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On the Horizon

Thoughts, musings, and a little bit of entertainment from the world of personal finance.

The Tao of Leprechauns

2/10/2020

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In honor of it being March, let’s talk about leprechauns.

First - did you know that Leprechaun (the movie) was Jennifer Anniston’s first film role?  Starring film role, that is. Apparently she had a bit part as one of the McDonald’s dancers in Mac and Me in the late 80’s.  Which, from what I can gather, is kind of like if E.T. was produced, directed, and starred Ronald McDonald.  But I digress. Back to leprechauns!

Second - did you know that prior to the 20th century, leprechauns were depicted as wearing red, not green?  True story. Yeats actually claimed both, that it was the solitary leprechauns who wore red and the “trooping” ones that wore green.  So go ahead and wear your red proudly at the St. Paddy’s Day parade this year, you solitary leprechaun, you.

Third - we all know about the leprechaun’s pot o’ gold, ostensibly at the end of the rainbow.  But do you know what leprechauns do
for a living?  Yes, they have an occupation.  They are - wait for it - cobblers.  Which, unless things are drastically different in the fairy realm, is not the most lucrative of professions.  So how does a race of (usually) unseen cobblers become known throughout the world for hoards of gold coins? The only possible explanation is that…


Fourth - leprechauns are masterful savers.  While I can’t entirely condone the whole “bury your gold in the ground” thing, I think there’s a lesson for all us in the uniform way that leprechauns across the board have managed to save up massive amounts of money.


Way back in the first ever Rogue Waves
, I gave out the two secrets to investment success.  Remember what they were? Time and compound interest.  Leprechauns are perfectly illustrative of the time component.  Even if you get zero growth on your money, a little bit of savings will turn into an entire pot of gold with enough time.


Now, since you as I, as mere humans, don’t have the savings time horizon of a leprechaun, we’ll need to take advantage of investing secret number two: compound interest.  How do we do that? There’s an easy bit and a hard bit. The easy bit is to put your money in things that actively pay you interest or dividends - bonds, real estate funds, dividend-paying stocks.  Happy to talk through your options with you.


The hard bit is putting your money in things that actively pay you interest or dividends AND
match your risk tolerance.  If you see your account value going down and you hit the eject (sell) button, then both your compound interest AND your time stop working for you, and you’re 0 for 2 on the investing secrets to success.  At which point you may very well think it a good idea to start chasing rainbows looking for pots of gold.


Until Discovery Channel starts airing a “Rainbow Chasers” reality TV show, that’s probably not a brilliant way to make money.  Stick to the budgeting/saving/compound interest over time method, and you’ll be alright. And if you need a little help getting on that path, drop us a line -
russ@atiwealthpartners.com.


Sláinte!

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Back to School?

8/10/2019

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Happy Labor Day!  Our summer school valuation series has wrapped up, just in time for the kids to go back to actual school.  So let’s talk for a second about actual school. Specifically, college...or not.

College costs have gone up by about 2.5-3% a year for the last couple decades.  That’s not bad in and of itself, but that is still about 8 times more than wages have gone up in the same time period, which leads to a problem with affordability.



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Is It Too Early to Start Investing?

6/12/2019

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Too Soon to Start Investing?  Financial Experts Weigh In.
By Claire Shaner.

Young adults face financial complexities such as student loans, new mortgages, or car debt, coupled with low-paying entry-level jobs. With so much on their plate, those in their early twenties might feel overwhelmed by the words “saving,” “retirement,” or “investing.” If you’re in this situation, is it too early for you to start investing?

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March

2/10/2019

 
Maaaaaarghch.  We got nothin’.  Monosyllabic. Not punny.  The only thing mildly related is “March of Dimes”, and that has been well taken already.  So without further ado, let’s continue our 2019 series in content, if not title.

  1. You’re paying yourself first
  2. Your emergency fund has three months’ expenses in it
  3. You are now here.

“Here” looks like different things to different people.  For some people, “here” might be increasing that emergency fund to 6 or even 12 months’ expenses.  Nothing wrong with that, but you know what you’re doing now, so keep at it and revisit this article when you’re happy with your emergency fund.

For others, “here” is about making your money work for you, which usually boils down to a question of which takes priority: saving/investing or paying down debt?  The answer is, like so many other things, it depends on your personal predilections.

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Febru-WHERE-y

1/10/2019

 
Ha!  See what we did with the title?  That’s clever. It’s like we’ve got a little series going to start 2019: first it was Jan-YOU-ary, and now Febru-WHERE-y.  (Looking ahead, “March” doesn’t quite fit the pattern, but that’s a problem for future me.) Staying in the present, hopefully you’ve started paying yourself first - that was what Jan-YOU-ary was all about, after all.  Those of you who happened to miss that particular article or perhaps would just like a little refresher (shameless plug coming), you can read past Beachcomber issues online!  Go ahead, we’ll give you time to get caught up...

Alright.  So you’ve started (or will start) paying yourself first every time you get that paycheck.  Where’s the best place to put that money? Bank account? Stocks? Under the mattress?

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Jan-YOU-ary

12/10/2018

 

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Savings Rundown

11/28/2018

 
Whew!  Nothing like waiting until the very last possible minute for a November newsletter, huh?  We don’t care what science says these days, we still blame the tryptophan.

It feels like we have been writing about benefits elections ad nauseum recently, but after a quick glance back through the last few months’ newsletters, apparently that’s not true.  So with a couple weeks left to make or change your elections (at least for the Healthcare exchange and likely for your own workplace benefits platform as well), let’s go through a Rundown of different places you can put your money.  Just don’t eat the Konlobos, it’s worse than tryptophan.


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Dos and Don'ts

10/10/2018

 
Emptier beaches and more waves mean that winter is coming.  And winter means holidays, food comas, and a nostalgic look back at the year mixed with excitement and planning for the year that comes.  Speaking of planning, this is also the time for employer benefit elections and open enrollment for healthcare exchanges! (And yes, that certainly does warrant the exclamation point of excitement.)   So let’s take a little stroll through some dos and don'ts to make sure your financial self gets the same kind of care and attention the rest of you is getting.

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The Importance of Saving

7/24/2018

 
What a World Cup!  I hope you all enjoyed that month of magic and drama.  Sometimes literally with the drama - did you see that Neymar spent 14 full minutes lying down?  That’s ⅙ of an entire match. On his back.

As for the real drama, Croatia, a country with a total population less than our very own Atlanta metro area, nearly pulled off a crazy upset by winning the World Cup over the likes of heavily favored Brazil, Belgium, Germany, Argentina, and Spain.  And they did it through two shootouts and an extra time win in the knockout rounds. In the end, however, it was like something out of a Hanson song, with France finally capturing the title that was just a Zinedine Zidane headbutt away 12 years ago.  In fact, France only conceded 6 goals the entire World Cup. Croatia gave up 9, England 8, and Belgium 6. The importance of saving, indeed!

After the World Cup, Cristiano Ronaldo got transferred to Juventus for roughly £105M (or £500,000-ish per week) and, to bring it back to things that matter in American sports, LeBron James moved to the LA Lakers for $154M ($740,000-ish per week for a four-year contract).

These guys are all set for life now, right?  Who needs four years, give us $740,000-ish per week for six weeks and we’ll be set.*  Unfortunately, more often than not that’s not how it works out.


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Don't Invest in Your 401(k)?

3/14/2018

 
Here’s a question you probably haven’t heard from financial media before: When shouldn’t I invest in a 401(k)?  Conventional wisdom would tell you that’s absurd - everybody knows the best thing to do is invest as much as possible for as long as possible because “compound interest is the most powerful force in the universe” (Einstein).  But this post is pulled from an article called “Rogue Waves”, so let’s look at that question from a different angle.

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USA Today Young Investor Series, Part 2

7/21/2017

 

This Millennial lives for today but builds her 401(k)
Tanisha A. Sykes, Special to USA TODAY

Zoë Dawkins loves to live for today.  The 28-year-old communications specialist at Indeed.com, an online resource for finding job listings in Austin, says, "I really value the idea of 'happiness now', so I spend a lot of my money on travel, entertainment, and gifts."

Dawkins is the quintessential YOLO, a term coined by Millennials, short for "You only live once." It makes sense, especially since she grew up in a family that valued having experiences over saving for the future. "My Mom changed careers so many times throughout my life,” Dawkins explains. “She would give up an entire business based on whatever she wanted to do, and just take off and go to Thailand."

While some view that behavior as flighty, Dawkins sees it as freeing. “It made me realize that I could do anything!” she says. But before she began dating her boyfriend, who is also a financial adviser, money was flying out the door. “There have been times when debt has mounted up, or I wasn’t able to bail myself out when a medical crisis hit,” Dawkins says.

After working with him to fix her finances, she set a budget and began putting money into a 401(k).
Now, instead of spending thousands on a lux jaunt to Bali, or hitting happy hour daily, she tracks her weekly expenses using Google Sheets, which allows users to create and modify spreadsheets and share the data online. “Working with a financial adviser who understands my priorities and outlook on life has been incredibly helpful,” Dawkins says. "He gives me a lot of insight into my own spending and has taught me that saving/investing doesn’t have to be burdensome; it can be freeing."

Dawkins' budget includes $1,000 a month for food and entertainment, $500 for travel and $350 for gifts. And in January, she started automatically investing $400 a month in her company’s 401(k) plan. On top of that, Zoë's company matches 50% of the first 6% of her 401(k) contributions. She also has $10,000 saved in an emergency account. "It's nice to know that saving smartly and living a full life don’t have to be mutually exclusive,” she says. “Not only can they co-exist, but they can also lend to one another when properly informed."

Even so, she knows she’s being a bit skimpy on saving for retirement. Dawkins says she will likely invest more once she gets promoted and earns a higher salary. But at the same time, “I don’t regret any of the things that I spend my money on or all of the adventures I have had,” she says. “I want a life that burns with passion, and I feel I have that." Her best advice for other YOLO investors is simple: “Keep the balance,” she says. “Decide what you really need to be happy and what you need to do to be secure. Then, set those things up.”

Russell Robertson, a certified financial planner and owner of ATI Wealth Partners in Atlanta, says that Dawkins was setting herself up to be in a bad financial position. "Before Zoë met with an adviser, there was a tendency to spend a lot with no real emphasis on saving, aside from a cursory amount,” he says. Like Dawkins, there are steps that YOLO investors can take to start putting aside money for the future without giving up their lifestyle. Robertson offers this advice:

Save separately for emergencies: A lot of life is planning for the unexpected. Dawkins is saving more now for emergencies, but Robertson would like that money funneled to a dedicated emergency fund in an online bank like Ally, Capital One, or AMEX. “If your car breaks and you suddenly need $3,000 or $4,000, you’re not going to be able to take those road trips you planned,” he says.

Build toward life goals: For YOLOs, it’s difficult to commit to saving for retirement because it feels like a nebulous thing. “I try to frame it as not this big construct,” Robertson says. “We’re not just saving for retirement, but also for starting a family, buying a house, or taking a really lavish European vacation.”

Live beyond the moment: Robertson tries to convey this message to his YOLO clients: “Yes, this moment is important, but temper that with a little bit of FOMO for the future,” he says, referring to fear of missing out. You may have a great day today, but if you lose your job tomorrow, now what?

Make saving unconscious: Sign up for automatic deductions in the company 401(k). As a rule of thumb, Robertson advises people to save 10%-15%. “Start with 8% of your income, which is equivalent to contributing approximately 13% in your 401(k) because of the company match,” he advises. If you don’t see the money coming out of your paycheck, you’ll never miss it.
​
Don’t be embarrassed by your budget: If you make saving unconscious, make spending very conscious. Write down everything you spent in the last month, categorize it, and follow that month to month. “You don’t have to adopt Draconian measures,” he says. If you overspend, address where and why. Creating a written budget makes you aware of what you’re spending on and helps you to conceptualize the bigger picture.

US News: Still Have  Your College Bank Account? How to Save and Spend Like an Adult

8/2/2016

 

Six tips for handling your finances like a pro after college.
By Geoff Williams


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Last Week's  Last Week Tonight, Tonight

7/11/2016

 
Brexits 1.0 and 2.0
First, a quick note on “Brexits”: unreal, right?  Losing to Iceland to get knocked out of Euro 2016 in the Round of 16?  Don’t think the bookies called that one...or the earlier one either, actually.  You know, the one 3 days earlier where England voted to leave the European Union?  If you looked at the headlines Friday morning and thought the world was going to end, we don’t blame you...but we’d like to point out that it has been a rather non-world-ending week since then.  
Be prepared for more headlines to come as this plays out over the next two years.  Yes, years.  The now-oxymoronic UK needs a new Prime Minister in a couple months, someone who theoretically will actually trigger the clause (Article 50 of the Lisbon Treaty, for those keeping track) to start negotiations for exiting the EU (which, by law, can take up to two years, with the possibility of an extension).  And the front-runner, one of the two people who basically engineered the "leave" vote, just dropped out of the race.

Meanwhile, you have seven or eight other countries that will try to get their own national referendum held about EU membership, not to mention Scotland and Northern Ireland trying to break away from the UK so that they can stay in the EU.  Phew.  That’s a lot of ink yet to be written.
​
As for how this will affect you personally...two things.  

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