Blog - The Cure For Money Madness

A Little Goes a Long Way

admin — Tue, 03 Nov 2009 17:55:40 +0000

Are you driving less? Shopping less? Scaling back on entertainment and travel?

This is normal and often prudent behavior during a recession. But we must be mindful (lest we be penny-wise and pound foolish) that we shouldn’t cut back on good food, or exercise. We must prioritize our health and well-being as one of our most important investments.

Similarly, when times are hard, it’s easy to contract around financial decisions. This is unfortunate because it is in times of crisis that the opportunities exist to make the most money from investments, have the greatest impact on a struggling charity, and make significant and lasting changes to our money habits.

I regularly offer workshops to help people shift their relationship with money and take advantage of the real financial opportunities that exist right now. But many people feel that even the cost of a workshop is too much to spend at this time. I am pleased to share with you another way to transform your relationship with money. Brent Kessel and I have developed an online course for the Daily Om that is available to everyone with a “pay as you can” structure.

Click here to register

I cannot overstate the value of this course, not only for your peace-of-mind but also for your wallet. My grandmother always told me: A little goes a long way. And what I promise in this course is that even one financial decision or change in a money behavior can have a huge impact on your financial life.

Let me know how you like the course.

May you be prosperous,

Brent Kessel & Spencer Sherman
Co-founders, Abacus Wealth Partners

The Pain of the Recession…

admin — Thu, 25 Jun 2009 18:35:14 +0000

We are all feeling the pain of the recession. And many people are comparing it with 1929. Even though no serious economist is saying that they ARE comparable, let’s assume that things will get as bad as they were in the Great Depression. What actually happened to investments during that time?

Let’s assume that you were unlucky enough to invest $100,000 in the S&P 500 on Sep. 3, 1929, the height of the market and the worst date to invest. By July 1932, that $100,000 had shrunk to $11,000. By 1950, that $11,000 rebounded to $100,000! By the end of 1959, that $100,000 had increased to $600,000!

Your money went from $11,000 to $600,000 in 27 years. What do we make of that roller coaster ride? The point here is that patience makes you money. Being diversified makes you money, too. Having $11,000 to invest in 1932 was a huge advantage over having nothing. (And those who had invested in one or two stocks may well have had nothing in 1932!)

You’ve already endured the pain of loss. This is the opportunity of a lifetime: invest in a diversified portfolio, like the Rainbow Portfolio™, find excitement in other areas of your life (rock climbing, hang gliding, scary movies, rollerblading), and sit back and watch your money grow over the next 27 (and more) years. And even if you don’t have 27 years of life left, at this point, the probability of a rebound is higher than a protracted decline.

Please join me and the President of Abacus, Brent Kessel, at Esalen June 26 – 28. There will be ample opportunity to review your personal financial situation and ask your questions. Receive the benefit of our two financial minds in beautiful Big Sur.

Q & A : How can a successful approach be so simple?

admin — Wed, 10 Jun 2009 22:34:08 +0000

Q : Spencer, If the successful approach (e.g. Rainbow Portfolio ) is so simple, why isn’t it exploited by all the funds out there? (Also, what is the expectation for the fund and upcoming (two year) market? ~H

A : Dear H,

Most funds are set-up to be actively managed funds. I think that most investors like the possibility of making a killing and the Rainbow Portfolio doesn’t offer that. So, even though over 90% of professional fund managers underperform the index funds, they keep at it because it’s so exciting to people to pick a fund that is smarter than the rest.

Over such a short time frame like 2 years, I have no idea what the fund will do. It also depends on how much of the fund you decide to allocate to our fixed income category. Over longer period of times, it has averaged between 5 to 13% per year.

Spencer

Q & A : Hamster In a Wheel

admin — Mon, 01 Jun 2009 19:48:35 +0000

Q : Dear Spencer,
I feel like a hamster in a wheel. I am a money saver. I have ever shifting goals (forever higher) for my bank balances. I am constantly plotting how much I will have in the future which takes all the joy out of today. I become anxious if I cannot save the projected amount I had planned. How can I free myself with this saving fixation? It is making me and my family miserable.

A :

R -

Recall a time in childhood when you learned to just save and save. Realize that all your saving habits originate in childhood.

Do the Actual Net Worth statement on my website and in my book.

Read my chapter on Sufficiency. Nobody ever gets to their future savings goal. We all want and more. The solution to the wanting mind is to write down your financial gameplan with the assumption that you have all the money you’ll ever have right now.

Start spending small amounts of money on pleasure items even if it feels uncomfortable.

Look into attending my Esalen or Harbin workshop. A workshop will allow you to go into these issues deeply and will accelerate your progress. See www.currmoneymadness.com/register.

All the best,

Spencer

Invest In Equities

admin — Wed, 27 May 2009 19:30:43 +0000

In the last few weeks the
pundits are questioning the viability of investing in equities. As a
result of the financial crisis, equities and real estate are down 30-50%, while
US government bonds (Treasuries) have had strong positive returns.
Furthermore, the pundits say that over the last 10 years the performance for
equities is now below that of bonds. (Keep in mind that when they speak about equities,
they are speaking about the S&P 500, which is only one investment category.)

They ask: Why take on the
additional risks of equities when you don’t even get rewarded over a
longer timeframe of, say, 10 years? Why
not buy Treasuries and decrease your
risk, uncertainty, and stress and still make as much money as you would in
equities?

While
Treasuries might appear to be the safe haven, buyer beware!

At this point in time, the
expectation for Treasuries is that they will do much worse than equities in the
coming years. Treasuries are also vulnerable to inflation (which is becoming a
more likely possibility). Therefore, a bond-only portfolio is far riskier
than we might think.

There are two important rules in
investing:

1) Buy low, sell high.
(Bonds are at an all-time high, stocks are at an all-time low. Your
choice is simple.)

2) Diversify. (The
only people who have lost all their money have been those concentrated in just
one or a few investment categories. Diversified investors have never lost
all their money.)

Can people who invest only in bonds lose
everything? Yes, it’s happened before. In Germany in the
1920s, because of hyperinflation, bond-holders lost it all.

Bonds represent only a few of
the many investment categories available in a highly diversified portfolio
(like my Rainbow Portfolio).

Given all the uncertainty today and that no
one can know the future, this is the most compelling time to choose a highly
diversified strategy. It is not the time to put all your money into
Treasuries, or for that matter, into any one investment category.

Invest In Equities

admin — Wed, 27 May 2009 19:26:51 +0000

In the last few weeks the pundits are questioning the viability of investing in equities. As a result of the financial crisis, equities and real estate are down 30-50%, while US government bonds (Treasuries) have had strong positive returns. Furthermore, the pundits say that over the last 10 years the performance for equities is now below that of bonds. (Keep in mind that when they speak about equities, they are speaking about the S&P 500, which is only one investment category.)

They ask: Why take on the additional risks of equities when you don’t even get rewarded over a longer timeframe of, say, 10 years? Why not buy Treasuries and decrease your risk, uncertainty, and stress and still make as much money as you would in equities?

While Treasuries might appear to be the safe haven, buyer beware!

At this point in time, the expectation for Treasuries is that they will do much worse than equities in the coming years. Treasuries are also vulnerable to inflation (which is becoming a more likely possibility). Therefore, a bond-only portfolio is far riskier than we might think.

There are two important rules in investing:

1) Buy low, sell high. (Bonds are at an all-time high, stocks are at an all-time low. Your choice is simple.)

2) Diversify. (The only people who have lost all their money have been those concentrated in just one or a few investment categories. Diversified investors have never lost all their money.)

Can people who invest only in bonds lose everything? Yes, it’s happened before. In Germany in the 1920s, because of hyperinflation, bond-holders lost it all.

Bonds represent only a few of the many investment categories available in a highly diversified portfolio (like my Rainbow Portfolio).

Given all the uncertainty today and that no one can know the future, this is the most compelling time to choose a highly diversified strategy. It is not the time to put all your money into Treasuries, or for that matter, into any one investment category.

Q & A : 4000.00 in debt plus car loan of 8000.00….

admin — Mon, 11 May 2009 18:03:52 +0000

Q :
I am a 52 year old woman and in 1980 I broke my back and was paralyzed from the waist down. Wayne Dyer came to see me and encouraged me to walk again and I do but am in constant pain. It is difficult to work alot. I collect worker’s comp and make a small amount on my own. I am now 4000.00 in debt plus my car loan of 8.000 dollars. I am barely making it and have trouble not flying into fear. What suggestion can you give me to stay calm and not so scared.

~C.V.

A :

Find a friend who has no agenda with each others financial ally or money mentor and meet 4 times a year w/this person to review your finances.
Start collaborating with your friends; you might surprise yourself with a new source of income.
Do the Intentional Spending statement that’s on my website, under tools and resources on the home page.
Read my book – it is all about getting out of fear and into your creativity and wisdom around money
Do the money breath everyday that’s explained in book.

Good luck and remember that there are billionaires in poor health who would envy your situation.