment you’ll want to achieve your financial goals.

#3: Index Concept…

The post 6 Investing Basics You Have GOT to Know appeared first on Financial Woman.

Last week, I showed you how to spot potential stock market danger (Scroll down to see). This week, I’ll cover when bonds are really risky since most investors have at least some of their money allocated to bonds. One of the first things you learn about investing is that bonds are safer than stocks. While this can be true, especially with U.S. Treasuries, there are times when the value of your bonds can drop, just like the stock market. Most investors don’t realize that their bonds can drop 50% from what they paid for them!

Here’s the lowdown on bonds…

Part III: Bonds and Interest Rate Basics

Bonds move in relation to several things, but most importantly interest rates. When you buy a bond, you get paid the interest that is stated on that bond.  I like to say it’s like a bank in that you are lending money to someone. Then they are going to pay you interest while you are lending that money to them.

Being Aware of Interest Rates

Now, bonds can be short bonds that are only for a few years, or they can be for a long time, such as 20 to 30 years. The further they go out, the more they are going to change in value, due to the interest rates. Long-term bonds will move down in value when interest rates go up. This means that noticing where we are in the interest rate cycle will give insights as to whether your long-term bonds will be more likely to drop soon.

For this reason, you’ll want to pay attention to interest rates. The current interest rate is something that you probably already know. If you have money invested in long term bonds, be prepared for the value to decrease when bonds rise. 

Believe it or not, interest rates were as high as about almost twenty percent in the early 1980’s. We have seen unusually low interest rates for many, many years now as I write this. All you need to remember is when interest rates go up, the value of bonds, especially long-term bonds, goes down. When interest rates go down, bond values increase.

Again, this is logical: investors can get a better interest rate on those new bonds since interest rates are higher. This makes the value of the old bonds go down. This would affect you as an individual investor, if you own individual bonds, if you wanted to sell your bonds. Most people, however, own bonds through some sort of bond fund.

A Flight To Safety

One other thing you’ll want to know about bond price fluctuation is that when there is abnormal uncertainty or volatility, the value of Treasury bonds usually increases. This is called a flight to safety. There are other variables to know about bonds that can affect their value, such as quality and type of bond, but interest rates broadly drive long-term bond prices.

It’s easy to stay on top of this risk. While it can be a bit trickier to spot the danger signs with stock market analysis, everyone knows when interest rates are rising.

Watch More on This Here:

Part II: How to Spot Danger Signs in Stock Market Trends

Two weeks ago, I wrote about the importance of paying attention to whether the stock, bond or real estate market is overvalued or cheap, based on history. (Scroll down to see.) This is one of the first things you’ll want to learn about investing so you don’t stash all of your money into a highly overvalued market. While this isn’t an exact science, or an excuse to avoid investing completely due to fear of the unknown, there’s a lot to be said for carefully considering valuation before buying anything, ever.

This core Financial Woman principle applies to stocks, houses, and handbags! As the saying goes, the trend is your friend. For example, if you had bought the Dow Jones stock index in March 2009 with $20,000, and sold in early March 2017, your investment would have grown to about $64,000. (1) If you had bought the Dow index in March 2007, and needed to sell in March 2010, you’d have a different, and very sad story entirely.

Now, I’ll share ways you can see potential stock market danger bubbling just beneath the surface of overvalued markets. Remember, no one can predict the exact top or bottom, but an awareness of long term trends makes it easier to accumulate wealth over time.. The best financial experts have completely different opinions about how long a market trend will last while it’s happening.

Terms you’ll want to know are that a strongly rising market is called a bull market, and a dropping market is called a bear market. You’ll also want to know that when the market drops 10% it’s considered a correction, which happens about every year. (2) When the market drops another 10% for at least 20% or more, it’s considered a bear market.

1. Time Frame

Use time frames to your advantage. By time frames, I simply mean how long a market has been moving in the current direction. For example, if a market is usually up for 6 years on average, and it has been up for 8 years, this is a long time based on history. The same is true for markets going down. Watch my video here where I explain more about this.

While the economy, politics and other factors affect financial market trends more than anything, time frame extremes can be a good signal for paying more attention to your investments.

2. Stock Charts

When I began investing seriously in the early 1990’s, I kept an image of a long-term stock chart on the wall beside my desk as a reminder that the market has always gone up over long time periods. I had a long-term perspective back then. In my fifties, I have a different perspective, and I’ve learned a ton about investing since then. 

Take a look at a long-term stock chart for S&P 500 index. If you don’t know about this important stock index, you can learn about it here. Don’t feel intimidated by stock charts; a chart is an easy way to look at the performance of the overall stock market.

There are numerical tools, like the PE ratio, that I also like to consider. I like to look at a nice long-term stock chart, however, for a rock sold historical visual perspective. As the saying goes, a picture is worth a thousand words.

Looking at a weekly chart, every week or two, keeps you in tune with the stock market. It only takes about 5 minutes to take this simple step that reveals so much! You already know that the market constantly goes up and down, but the larger moves display beautifully on a weekly chart.

The Best Thing

The thing that I like most about stock charts is that you can see what the markets have done in the past. You are able to easily see how long it’s been since they were at a peak, or how long it’s been since they had a big drop. As I write this, we are in year eight of a rising bull market, which is the second longest bull market in history.

This fact naturally makes me a little more cautious with stock investing. Note: facts are logical, rather than emotional. Emotional investing is what typically gets us into trouble.

From the chart, you will also easily see the big ups and big downs in the early 2000’s when we had a correction of about 60% in some areas of the stock market. Then, we had 50% corrections in the 2008 period. Ouch! This is obviously what you want to avoid. Somehow seeing these big moves depicted on a chart makes them easier to grasp.

3. Ask What’s Most Likely to Happen?

Again, no one knows where the stock market is headed for sure. For every investing expert that says the bull market will end soon, another investing expert says that the bull market will keep rising. For the most part, these are all smart people who spend their lives trying to figure this stuff out. Keep in mind that there can be a bias by some of these experts to say that the market will keep rising because stock investing is what they do for a living. For the most part, though, investing experts want to be right.

Acknowledging that no one knows for sure where the market is headed takes the pressure off of you as an investor. But then there’s still the concern of losing your money, so here’s what I do. I like to ask myself what’s probable before I invest or stay invested. A market uptrend can last longer than any other bull market before it, making new history.

No one knows for sure, but probabilities can be used to guide you in the right direction when you’re investing your money. The odds are greater that there will be a stock market correction in year eight of a bull market than in year one or two. It doesn’t feel that way, though, because everyone still feels the pain of the bear market.

4. How Much Am I Likely to Gain?

Take a long-term perspective and see how much the market has been up since the last bear market. For example, if stocks have risen 250% during a bull market, ask yourself how much more likely is it to increase in the bull. Ask yourself if that additional 20 or 30% is worth the risk. While this approach may leave some money on the table in the form of investment returns should you choose to bail, it would lower your risk during a major market correction.

5. Consider Your Investing Time Frame

If you’ve ridden the market up 200% over a very long time frame, a drop of 40% feels less detrimental than if you put your money into the market just before a huge drop. That’s because you have a bigger base. It takes so long to recover from those huge drops when you enter the market right before the drop. This reality is why it’s so important to begin investing as early as you can.

If you’re a new but long-term investor with a couple of decades to invest, then you may choose to ride out those ups and downs. If not, and you have nearer term goals, you will want to be more cautious about investing in stocks near the top of the cycle.

6. Staying Realistic

Don’t be caught off guard with market corrections, or sell low and buy high repeatedly. Make an informed decision about what you’re doing, and do it with confidence based on knowledge and facts.

Don’t be shocked when history repeats itself and the value of your retirement account drops 50%. The market will drop again. The only question is when, how much, and will you need your money before it goes back up to where it was before the drop.

If you’ve chosen and prepared to ride the cycle, then you’ll have peace from that decision. You won’t feel panic when the drop happens.

If you don’t want to ride the cycle down, take a look at the percent of your net worth you have in stocks. Knock 30% to 50% off of that amount and see if you can live with it. If not, learn more about how to be prepared for a bear market. Meet with your financial advisor if you have one, and see how your concerns are being addressed. If you don’t work with a financial advisor, you can hire one by the hour, if you feel this is what you should do, but be super careful about who advises you.

7. Have a Big Picture Perspective

Finally, consider the potential tax sting of selling investments with large gains. While you don’t want taxes to be the only reason you stay in a market you’ve deemed seriously overvalued, taxes are a real expense that can reduce your profits if you do sell.

8. Easing Out              

If you’ve done the math and see that you can handle your portfolio dropping $50,000, but not $100,000, you can always take a portion of your money out of the market. Investing doesn’t have to be all or none. This goes back to knowing how much money you have, how it’s invested, and the risk that’s involved with each investment.

Either way, do some research first. Be informed. Lead your wealth. Leading without knowledge doesn’t work with anything.

This is where I need to repeat: Nothing in this article is to be construed as financial advice. Do your own research. Or you can hire a registered financial professional. I’m just sharing what I learned from over three decades of investing my own money.

Next time I’ll write about why bond markets drop, and how you can see the danger signs. In the meantime, get the investing basics you’ll want to know here, in my free eBook.

Part I: Taking Advantage of Cycles

Everyone knows that the price you pay for something determines how much money you’ll make when you sell it. Taking advantage of those ups and downs, or cycles that are happening in the market, lowers the price you pay for almost any investment that swings in value. This is one of the first and most important things to learn about investing.

You may have heard, read, or even have been told that long-term investing is so important. You may have heard that you don’t need to worry about how much money you are putting into the market or how much it costs when you do invest in stocks. You may have heard that you just need to be a long-term investor. Though any of these statements are true in many situations, you may not have that long until you need your money. Examples of this are approaching retirement if you’re in your forties or fifties, or college savings for high school students. In these cases, you can’t apply long term investing rules, such as twenty years, to shorter term goals, such as five or ten years.

Importance of Timing

If your investing time frame is near, make sure that you pay attention to the cycles that are happening in the markets. When you are able to capture trends or cycles in the market, you’re able to accumulate wealth faster. There’s no avoiding the reality that if you buy something cheaper, you’re are going to make more money with your investing.

Can you pick the exact tops and bottoms? No. Am I encouraging market timing? No. All I am encouraging you to do is be aware of how a market is priced before jumping into it.

Easing In and Out

As my father used to tell me, it is really hard to pick the exact tops and the bottoms when investing, but if you can just ease in and ease out somewhere near those tops and bottoms, then you will do well. I’ve always remembered that message to this day. Have I always done this? No! The reason is because it took me years of investing to clearly see that the fear near the bottoms makes it super hard to invest near them. And the greed near the tops of markets makes you want to stay in them.

Fear and Greed

Fear and greed are what drive markets. They are what can decimate savings accounts. They can keep you awake at night. If you can bring logic into your mindset when investing, you can improve your results. This is one of the most important things you can learn about investing.

There are three major markets for most investors, stocks, bonds and real estate. There are clues and tools that you can use to gain insights for whether you are buying near the top of the market or near the bottom of the market. These insights can replace emotions with logic. These same insights can be used when buying a home, which is a huge real estate investment. You simply have to know what these signs are, and have the curiosity to keep an eye on them.

Seeing the Signs

You’ll see some of these signs in your daily life without any extra effort beyond choosing to notice them. Once you do, you can choose to be a proactive investor who uses her insights to her advantage when investing. In my next post, I’ll tell you the signs and clues for the stock, bond and real estate market. In the meantime, get curious about whether the markets you’re invested in are cheap or overvalued.

If you’re ready to learn about investing, be sure to grab my free investing basics eBook here.

Sources:

(1) The New Yorker

(2) Tony Robbins

The post Before You Buy That Investment Do This appeared first on Financial Woman.

The New Warren Buffett Documentary

Becoming Warren Buffett is a fantastic documentary to watch about how he became such a wealthy man. What really excited me about it is the surprising insights Warren shared about women and money. In this video, I’ll share those with you, along with a few investing tips that every money savvy woman will want to know.  And that’s you, choosing to be a financial woman!

Important Takeaways

The five most important takeaways that I got from the new Warren Buffett documentary are below. The last one is especially important if you are nearing the end of that time period that you have given yourself to reach a financial goal, such as college or retirement funding.

• The first takeaway is Warren’s message to live within your means. Would you believe he picks up his breakfast every day from McDonald’s while on his way to work? Warren said that his breakfast cost between $2.5o to $3 dollars. His wife puts the money in his car each morning for him.

• The second takeaway from the Warren Buffett documentary is about women. Warren asked his wife, several decades ago, how women will feel about being slaves to men for so many years, once they realize it. (I’d say we’re a little pissed off about it:) Warren went on to talk about how women, at that time and throughout history, had a primary role of serving their man. A woman’s primary role was not to be all that she could be as a person. It was to serve her man.

• The third take away is the magic of compounding. Warren Buffett loved to buy things and hold them for a really, really long time. Compounding happens when you own something for a long time it and it grows. Good investments compound over time. That is why you can invest wisely for 20 or 30 years, and it grows passively. The crucial catch here that I must point out is to be aware of your investing time frame. This is explained more in my free investing basics ebook here. 

• The fourth take away is that women got a different message than men did about potential. Warren felt that he got the message when he was growing up that he could be anything he wanted to be, or do anything that he wanted to do.  He felt that message was conveyed very clear to him as a man.  He felt his sisters did not get the same message because they were women.

• The last take away is super important, especially if you are nearing the time frame to reach your financial goals. This important takeaway is to buy cheap. As women, we are great at applying this principle to shopping. Think of buying cheap when it comes to your investing, as well. There are times when stocks, bonds and real estate are cheap based on history. Try to invest closer to those times so you get more for less.

Be sure to get the basics you’ll want to know before investing in anything, ever, in my investing ebook that I made free for all women choosing to lead their wealth. It’s based on my 30 plus years of investing my own money. Click here now to get it. 

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Applying The Basics…

Recently I wrote about mutual funds vs. stocks with the promise of more posts about this important topic for every investor. In this post, I’ll explain some of the many different types of mutual funds. This way, you’ll have a handle on this, whether you’re investing now (or later) in a retirement fund, individual funds or with a financial advisor. You’ll want to know these investing basics whether or not you invest specifically in mutual funds.

These basics apply not only to mutual funds, but also to traditional investing as a whole. This is because for almost all types of investments, mutual funds and similar, other types of funds that require larger account sizes exist for that particular category.

Asking Questions And Understanding Answers

Am I suggesting you invest in these mutual funds? No, I don’t give financial advice. I only want you to know about them because if you are invested in stocks and bonds, or plan to invest one day, you’ll want to know this. If you have money in a stock or bond retirement fund, you can ask better questions with the information below. The same is true if you work with a financial advisor.

It is my hope that a written explanation is clearer than seeing names such as “XYZ Value High Yield Blah Blah Fund” on your investment platform or statement. If you then say to financial advisor or retirement account manager, “Tell me more about this XYZ Value High Yield Blah Blah Fund that I own,” you’ll better understand the answer to this very reasonable question that every single woman should be asking. As crazy as it seems, what drives me to write is to help women become better investors.

There are, of course, other questions you should ask before investing in any fund, including the fees, management and historical performance of the mutual fund you’re considering. You would also want to see how much the fund has gone up or down over the past. In this post, I’ll just cover the major types of mutual funds that exist, and what those fancy names suggest.

Types of Mutual Funds

The largest mutual fund categories are stock and bond funds. There are hundreds of additional categories within the stock and bond fund categories, as well as many other types of mutual funds. For example, among stock mutual funds there are funds that invest in large and small companies. In investing lingo, these are called large cap (capitalization), mid cap, and small cap funds, depending on the size of the companies in which the fund invests.

But There’s More!

Within each of these categories, there are value-focused funds and growth-focused funds. This means that the fund buys companies that are bargains or fast growers. In investing lingo, this is called undervalued (value) companies or fast growing (growth) companies. There are long periods of time where value does better than growth, and vice versa.

Growth Vs. Value Mutual Funds

I learned about growth vs. value mutual funds the hard way back in the 1990’s when I researched and bought top performing mutual funds. My choices were, naturally, all value type of funds. I have a bias toward value anyway, since buying low cost things just makes more sense to me. You may have read before how I encourage you to apply this principle to everything you buy, whether you’re buying stocks, a home or a handbag!

Back to my mutual funds, the research also showed that the best long-term performers were value mutual funds instead of growth mutual funds. Unfortunately, my funds did not perform as well as other funds in the growth categories over the next couple of years, so I sold them. This was because—unknown to me at the time—the market was in a period of growth funds outperforming value funds. But then (urg!!!), value rolled back into favor due to the changing stock market, and the funds I had chosen initially were the top performing funds again.

The good news is that I had chosen wisely, simply overlooked the Growth vs Value factor. More importantly, I learned the difference between growth and value funds many years ago, and when each performs best based on the overall stock markets. I have remembered this important principle when investing ever since.

Just to clarify, growth stocks are fast growing companies. Examples nowadays would be Facebook, Alphabet (Google) and Amazon. Value stocks on the other hand are just as the name suggests. They are companies that for some reason are selling cheap relative to their financials, such as their revenue or their worth, which is called book value. Sometimes this is because the whole industry they are in has fallen out of favor with investors. Other times, they are cheap due to the economic cycle. Just think of value investments equaling the clearance rack at your favorite store. (I like to reference cashmere in May here.) And everyone loves a sale!

Bonds Funds

Bonds are another major category of traditional investing. Among bond funds there are corporate bond funds, government bond funds, and municipal bond funds. Within each of these categories, again, there are funds that buy bonds that mature in different time frames. In investing lingo, this is called short-term, intermediate-term and long-term duration. As a general rule, when the bond matures, the bond is paid back completely and the person or entity that owns the bonds no longer gets interest from the bonds.

Investing Outside of the U.S.

International funds and global funds are also common within each of the stock and bond categories. The term emerging market funds refers to funds that invest in more recently or less developed counties. Global refers to funds that invest in both the U.S. and abroad, whereas International refers to funds that only invest outside of the U.S.

Index Funds

Index funds hold a group of companies that mimic the performance of any one index, such as the S&P 500. The fund manager buys the exact same companies that are included in the index being copied. Therefore, the fund should have the same performance as the index. Again, index funds have become very popular due to their low cost and tax efficiency. Any of these categories above have index funds as a way to invest in them.

Now that you know more about the different types of mutual funds, I hope you’ll feel braver about increasing your involvement with your investment accounts. If you want to know the basics that every woman will should know before investing the stock or bond market, be sure to grab my free eBook here.

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You may be wondering if it’s best to buy mutual funds vs stocks. In this post, I’m updating an article I wrote back in early 2008! A lot has changed in the investing world since then. Not only did we go through that nasty, nasty market correction in 2008 – 2009, but there has been a proliferation of funds from which investors can choose. Let’s start with the basics of just what mutual funds are.

What Is A Mutual Fund?

A really smart, well respected guy named Jack Bogle realized that it would be much easier for people to be able to buy stocks as a group through a fund rather than individually. He promoted this idea in the 1990’s. By doing so, he revolutionized investing with this concept at the company he founded, Vanguard. They are still the low cost leader in mutual funds. Bogle further promoted a certain type of funds called index funds, which I explain below.

In investing lingo, a mutual fund is an investment company that is registered with the SEC (U.S. Securities and Exchange Commission). It contracts with an investment manager who invests money for the people who buy into the fund on their behalf. There are several benefits to mutual fund investing over buying individual stocks, which I’ll outline below. You’ll want to understand mutual funds since there’s a good chance you’re invested in them if you have money in the stock market, unless you’ve bought individual stocks. 

First, Let Me Mention Two Things

It’s important that you first be aware that there are passive mutual funds and active mutual funds. As the name implies, a passive mutual fund simply buys the index. An index is a basket or a group of stocks with a commonality. You’ve probably heard me harp on and on about how important yet simple it is to understand an index. If not, read here. There is no work involved. The fund manager (or the software, more realistically) buys the index.

An active mutual fund, on the other hand, has a top notch stock selector who chooses what to buy, often with the help of a team.

Second, there are all types of mutual funds. There are stock funds, real estate funds and bond funds. There are funds within each category, like gold stocks, or international bonds. In this article, I’ll refer to stocks, but remember that mutual funds apply to all types of investments.

Diversification

Since enormous amounts of money are pooled together in these funds, investing through a fund allows individual investors to own a a tiny amount of a bunch of different companies. This is known as diversification. Most individual investors would never be able to get the same level of diversification on their own that they get from investing in a mutual fund.

Let’s say that you get super lucky and inherit $100,000. You could do lots of research and buy $10,000 worth of ten different stocks. Alternatively, you could research mutual funds, and put the entire $100,000 into one fund. By owning the fund, you would, in essence, own a tiny bit of hundreds, or even thousands of companies.

This applies to both active and passive mutual funds.

Full Time Investors Buy for You  

Another frequent advantage of owning active mutual funds vs stocks is that you have an expert stock selector, or team of experts, choosing stocks for you. These are people that nerd out over balance sheets, analytics and charts. They love researching and choosing stocks. There is also a large research department to help choose the securities to buy for the fund.

As you probably guessed, this expert stock selector only exists with active mutual funds.

Less Work

It takes much less time to invest in mutual funds vs stocks. This is because you can research a mutual fund occasionally when you’re ready to change your investments. When you own stocks, you need to do the initial research in both the company and it’s industry, as well as stay on top of company news. (Remember, with both mutual funds and stocks, you’ll want to be aware of the overall stock market valuations relative to history before buying.)

The Rules

Mutual funds are required to produce a prospectus that is a legal document which all open-end funds must make available to anyone who wants to buy shares in the fund. You’ll want to read that.

Goals

In investing lingo, goals are called objectives. All funds have objectives. They are usually called growth, meaning the value will increase, income, meaning that you’ll be paid income while you own the fund, usually in interest or dividends, or preservation of capital, meaning your money isn’t lost. Clarifying these objectives prioritizes the goals of the fund. It allows you to research quicker based on your financial goals of income or growth, which I explain in this video. You can rarely have it all. (But every now and then you can, if you sharpen your investing prowess!)

In other words, if preservation of capital is the main goal, you’re going to give up some of the likelihood that your fund will grow. The same is true if income is the main objective. If income is the main objective, you’re probably going to give up some growth. The fund objective can also give you a good idea of the risk involved in investing in any particular fund. The caveat is that if you invest in an overvalued market that is ready to drop, even funds with preservation of capital as a main goal can tank. This is why diversification is so important by investing in different types of investments.

You’ve Got to Have Some Money to Invest

Mutual fund companies require a minimum amount to be invested. Frequently, the minimum is $ 2,500, but it may he as high as $250,000 or more. When you buy a fund, you can elect to reinvest the annual earnings from the mutual fund back into the fund automatically, or have the proceeds given to you. Hint: For tax and tracking purposes, it’s usually easier to not reinvest. On the other hand, automatic reinvestment encourages putting away more money. You also have the advantage of getting in the fund at various price points as the value goes up and down over time when you reinvest automatically.

But Here’s the Surprising Thing…

Active mutual funds rarely perform better than passive mutual funds. This is very counter intuitive. It seems like the fund that has the expert stock selector working hard would do so much better than just buying an index. Nevertheless, studies repeatedly show that only about 10% of active mutual funds beat passive index funds. This is where knowledge of investing comes in handy. Understanding the basics of investing allows you to select those rare active mutual fund winners. It can also make sense to just go with the index.

Only you can decide what is best for you once you know the basics of investing. This is true whether or not you work with a financial advisor since you’ll need to hire and monitor your advisor. You’ll, of course, want to understand where your money is, also. This seems silly to mention, but it’s amazing that a lot of women don’t really know how their money is invested. (Reality: Not knowing how your money is invested is the same as not knowing where your money is.)

Active mutual funds perform a little better when the stock market is doing down vs when stocks overall are going up, which I won’t go into here.  The good thing is that it is super easy to buy mutual funds, and index funds are even easier to buy index funds because they require even less research. Financial advisors use both index funds and actively managed funds, depending on their style. (And now you know how to have a great conversation about passive vs active funds with your financial advisor, if you have one:)

Doing Your Basic Research

There’s much more to know, but this is a primer. Before you invest in anything ever, understand what you’re investing in. Check the fees. Check how your taxes could be affected.

Be sure to check the price tag of the overall market before investing in it. In other words, where is the stock market relative to history? Has it been beaten to a pulp? If so, everyone hates it. Has it been straight up for eight years?  If so, everyone loves it.

Again, the topic of mutual funds is extensive. If you’ve read this full article, you have an understanding of the basics of investing in mutual funds. Feel free to ask questions below, remembering that I write for educational purposes only and do not give personal financial advice. (I have to say this:) Hopefully, this gave you a good understanding of why most investors choose mutual funds vs. stocks.

Be sure to grab my guide with the main 3 Investing Myths that I learned from over 3 decades of personally investing. They seem to mess up investors, time and time again.

The post Mutual Funds Vs Stocks: Which Is Better appeared first on Financial Woman.

Updated Feb. 7, 2017

Having The Right Mindset

You may be desperately wondering how to invest your money in a way that gives a big enough return so your money outlives you, while having low enough risk to stay sane. After years of avoiding investing because it feels intimidating, or waiting endlessly to have enough money to even begin investing, a lot of women suddenly get hasty once they do have money to invest. The mindset becomes “Let me just get this investing thing done so I finally feel like I am doing what I am supposed to be doing with my money!” This often leads to hastily choosing a financial advisor, settling on an inappropriate fund in your retirement account, or buying into a mutual fund without the foundation that will drive those decisions.

Having Financial Order

While I’d never encourage procrastination for something as important as investing, my advice would be to slow down and take the few steps outlined below. The very first step to investing is creating financial order and knowledge around the investments you already have, so you can know whether to change your current investments. Additional investments should enhance what you already own. Financial order is also knowing your overall net worth, and the percentages of your net worth that you already have invested. Believe it or not, I’ve heard of overlooked assets, such as an old IRA floating around.

Knowing The Basics

One you have order and clarity about your current investment situation, you’ll want to be at least somewhat informed about what’s happening in the financial markets before putting your money into them. Then, you’ll definitely want to know the very basics of investing.

Making The Project Doable

Break the following steps below into manageable actions. Assign a set completion date. This makes almost every project doable because each completed step empowers and moves you forward. Many think that year end or early winter is a convenient time to begin embracing and tracking investments since you are probably already getting together your investment data for your federal tax returns. The reality is that any time, however, is a great time to gain clarity over your investments.

Here are some suggestions for steps toward investment clarity, and an action plan to be a better investor. Each situation will vary, depending on the amount of money you have and the amount of time you have decided to commit to growing it.

Suggestions For Clarity

1. List all of your investment assets on some type of spreadsheet or online tool. I still like Excel spreadsheets, but I’m a little nerdy:) Handwritten spreadsheets also work. My dad, a very astute investor, used to jot the investment account name, an amount, and total it. This works, too! There are many wealth online tracking tools. Find what works for you, but keep it simple.
2. Choose a financial news publication related to the type of investments you own. Update: Since I first wrote this article in 2008 (pre-market crash!), podcasts and videos have become abundant. Choose a podcast to increase your financial savvy while exercising, running errands, or doing otherwise mundane household tasks. If you prefer reading at your breakfast table with a highlighter in hand, that works, too. Do whatever works for you. Honestly, reading a five or ten minute weekly summary of the financial markets over the weekend is plenty good enough for most investors. An upside is that almost always triggers me to keep reading and learning.
3. Understand each asset you own. This is not a lot of work, but it is a huge step toward financial independence. You can increase your understanding of mutual or index funds by reading Morningstar at the library, doing online research, reading a book about the type of investment you have, taking a course, or meeting with your financial advisor and having them teach you about your assets. Note: While financial advisors can provide information from a deep knowledge base, I also recommend you learn from an unbiased source so you’re independently leading your wealth. 
4. Develop a monthly and annual plan for overseeing your investments. This plan will include specifying a time to review your investment accounts, such as the first Saturday in the quarter. At that time you’ll update your net worth, as well as check to make sure any investment you have is performing as well as it should be. This is done by simply checking the index that’s related to your investment, which is explained here. 
5. Check the total fees you’re already paying for your investments. Women are great about watching the costs of clothes and groceries, but usually overlook one of their biggest expenses: investment fees. Just think: one percent of $250,000 is $2,500 every single year. Total fees of 2 percent on a $250,000 investment account is $5,000 every year. Since you checked to see how well your investments were performing, you’ll be able to easily see if the expenses are warranted. If not, see how you can lower your investment fees.
6. Check your tax return or ask your CPA how much tax you paid on your investments on your last tax return. Ask yourself, your financial advisor, or your CPA if there is a way to lower those investment taxes.
7. Total the amount of money you have in each type of investment, such as stocks, bonds, cash and real estate. Divide each category amount by your total investment amount. These percentages will give you your “asset allocation”. Always make sure yours is suitable for your risk level. Take notice of what has increased or decreased significantly in value since you made the investment. Find out why this change in value happened. Was the drop in value because the overall market dropped, or was it just poorly performing fund?

Clarity Then Exploration

Take these seven steps and you’ll be well ahead of the huge majority of investors. Once you’ve gotten clarity about what you have and what your current investments are doing, then you can explore how to invest your money smarter and better.

Remember, before you invest in anything, you’ll want to know the basics of investing. Be sure to grab my free guide outlining those for you. Click here to get it now. 

The post How To Invest Your Money: Gettting Started appeared first on Financial Woman.

Women And Money Habits…

Do you have secrets lurking in your financial closet?  You’re not alone. When it comes to women and money, there’s a crazy disconnect. Women are in the leadership forefront more than ever, yet studies continue to show they’re not confident about investing their money. This leads to unhealthy money habits because we avoid what we don’t feel good about.

Guilt and shame are at the core of most unhealthy money habits. For something that can do so much good in the world, it’s crazy that there are so many unhealthy emotions tied to money. But there are, and there’s a reason for them. In this post, I’ll address those reasons with the hope that you’ll tackle your money fears head on.

What lurks for you?

Is it a deep and somehow shameful secret that you’re not handling your money as well as you could? Or that you’re not as involved as you know you “should” be? Or that your cash flow is sometimes, or always negative? Or that you have a bunch of debt for luxury cars or clothes? Or that you don’t go to meetings with your financial adviser? Or you don’t know how your money is really invested because it seems too big and complex and your brain is already super full of other stuff and you know that someone else will deal with it…while knowing deep inside that you need to know more to oversee your money management confidently?

You’re not alone, especially when it comes to women and money!  

Money Avoidance

You may sometimes feel like you’re alone in your money imperfection since no one ever talks about it, but almost everyone has money secrets that are a reflection of not handling their money as well as they know that they can. Why is this? Money is powerful because it provides so much, yet for some weird reason it’s not discussed. And there’s a weird energy around money, even among the closest family members.

This money avoidance leads to misleading beliefs and confusion for children that carry into adulthood. These in congruent messages breed invalid perceptions about money. Later in life, these unrecognized and erroneous childhood beliefs affect, usually negatively, the way you handle your ability to make, grow and keep money.  In fact, they can be detrimental to your very existence.

Get Rid of The “Somethings”

You may have already sensed deep in your soul that you have all of the abilities needed to create real and lasting wealth in your life, but “something” always prevents you from reaching your definition of true financial satisfaction. Here’s the thing: Those “somethings” are actually potent but sneaky saboteurs of financial independence. They come disguised as being too busy to take small steps to create the life you really want, or feelings of undeserving, unworthiness, or not being capable. They may relate to investing your money, or increasing your income.

Saboteurs Vary

These sly saboteurs are different for everyone. Maybe your saboteur takes the form of blaming your spouse, parents, the government, or your boss for your lack of money. Or could blatant avoidance of knowing how much money you have, where it is exactly, or understanding how it’s invested be your saboteur because deep down you think women “shouldn’t” know about money? This lack of awareness destroys your confidence, along with your financial security.  Procrastination, playing small, and even illness are other common but unpopular money saboteurs.

Recognize The Disguise

What disguise is your money saboteur playing? Confession: I am no stranger to playing small and avoidance. I know most all of the saboteur disguises because, as a human, and certainly as a woman with deep childhood roots from the 1960’s, they are ingrained into my being from a time when women and money were about as taboo as four letter words. There was just something not quite right about women and money.

Discouragement & Lack of Confidence

Could it have been that money was, and still is, power? Is it possible that power from women was discouraged in the 1960’s and 1970’s, as it had been for previous millenniums? Is it possible that your mom heard those almost silent but hugely instinctual and influential whisperings from your grandma, who picked these up from her grandma, who picked up on them from her grandma, and on and on forever?

Was the message that power, women and money just don’t belong together? Yes, I think this is very, very possible. It’s beyond possible; it’s likely, and it’s likely that this phenomenon affects almost every single women alive today, regardless of age. I hear the lack of confidence from women in their early thirties who make good money from their careers or have inherited wealth, and I hear it from otherwise confident women over fifty.

Being The Change

The great news is that you can be a potent catalyst for change around women and money and power. You can be a model for the younger generation of women. This will also create joy in your own life in many ways in the form of confidence and clarity.

There’s just not much to lose by choosing and embracing your own empowering beliefs around money. You can choose to believe that money is good, not evil, that you deserve money, and that you’re capable of taking good care of your money. Those new beliefs will lead to actions that support them in a very good way.

Certainty=Power

When you choose power around money, you can choose to create the life that you want from a place of certainty about your money. Because when you know the where, how much, and how involved with your money, you have certainty. It’s clear. And when it’s clear, you know if you need to radically change the path that you’re on, or if you just need to just tweak it a bit. Or maybe you just need to stay on your current path because it’s getting you where you want to be, which is joyful in itself.

Only when you know the change needed to achieve financial freedom, if any, you can choose to do it. And when you have all of this clarity and certainty, you can commit to creating what you want. And from this awareness and commitment, you are truly free from that deep, deep nagging worry that you’ll outlive your money. It’s that gut wrenching fear that, according to research on women and money, nearly half of all women in the U.S. have, but avoid discussing. (1)

Take The First Step

The first step to this fulfilling financial certainty and peace is breaking free of that garbage in your head that’s just not true. It’s dated; it’s so incredibly unhealthy, and it can truly ruin your life. It is directly responsible for playing small, settling for less and for damaging money avoidance, weak delegation and uninformed leadership of your own money. That’s the wonderful asset that pays for your mortgage, feeds your family and keeps your lights on. Money’s truly beautiful thing. Not having it can definitely lead to that above referenced HUGE fear of becoming the bag lady without money, home, or God forbid, a decent wardrobe.

Money Mindset

Remember, these false beliefs are usually so deep in your subconscious mind that you have no awareness of them whatsoever, but they can, and do, sabotage your efforts to have the life you want.  Now, some individuals are driven to remarkable success as a result of atrocious childhood financial situations. More often, however, people allow old and invalid money beliefs to control their actions in a way that keeps them stuck in negative habits around their money that were picked up by subtle, even silent, messages.

Here’s the best news ever: Address your mindset around money, and you can move forward today. This doesn’t take years of therapy. You can start creating positive change right now, literally in a few minutes.

Ask Yourself…

Simply discover why you keep repeating the same money mistakes by looking into your deep rooted beliefs by reflecting on this area. You probably already know what you’re doing that is causing financial discomfort, at a minimum. Answer this question now: What were the attitudes and beliefs, spoken or not, in your childhood home about money?

Self-Awareness & Reflection

Now, sometimes it’s hard to get started because it can feel like parent bashing or it can be horribly guilt inducing. Odds are that this issue has much more to do with ancestors you don’t even know, and prevailing societal attitudes (like women, money and forbidden power) than about your parents. So honor yourself, and honor them by becoming all that you can become. Be the confident and wonderfully self-aware woman that you were born to become by taking five minutes now to reflect. Can you just do it now for you, and for future generations of women?

The real problem is all this money negativity in your head may have kept you from achieving your financial goals. Or maybe you don’t KNOW if you’re on track to outlive your money. This is even scarier. Click here to see if you’re on track to outlive your money, and to make your money outlive you.  

Source: Allianz Life

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