1. There is no single perfect investment

When investing, it is necessary to weigh the advantages and disadvantages of each investment type and to select the investment options that most closely fit your circumstances and personal goals.

2. Risk and reward are proportional

It is important for investors to understand the risk/reward ratio of the investments they currently own and considering to purchase.  Generally, the greater the potential reward of an investment, the higher the risk associated with it.  Different investment vehicles carry different levels of risk.

3. Minimize risk and maximize reward

Diversification is based on the knowledge that different categories of investments respond differently to the same economic conditions.  A strategy for managing risk and boosting returns is to diversify investments across industry and investment types.  Asset allocation is an important component of diversification.  It involves deciding what percent of your total investment portfolio should be allocated in each of the investment categories.

4. Compounding interest is powerful

Compound interest is growth through multiplication.  Interest or earnings deposited back into an investment on a regular basis will increase the size of the asset and its ability to generate still more earnings in the future.  According to Jane Bryant Quinn, nationally syndicated financial columnist, “Compounding is a true perpetual money machine.”

5. Pay yourself first

One technique to help individuals spend less and save more is the “pay yourself first” method.  That means that with every paycheck, and before any expenditures are made, a predetermined amount or percentage is transferred to personal savings.  This assures that saving takes priority and occurs on a regular basis.

6. Practice dollar cost averaging

Dollar cost averaging is investing a fixed amount of money at regular intervals (usually monthly).  With this method you will sometimes be buying when prices are high and sometimes you will be buying when prices are low.  Over the long-term, your average cost will likely be lower and your return higher than if you tried to time individual purchases to market swings.

7. Avoid market timing

Market timing is an investment strategy that involves trying to outguess market movements.  Essentially, it means buying before the market goes up and selling before the market goes down, this strategy rarely outperforms the investor who buys and holds.

8. Maximize tax favored retirement plans

Your best investment “bargains” are tax favored retirement plans.  They offer two types of tax advantage: tax deferral and tax deductible.  Tax deferral means that taxes are not paid on investment earnings until withdrawal of funds.  Tax deductible means that contributions made to a tax favored retirement plan are excluded from your reported income and are thus free from federal and state income taxes.  Keep in mind that eligibility requirements vary for these plans and the “tax breaks” they offer.

Reprinted by permission of Money Quotient, NP

As a socially conscious finance planner, I understand the impulse to tie the power of money to the responsibility for more effective use; the impact that our investment strategies can have upon the world in which we live.

Making conscious investment choices

First Affirmative Financial Network is at the leading edge of the SRI/ESG movement, promoting investments in companies that “do no harm.” A recent article from them offers a terrific overview of the history and current landscape of socially conscious investing. However, the strategy for socially conscious investment strategies does not end there, but actually seeks to promote the general welfare as a result of responsible investing. Innovative new strategies seek investments that have a positive social impact.

The goal with the ESG investment strategy is to transition from the simple “no sin” investment model into a pro-active investment mindset that seeks out companies that create products and services which promote sustainability and responsibility; that treat all people fairly and embrace equal opportunity; and that promote peace around the world. It is a highly conscious movement toward using money for the good, rather than being indifferent to the results of our investments – as long as the return is good.

“As of early 2012, nearly one out of every nine dollars under professional management in the United States was involved in some form of sustainable and responsible investing – that’s 11.3% of the $33.3 trillion in total assets under professional management in the U.S.” ~ from the First Affirmative article.

The article goes on to cite several factors that are fueling the growth of ESG and socially conscious investing in general, among them:

• Improved investor education – offering alternatives to traditional investment choices, as well as new, more responsible investment choices
• Improved performance by socially conscious businesses – removing the stigma that these businesses must underperform for their investors
• More women in executive positions and business ownership – bringing a versatility to the concept of how business should be done
• Financial scandals among traditional corporate structures – have caused investors to seek out new modes of thought and alternative business practices
• Green thinking and sustainability – have had a direct and powerful impact on the mindset of investors, and potential investors, as they realize the impact their investments, or lack of investments, can have on the policies and practices of the companies they support

Perhaps the most fundamental change that has taken place among potential investors has been the realization that the old rules no longer apply. It is simply no longer that case that returns on investment must be sacrifices to making a positive social impact. In fact, many social impact strategies offer market returns.

As part of your comprehensive financial planning, with a certified finance planner, you too can make a difference in the world with socially conscious investments. Tamarind Financial Planning is here for you, with individual financial planning strategies and personal investment management techniques to help you set, meet, and exceed your financial – and life – goals.

My husband, Lonnie, and I have been using First Step Cash Management System™ for one full year. Before First Step, we used a “one-bucket” approach – all of our income flowed into our checking account and, from there, we paid all of our bills. I used Mint.com to track our expenses, but I could not predict from one month to the next our level of spending. It made me wonder, like so many others – where is all that money going? We now use the “3-bucket” method.

The 3-bucket method of cash management

• Static Bucket – all fixed expenses are paid automatically from this checking account
• Control Bucket – weekly expenses such as gas and groceries are paid from this checking account – cash or debit only
• Dynamic Bucket – this series of savings accounts – one for each financial goal – receive automatic monthly deposits

I resisted setting up multiple new accounts thinking this would add complexity and cost. Once I got started using ING Direct (now CapitalOne 360) those fears proved false – actual experience has shown it to be free, easy, and even fun! The smart phone app makes it easy to track my weekly funds and my goals.

How does the 3-bucket method work?

Static Bucket: All fixed expenses are now on auto-pay. (OMG…Why didn’t I do this earlier?!)

Control Bucket: We have a fixed weekly “allowance” for our day-to-day expenses (gas, groceries, dining out, and entertainment). We only use cash and debit cards for these expenses. I resisted this idea initially too. Not use my credit card? What about card benefits? (And, isn’t that kind of Un-American?)

With cash/debit, the timing of expenses is always matched up with income. I feel much more in control of my spending. I am now very conscious of my day-to-day spending. If there is no money in the account, either we are finished spending for the week or we must decide which goal to take funds from for additional spending. And if there is money in the account, we know we are free to spend. Wow…Freedom – what a concept!

Dynamic Bucket: We have specific goals we are saving toward and can see our progress at any moment. Monthly transfers are made automatically. Each dollar of income has a specific purpose.

Results after one year of using First Step Cash Management System™

As a family, we are much more conscious of our spending and saving. Our weekly “control” bucket defines our weekly spending limits while our “dynamic” savings accounts make our progress toward our goals visible.

I don’t track expenses any longer – yet I feel much more in control. I feel relaxed when I see that we are accumulating savings specifically for upcoming expenses like summer camp, vacation, and a new car. Cash management is no longer a chore; it is a pleasure.

It is a very common misconception that tracking and categorizing expenses is the key to successful finance planning. In the past, I actually promoted this myth. It is helpful when starting a plan to have detailed information, but First Step relies on real life behavior – not estimates or projections – which are often garbage anyway.

Tamarind Financial Planningis here for you, with individual financial planning strategies, personal investment management techniques, and household budget planning tools designed to help you meet and exceed your cash flow goals.

Your SAR will have an Expected Family Contribution (EFC) listed, although this is not necessarily the amount of money your family will have to pay. It is a starting point for the colleges to begin the financial aid award process. The next step on your journey is that your chosen colleges will review your financial situation and begin sending you financial aid award letters. Each school will send an award letter that details the financial aid which they have determined you are eligible to receive from federal, state, school and private sources. This is the point where you and your parents will need to have a serious conversation about which school you will realistically be able to afford attending. Some points to take into consideration when comparing award letters include:

• Cost of Attendance (COA): The initial amount it costs to attend your selected program should be listed on the award letter or available from the school’s financial aid office. Include all the attendance costs such as tuition, room and board, fees, books, transportation and living expenses to determine your cost of attendance.

• Grants and Scholarships: The award letter will then list the grants, awards, scholarships and work-study programs for which you are eligible. Subtract these and any amounts you will be paying out of pocket from savings or a 529 plan to come up with a net amount for each school.

• Compare Colleges: Compare the net amount it will cost to attend each school and the amount of student loan debt you might have to take on to attend each school.

Jodi Okun
President and CEO
College Financial Aid Advisors

1. Set clear goals
2. Use Strategic Asset Allocation
3. Follow Disciplined Diversification
4. Plan for a 30 year retirement
5. Focus on your long-term investment strateg

These 5 Keys to Successful Investment Management are critical to achieving your financial goals and creating the good life, as well as a retirement of dignity and comfort. One segment of investment options has been evolving rapidly and deserves to be called out as the 6^th Key.

The 6th Key to Successful Investment Management

6. Buy low-cost investments

Traditionally, active mutual funds, whose managers believe they can “beat the market” have dominated the investment choices for individual investors. Now, low-cost Exchange Traded Funds (ETFs) are dominating the marketplace. What are ETFs?

“[It is] A security that tracks an index, a commodity or a basket of assets like an index fund, but trades like a stock on an exchange. ETFs experience price changes throughout the day as they are bought and sold.” ~ Investopedia 

Sparked by competition among the top providers, falling fees, a broader array of ETF choices and a growing popularity among investors, ETF assets have increased 12-fold during the past decade and now total $1.3 trillion, according to Fortune.CNN.com.

Exchange Traded Funds vs. Actively Managed Mutual Funds

Actively managed stock mutual funds have a mandate to “beat the market” and for attempting this feat, they charge double the average stock ETF and 10 times or more the lowest cost providers:

• Average stock mutual fund – 1.29%
• Average stock ETF – 0.56%
• Average Vanguard stock ETF fees – 0.15%

And these low ETF fees are only moving lower – .

While many investors and active fund managers hold onto a goal of “beating the market,” research shows this to be virtually impossible. The best we can hope for is to match the market – over the long term. As a low-cost tool for matching market returns, ETFs have become a powerful tool for investors.

Tamarind Financial Planning is here for you, with individual financial planning strategies, personal investment management techniques, and investments for retirement to help you set, meet, and exceed your financial – and life – goals.

I have created an entire series of blog posts surrounding the subject of Financial Planning for College, as well as a FREE eBook, entitled “Well Schooled: How To Pay For College Without Breaking the Bank of Mom and Dad,”  to help you with making good choices and planning for your child’s higher education.

There are a number of tax-favored savings plans, as I explained in two earlier posts, How the Fiscal Cliff has affected Financial Planning for College, and Coverdell Education Savings Account – What is it Good For? Both posts offer valuable information on how and when to begin saving for college.

6 Free Web Resources for Financial Planning for College

In addition to the information provided here, you can also use these 6 Free Web Resources to start your college saving plan.

• Finaid.org – FinAid was established in the fall of 1994 as a public service. This award-winning site has grown into the most comprehensive source of student financial aid information, advice and tools — on or off the web.

• CSUMentor.edu – Compare CSU schools. Tuition and cost of attendance for all CSU schools.

• FAFSA – all about Federal Student Aid including a forecasting tool.

• Petersen’s College Search – thousands of schools with detailed information including tuition, room and board, and other expenses.

• Collegeboard.org– more college planning and search information.

• Savingforcollege.com – one of the most comprehensive sources of college saving information with a focus on 529 plans.

The key to successful financial planning for college and effective saving for college is to begin early, to make your college saving a part of your monthly budget. This will allow you to begin small and grow the investment in your child’s education over time, as you can afford it. Use the resources above to help you and soon you will have a nice little nest egg growing that will help you and your student pay for college with very little or no stress.

As part of your comprehensive financial planning, with a certified finance planner, your financial planning for college can be greatly simplified. Tamarind Financial Planning is here for you, with individual financial planning strategies and personal investment management techniques to help you set, meet, and exceed your financial – and life – goals.

The downside of all of this reading and studying is the almost daily dose of negativity to which I am exposed. Our focus, as financial professionals, is most often on the economic risks that we may face. And while a risk-based approach is critical to preserving wealth, when it is unbalanced, we can miss opportunities. When I see pure optimism, it brings a smile to my face.

Making the case for a better year in 2013

A recent article by Fortune Senior-Editor-at-Large and Financial Columnist Geoff Colvin, Lucky 2013: A case for economic good times, was just such hopeful, “smiley” moment for me.

In the article, Mr. Colvin refuses to accept the standard argument we commonly see in the financial press, which focuses almost exclusively on problems and risks – of which there are many, and instead imagines an economy that “…gets us to a 4% growth rate, rising incomes, and low unemployment by year-end.” With a more positive mindset applied to current, real-world economic trends, Colvin makes a realistic case for an optimistic outlook for 2013.

There are, in fact, some very strong positive aspects in our economy today. For example, as outlined in the article, the US oil and natural gas industries are in a massive growth phase, with domestic production at decades-long highs. This increased production and implementation of new technologies is fueling growth all across the economy in a variety of industries; just as past problems in the industry have lead to downturns in the economy.

How to make 2013 a better year for yourself

It seems to be human nature that we focus on problem prevention rather than opportunity acquisition. Most of us believe that by focusing most of our energy on risks and possible problems, we can prevent bad things from happening; that we can make the right investments, sell or buy at the right time, and make more money, and not lose money. The truth is that we humans are terrible at predicting good or bad markets – or world events, natural disasters, accidents, inventions, health scares, and recoveries from them.

Rather, it is better to focus our energy on what we can control – spending wisely, saving regularly, investing appropriately to our goals, insuring big risks, and giving generously – while at the same allowing for the possibility of “Lucky 13.”

As Mr. Colvin concludes in his article, “When everyone believes it can’t possibly happen, that’s when it happens.”

Tamarind Financial Planning is here for you, with individual financial planning strategies, personal investment management techniques, and investments for retirement to help you set, meet, and exceed your financial – and life – goals.

Before engaging in solving a problem involving your teen, it is very important to first determine who will be making the final decision on what solution to choose. Will it be you, your teen or the both of you together? Whoever owns the problem; the one who is most directly affected by the problem, will be the one who is responsible for deciding on the solution.

Teens get very upset when they own the problem and adults want to come up with the solution rather than letting them work through the problem solving process. When teens own the problem, your job is to lend support rather than give the solution. Often it isn’t clear who should make the final decision until you first gather information to clarify the problem. Michael Popkin, PhD. gives us three questions to answer to determine who should make the final decision.

We can usually determine who owns a problem by asking three questions.

1.Whom is the problem directly affecting?
Decide this by asking 1) who is most concerned or upset about the issue or 2) who brings up the problem and wants to find a solution to their unmet goals or needs?

2. Does the problem involve health, safety, family rules or values?
If so, the parent has the final decision on how to solve the problem. This involves parents setting the final limits.

3. Is the problem within reasonable limits for the teen’s age and level of maturity?
If it is, the parent supports the teen’s process of brainstorming possible solutions and the teen makes the final decision. Parents maintain an “it’s up to you” supportive attitude in order for the teen to learn how to self-reflect and build self-confidence to handle life’s struggles. If not, the parent steps in and decides how to solve it.

So, next time you want to tell your kids what to do and they get upset, stop to analyze who should make the final decision, you, your teenager, or both of you together

©2013 Cynthia Klein has been a Certified Parent Educator since 1994. She works with dads, moms and organizations who want more cooperation, mutual respect and understanding between adults and children of all ages. Cynthia presents her expertise through speaking, webinars, and private parent coaching sessions. She is a member of the National Speakers Association and writes the Middle School Mom column for the magazine Parenting on the Peninsula. Contact Cynthia at bridges 2 understanding, www.bridges2understanding.com or call 650.341.0779.

The good news is that for many families, financial aid is available to assist them with college costs. The bad news is that for many families, the financial aid process is confusing. If the cost of college makes you gasp, you should apply for financial aid.

You may or may not be eligible, but if you don’t apply you certainly won’t get anything. Colleges have different policies on both the criteria used to award aid and on the types of aid offered. While you might not be eligible for financial aid based on your family’s income and assets, you might be eligible for a merit or talent award.

Also, the cost of a particular school directly affects your eligibility for assistance. Even if you can pay for the first year, think about the full four-year cost and if you believe you might need assistance sometime during those four years, it is often better to apply in the first year.

As with all financial investments – and college is a financial investment – you need to be thorough as you research the application process at different institutions. Institutions have different policies – including those pertaining to the financial aid application and its interaction with the admission decision. Make sure you know how applying for financial aid intersects with your admission application. Here are two questions to consider before you apply for financial aid:

Can your financial aid application affect your admission? The term “need-blind” refers to an admission process in which a student applicant is admitted based upon scores, grades and other academic criteria, and the family’s financial situation has no bearing on the decision. The term “need-aware” refers to the admission process that does look at a student’s financial situation, because the school is not in a financial position to meet the financial need of all applicants. In this situation, financial need can have a bearing on whether the student is admitted.

Is financial aid different for an early decision or early action application? You need to ask if the aid awarding policy is different for early applicants and also make sure you will have an aid decision before you are asked to commit to the school. Early decision can be a useful option if you know where you want to go, but you have to be certain that the school you choose is one you can afford!

Jodi Okun
President and CEO
College Financial Aid Advisors

Life in each period seems to be conducted without much consciousness or preparation for life in the next period.  High school and college graduates almost universally express that they learned very little in school to help them find jobs or to be successful in their careers.  Likewise, workers approaching the end of their careers realize they are ill prepared for life in retirement.  Thus, as Bolles explained, “these three periods—in their isolation from one another—end up looking (or feeling) like three boxes.”

Bolles also observed that the box-like nature of these phases of our lives is further accentuated by the way we spend our time.  The first period is devoted to learning, the second period is devoted to working, and the third period is devoted to leisure.

Instead, he recommends that we would all benefit much more if there were a more equitable balance between learning, working, and leisure in each period of life.  In this way, wouldn’t our lives be more balanced?  Wouldn’t we be healthier in all ways? Wouldn’t we feel more satisfied and more fulfilled?  Wouldn’t we be growing as individuals in more positive ways?  Wouldn’t we be better prepared to transition into the next phase of life?

Meanwhile, as we contemplate these questions, we must live with the reality that “the system” does not advance this perspective on planning and living our lives.  Therefore, it is really up to us as individuals to get “unboxed”—to be proactive in (1) balancing learning, work, and leisure in each stage of life; and (2) using our current life stage to prepare for the next life stage.

Dr. Phyllis Moen’s retirement advice is similar to that of Bolles.  As the director of the Cornell Retirement and Well-Being Study, her research has led her to conclude that retirement planning should be “a life-long regimen rather than a later-life concession.”

In addition, she encourages individuals to “pursue an unconventional life course and to be proactive in developing their own opportunities.”  These opportunities are our individual choices in learning, work, and leisure activities that make life in retirement satisfying and fulfilling.

Likewise, Richard Bolles recommends in The Three Boxes of Life that it is very important to identify the learning, work, and leisure activities that are most meaningful to you, and to explore ways to invest your time and energy equitably among these activities.  It is these activities that will define what you “do” in retirement.

In other words, as you design your future, you should explore and choose ways that YOU WANT to spend your time.  As a result, the return on your investment will yield a successful and rewarding retirement experience.

Reprinted by permission of Money Quotient, NP