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The #1 Wealth KILLER

  Albert Einstein once referred to compound interest as the 8th wonder of the world. Saying he who understands it earns it; he who doesn’t pays it. And he couldn’t have been more right. Today we’re going to be looking at the miracle that is compound interest and how can protect my retirement as it relates to the #1 killer of your wealth. Let’s get started. So the #1 wealth killer is debt. Yeah, I know, big shocker. But it’s really true and today we’re going to look at why that is. The truth is, having too much debt can put a limit on your greatest wealth-building tool – your income. While it may be tempting to invest rather than pay off your debt, compound interest is a force to be reckoned with. In fact, I recently dedicated an entire video to its power. Financial advisors often use the example of Jane, who invests $100 per month ($1,200 per year) from the age of 18 to 25 and earns an average of 10% per year on her investments. By the time she stops investing at age 25, her nest egg will be worth just over $15,000. However, before you start investing, it’s important to consider your debt load. Here are some reasons why paying off your debt first may be the smarter choice: High-interest rates: Many forms of debt, such as credit card debt or personal loans, carry high-interest rates that can negate any potential investment gains. Risk: Investing always carries some degree of risk, and if you have high levels of debt, taking on additional risk may not be advisable. Stress: Debt can be a significant source of stress and anxiety, which can have negative impacts on your overall financial well-being. Freedom: Paying off debt can give you a sense of freedom and control over your financial situation, allowing you to make better long-term decisions. That being said, paying off debt doesn’t mean you can’t invest at all. Here are some steps you can take to balance debt repayment and investing: Create a budget: Determine how much money you can allocate towards debt repayment and investing each month. Focus on high-interest debt: Prioritize paying off high-interest debt first, as this will save you the most money in the long run. Consider employer-matched retirement accounts: If your employer offers a retirement plan with a matching contribution, take advantage of it. This is essentially free money that can help you save for the future. Seek professional advice: A financial advisor can help you create a personalized plan that takes your unique financial situation into account. In conclusion, while compound interest is a powerful tool for building wealth, it’s important to consider your debt load before investing. Paying off high-interest debt should be a priority, but that doesn’t mean you can’t invest at all. By creating a budget, focusing on high-interest debt, taking advantage of employer-matched retirement accounts, and seeking professional advice, you can balance debt repayment and investing to achieve your financial goals. Over the course of the next 45 years, those investments will continue to grow. Assuming that it continues to grow at an average annualized rate of 10% per year she will end up with $1.1 million in her portfolio at age 70. That’s all achieved with eight years of investing $100 a month. Jane becomes a millionaire by investing $9,600 of her own money. On the other hand, we have John. John doesn’t start investing at age 18. Instead, he starts at the age of 26 (just after Jane had finished all of her investing). He also invests $100 a month. However, unlike Jane, he does it from the age of 26 all the way until the age of 70. John invests $54,000 of his own money over the course of those years and ends up with a nest egg of just under $950,000. So John ends up with approximately $150,000 less than Jane. This is in spite of the fact that he invested six times more of his own money than she did. It’s no secret that excessive debt can put a damper on your ability to build wealth using your most powerful tool – your income. While the concept of compound interest is widely known to be an effective way to grow your money over time, paying off debt may seem like a counterproductive move. However, it’s important to remember that not all investments are created equal, especially when you’re dealing with debt payments. Let’s take a look at an example: Jane invests $100 a month for 7 years starting at 18 and ends up with a net worth of $1.1 million at the age of 70. Now, let’s say John starts investing $100 a month at the same age and earns an average of 10% per year, just like Jane. Even if John continues to invest until he’s 100 years old, Jane would still have more money than him, and her lead would only increase with time. In fact, at the age of 100, Jane would have $19.2 million to her name, while John would have $16.7 million. This just goes to show the power of compound interest, as famously called by Albert Einstein as the 8th Wonder of the world. However, when it comes to investing, it’s important to consider the context of one’s financial situation. Comparing someone who is debt-free to someone who is not will not provide an accurate comparison. While Jane invested $100 a month for 7 years, John was dealing with debt payments and didn’t invest anything for those first 8 years. But what if John managed to free up an extra $200 a year, or less than $17 a month, by paying off his debts? In that case, he would come out ahead of Jane by the time they’re both 70. And if he freed up more money than that, he would pass Jane even earlier. So, what’s the takeaway? While compound interest is undoubtedly a powerful tool, it’s important to also consider the impact of debt on one’s ability to invest. Paying off debt and freeing up funds for investment can ultimately lead to greater financial success in the long run. And given the state of the average American debt situation, $17 a month in payments is a remarkably conservative estimate. According to articles in business insider, CNBC, and Forbes the average American debt situation looks like this: About $9,000 in credit card debt which is often split between several cards. $30,000 in student loan debt. And assuming a used vehicle was bought a little over $21,000 on a car loan. That’s around $60,000 in total debt. If we assume 18% interest on the credit cards and 4.5% interest on the other loans and terms of 5 and 10 years on the car loan and student loan respectively, the minimum payments could be roughly $900 a month. Freeing up that much cashflow could make a tremendous difference in the previous example. Let’s look back at John’s situation from before and assume that his household’s debt situation was that of the average American. John uses his $100 a month of excess cash flow to pay off these debts.   Based on the numbers it would take him roughly six years to become debt-free. This is assuming he did not work any extra hours or sell anything to get out of debt faster. Once he was debt-free he would have almost $1,000 a month left over to invest. If he starts the process of becoming debt-free at the age of 18 when Jane was starting to invest he would have become debt-free by his 24th birthday. If he then turned around and started investing the full $1,000 a month he would actually be further along in his investments by his 25th birthday then Jane was. Granted this is largely because he has invested more money than Jane has at this point. Jane by her 25th birthday had only invested $8,400. That’s quite a bit less than John’s $12,000 but think of the potential payoff of this down the road if John keepS investing that money.   He’ll also likely be able to lead a much better lifestyle than Jane in the present due to his lower monthly expenses. Jane may eventually equal him in that regard if she gets her debts paid off, but for those first several years after John is debt-free, it is worth noting. Remember, compound interest is an incredibly powerful mathematical force. But it can work just as hard against you as it can for you. So it’s important to make sure that compound interest is your ally in your finances, not your enemy. So with that being said how do we avoid this killer of wealth? First, if you’re lucky enough to not have any debt right now research some ways to ensure that you keep it that way.   If you’re planning to go to college look into ESA or 529 plans. They are ways to start saving for college while lowering your tax burden (which is always a nice perk). Also, look into scholarship opportunities or PSEO. Don’t be afraid to have a summer job and work during the school year part-time. For the record, this can also be a good option in high school to give yourself a head start financially so long as it doesn’t take away from your studies too much. Make sure that you always have an emergency fund. It should contain three to six months worth of expenses so that you don’t have to take on debt for those moments when life happens. Make sure you have insurance for those catastrophes that you wouldn’t be able to cover with your savings. Catastrophic health emergencies are a good candidate for this.   If you’re already in debt, learn about how people have paid off their debts. Then choose the strategy that is most likely to get you (and keep you) completely out of debt. Three of the most popular strategies are the debt snowball, debt avalanche, and debt tsunami. I have done videos on all three of those and they will be linked in the description. The debt snowball is the one made famous by financial personalities such as Dave Ramsey. It has you order your debts from smallest to largest balance and pay them off in that order regardless of the interest rates on those debts. The plus side is the momentum you can build up for yourself by quickly wiping out those bills. The downside is it isn’t the most mathematically efficient way to get out of debt, all else being equal.   The debt avalanche is the more mathematically efficient option if you can stick to it. It has you order your debts from highest to lowest interest rate and pay them off in that order. This is regardless of the size of the loan itself. The upside is the fact that you’ll be paying less in interest. The downside is in some situations it may take quite a while to get rid of that first bill. For those who are more motivated by seeing the balances of the debts themselves going down this may not be much of an issue.   For those that are more motivated by the lowering of bills, this could be an issue in some situations. The debt tsunami has you order your debts from the most emotionally stressful to the least emotionally stressful and pay them off in that order. In some cases, this could mean paying off the largest balance that also has the lowest interest rate first. However in my experience that is not commonly how it goes. Most of the people that I’ve seen use this strategy tend to use it because there are personal loans between family or friends that are causing a lot of stress in the relationship. The person with the debt uses the tsunami to get rid of that loan first and then often switches to a different strategy such as the snowball or avalanche. Which is another viable option for many people. There’s nothing stopping you from starting with one strategy that will help get you going and then switching to another that will work for you longer-term.   I know a lot of people who have started with the snowball to get themselves some momentum and then switched to the avalanche once they were on a roll so that they could save on interest. Another thing I would recommend looking into is the power of the debt snowflake. If you haven’t heard, the debt snowflake is a strategy where you find ways to free up money (or just happened to find the money) that you can put towards your debt payoff strategy. The nice thing about it is it works well with any of the other three strategies I mentioned. While by itself it isn’t game-changing it does help your primary strategy do its job a little better. And as we know every little bit helps. If you need more motivation make sure to check out Dave Ramsey’s YouTube channel and their debt-free screams playlist.   It’s filled with a lot of amazing stories of people paying off loads of debt on various levels of income and getting to see their relief when they are finally debt-free is very inspiring. You might also find their Turning Points playlist interesting. It is essentially interviews of people who have become debt-free talking about what made them decide to go through that process and achieve that lifestyle. I’ll leave a link to both playlists in the description as well.. As found on YouTube Retire Wealthy

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(upbeat tempo) – So welcome back its Robert Kiyosaki with my dear friends' daughter here Alexa. And we're talking about Millenials and money, and we gone through some lessons. I don't know how many more, but let's continue on with another lesson here. And so we were talking about you know assets and liabilities, right? – Yes. And when you read Rich Dad Poor Dad I said your house is not an asset what did you think? – Well, I think that's a conception that many people believe, but as you demonstrated the last seminar that we went to in Argentina.

My mom had her properties and she converted them into assets. Correct. – I think it just depends on what you do with it and it would be great if you could show us how to turn your house into an asset. It's very its really fundamentals. If I could go back I probably covered it earlier, (marker rattling) but it's a crucial question and this is what financial education and financial literacy really is. Again it starts with the financial statement and I would say probably 95 percent of all college graduates don't know what a financial statement is. You took an accounting course right? – Yeah, I did. I know you go through parts of this, but I say to young people like you there's six basic words to financial literacy and financial education.

And the six words again are income, expense, asset, liability. See I don't really care about my FICO score a fico score just basically registers are you trustworthy with borrowing money, but a bank will never sel. I borrow in the hundreds of millions of dollars. (chuckling) A fico score not gonna get me there okay. It's so it's kind of a ruse I mean I don't its, it's important but not for me. So these are the four words income, expense, asset, liability. Then the last two words are the words cash flow. And that's, why the game is called cash flow (marker squeaking) and the secret to being rich is not a college education, but can you control cash flow. And this is what cash flow in looks like. So this here you need this income, expense, asset, liability.

(marker squeaking) Again this is you get a job and this is my poor dad, go to school, get a job, get your PHD. And so this here is cash flow so income comes in and it goes out this way. First line of expense is tax, but this is a poor persons cash flow pattern. It's not how much money you make most people you know they. I don't care if you what you have a Ph.D. or no school at all. They can't control the cash flowing out through their expenses so that's, why people like Susie or men say cut up your credit cards, live below your means cause you're a spend-a-holic.

So that's a poor person. This is a middle-class persons cash flow patterns and this is where the house comes in. They, first thing you know most kids do when they get pay raise and all that they buy themselves a bigger house, now my house is an asset. Who tells you that? Your real estate agent of course! – Yeah. (Alexandra giggling) Right cause they they want to give you this false sense of security while you're getting screwed.

– Exactly. Ya know but when you look at what happens with the house a personal. I mean a personal residence that I live in the money comes in it goes out and this is middle class, but also goes out through a mortgage. Mortgage payments, oh but I don't have a mortgage. You still have taxes you still you know. Hawaii just raised the property taxes on me. Which is probably why I'm gonna sell. I'm gonna get out of Hawaii, but you have taxes and you have upkeep so monies always flowing out. So that's why your house is not an asset it's because its taking money from your pocket. So very simply said assets put money in my pocket, liabilities take money from my pocket. And then this here is, so I'm not saying don't buy a house but here is a house that. And I started when I was 25 bought my first house it was an apartment with an investment property. I didn't live in it, I rented it out and it put money in my pocket.

So very simple the definition of asset and liability is not the house or this, its cash flow. Where is the cash flowing? So as a young person (Robert coughing) and to all millennials or if you're old financial intelligence is the ability to control cash flow. And that's what they don't teach you at school. They tell you to go to school, get a job. First thing is tax you know, you'll pay most of your money will go out through taxes, in your lifetime. Then they tell you to buy a house, a car.

Cars an asset, no cars a liability. You got insurance, gas, upkeep, and all this. Now if you buy a, a taxi car it could be an asset, its cash flow. And that's very simply it, so this is a poor person. Money goes out there's a lot we, we just interviewed some national football league players who make millions of dollars in their 20s. And most of them are broke in two years because they can't control cash flow.

Intelligence IQ is can you control cash flow not your college degree. College degrees are important, but they're not gonna teach you this. So the cash flow game, trains you over and over and over again to get your money in here to get the cash flow this way. So I started with this, cost me 18,000 dollars. I paid for the credit card and I put 25 dollars in my pocket okay. It's an infinite return because the cash flow paid for the mortgage, it paid the expenses, pays the operating costs and I still made 25 dollars. Kim's first year was the same, hers wasn't 18,000 it was 50,000, 45,000 and it put 25 dollars in her pocket, but Kim now owns 6,500 rental properties.

And she pays no tax because the income comes from here. – Mm-hmm If you have a job you pay tax, but income the rich get richer because when you have asset income taxes are less. You can get it down to zero if you want. But that's financial intelligence, but can you control cash flow. Okay, so say that again. Assets what? – Assets put money into your pocket, liabilities take money out of your pocket. And so as a young person you just focus on that so when you buying a new house, you're gonna say is this gonna take money or put money? You buy an apartment house is it gonna take money or put money that's it, its cash flow. Six most important words for financial intelligence and IQ is income, expense, asset, liability, but its really cash flow. Now if I could bring up a more horrible subject is, do you think people can be assets or liabilities? – I think they could be both, to be honest.

So for most young people they fall in love, they get married, they have kids. Is a child an asset or liability? – A child is definitely a liability. I'm not saying don't have kids, but you gotta think the kid is expensive and they don't get cheaper. They get more expensive every year, you know then they go to college and then it gets even more expensive. So a human being now this sounds horrible to all those socialists and communists out there, but the fact is kids cost money. But as an old guy, I want you to think about this as I get older as people get older family members become liabilities. So I have a friend whose mother thank god she had long term I don't know what they call it, but they just canceled it on her. She can go to a old age home and I think the price is 18,000 a month. Most so that as a young person as your parents get older the question is can I afford to spend 20,000 dollars a month on my mom or my dads' long term healthcare, yes or no? – No, not right now.

No so. – No. And this is gonna happen to my generation many people don't realize, but there brothers or sisters or sisters kids and all this become liabilities to them. So as a person whose fairly well off, I'm and Kim and my friends are thinking about two legged liabilities. So I know today that if my sisters become ill I'm the one with the money and it's my responsibility to pay for them. Same as my brothers and their kids. So these are things that people don't think about a lot of times is what happens not only as they grow up, but what happens as they age. Statistics show the average person in my generation lets say have a million dollars.

80 percent of that million dollars will be gone the last two years of life. Because medical expenses go through the roof and today insurance companies are canceling. I forgot the name of it, but my friends' mother it was just canceled. So he doesn't have 18,000 a month so he had to bring his mother into his house and you know create another room and all this. Well, I love her which he does but shes a big liability and all he had was savings. So the savings are being depleted going out this way, okay? So with your question about houses and people, but people are also assets and liabilities. For most people with our favorite subject, a 401K is it asset or liability? – From what I've learned from you its definitely a liability. Or an IRA or a pension cause it's always going out this way. There's no guarantee it'll be there.

So this is the basic of financial intelligence, financial literacy stuff like this. Another thing about people is you have a bad advisor, like a bad financial planner, or a crook, or a business partner that's a crook, a wife that's a crook and all of that. They can be human liabilities. I have two friends right now who just joined a million-dollar club. They married beautiful women, got divorced and the women is now costing a million dollars a year in alimony. So their beautiful wife and the child support it's a million dollars going and she's only 40 years old. So she has a whole pile of boyfriends, but it's costing him a million dollars a year for her boyfriends. I said I wanna be her boyfriend.

(both laughing) not really you know. That make sense to you? – Yeah, it makes sense. Financial IQ is can you control cash flow. IQ means how big a problem can you solve so if like my friend whose mother is now costing him 18,000 dollars a month. Well, thank God he has about 100,000 in savings but in one year its gone. – Yeah. That's not high IQ, but for myself 18,000 dollars a month I ain't gonna make that much cash flow pretty easily.

– yeah. okay. So when you're like in your 20s per, well how am I going to make. Let's say by the time probably a 100,000 a month to take care of my parents, because like it or not its cash flow and they become liabilities. And the problem is getting worse or because the bond markets are not providing income. So many insurance companies have to renege on their promises to provide the cash flow to take care of our loved ones the same as medical. – Wow. And so that's why when people say I'm gonna go out on my own and do all these things they're kinda doing what they love. Which is good, but they've really gotta think about how many liabilities do they have. It's not just your rent you know, it's your family and so for me (marker tapping) and for Kim. We have family members, but they're liabilities so that's why we stay over here. Hopefully, nothing will go wrong, but if one of my sisters got ill and she needs 100,000 a month at least can provide it.

– Yeah. otherwise she they go they go indigent whatever they call it kay. – Yeah. Any other comments or questions? – No thank you for sharing so much about this content and all this information. That's gonna be super valuable for all my friends and all the Millenials out there just like me. So I have two friends that are in the million-dollar a year club, it doesn't mean they're making a million dollars it's their wives are taking a million dollars a year out of their pockets and their kids and all this. And I go you should of thought about that 20 years ago. – Yeah. But you don't cause your in love and you're gonna have kids and gonna make it together. – mm-hmm. But your parents offer great role models. So once again the six words you have to know and be masters at income, expense, asset, liability, cash flow. You can control cash flow that's financial intelligence, financial IQ and financial literacy, okay? – Okay. Thank you..

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Family Wealth Killer 2: Bad Investments

Family Wealth Killer #2: Bad Investments All investments look good the first time you see them…right? I met a guy with millions of dollars. He could really accumulate capital, but he couldn’t pick a good investment if his life depended on it. He would only see what he wanted to see and commit precious capital to things he couldn’t control with little possibility of producing a return worth the risks. A good investment policy changed all that. Sticking with our investment policy we always know how to deploy capital because we know what we're trying to accomplish. The deeper we dig with due diligence, the more we understand an opportunity and how it lines up with our values and goals. Picking winners is easier and more fun this way. Building capital is like building anything else— the better the quality of the parts and how they all fit together for us, the better it will perform..

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60 Years Old and Nothing Saved for Retirement – Top 12 Recommendations

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ca n't lean was bummed best be so a universe alone there a porn touch religions when comes to actually saving you fire a rat race for my kees with ketchup contributions and have all those videos the goal indeed that when CDA Lyceum in the most active Chile plausible and new of course will be wise in all-wheel of the people who left together the box that Redman in description below environments and 12 is the overflow you have a strategy Aramis Aegon reconversion mortgage it is a time rather in the morning that does not allow the needs to change the renewed hypes or rather in the morning the app more options and more flexibility in the queue the building fifty percent and King Johan and new loses a sixty-two that gate and in a purely morgens payments so I think there is a lot of humor morgens payments you may also be able to establish a tax free stream income the social media tyme come and get to the time in this video to go nobody yourself you can le morvan my book in chernaiev i only 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What Retirement Income Puts You In The Top 1%

what income does it take to be in the top 1% of all retirees you'd think that'd be a relatively simple project to research turns out it wasn't so stick around and benefit from the work that I did to uncover these hardto find numbers let's go for a walk and and talk about it and you know the first thing I want to observe is that most of us probably would not recognize could not tell by the lifestyle folks that are in the top 10% of all Rey income when I get to the numbers I I think you'll you'll say okay I think I would be able to recognize people that are in the top 1% I'll give you a hint it's a it's a much bigger number than than I thought it was going to be okay and and so why is that you know why wouldn't we recognize uh the folks that are in the top 10% and it's because like a lot of things in life you know if you look at Millionaires and millionaires Lifestyles you know 70% of millionaires in America or self-made and and most of them most of us uh got there um by being you know uh uh careful with our money and and and being good Savers as as much as uh being fortunate and and receiving a a good salary along the way okay so I'm going to start off with what these numbers look like for all Americans and this is from a large data set they say it's the largest population data set uh in the world and the organization is called ipums and this is for all Americans not just retire so um to be in the top well first let's start off with median and and this is household this is household income the median household income uh in the United States for for everybody all ages is is $70,000 to be in the top 25% you've got to make about $130,000 000 to be in the top 10% you're making a little over $200,000 the household income a little over 200,000 it's 212,000 and to be in the top 1% you're making over $500,000 a year now um and the number is 570,000 what was interesting is each of those groups from um 2021 to 2022 so this is a data set uh that they released the results of at the end of 2022 each of those groups got a raise between 2021 and 2022 unfortunately from the median and Below on an inflation adjusted basis folks that are at the median below uh are actually making less on an inflation adjusted basis folks that are above the median are making more in 20122 and we've heard this play out in the press okay so so those are the income levels now now let's talk about savings and there's a really interesting point I want to I want to share with you here okay to be in the um to be in the top 1% of Savers in the United States this is the top 1% if you're between 65 and 69 75 and 79 or over 80 it's to be in the top 1% you've got to have $2.7 million in what's called net worth the net worth is just take all of your assets all of your savings accounts the value if you own a house the value of your house and subtract from it the the the debt that you have on that essentially so you just take all of your assets and you subtract all your liabilities your car loan your your mortgage your credit card debt hopefully you don't have too many of the latter too uh and that's your net worth so um if you have a net worth of $2.7 million a household net worth uh in the United States you're in the top 1% what I want to point out is you know if you look at the income boy that income is really staggering right I mean the top 1% of income is 570,000 or higher and you know some people will say well you know that number seemed a little low I was expecting that top 1% of income to be higher and I I agree but that's like the last person that made it into the top 1% so there's plenty of people in that category that are making a lot more money but think about this you know the the lowest income in the top 1% is almost $600,000 right it's $570,000 yet to be the top 1% in savings you just need $2.7 million or more um and what that tells me is you know as a society as a country it's no surprise we're not saving enough money and so um it's not enough to make a great salary you've got to be able to to save it but to me that was just staggering that you know essentially that top 1% you know if they were the Savers they essentially have saved um what five years worth of income uh and most of us could not retire if we had just saved five years worth of income right so that just shows just the the importance of living below your means and and saving as much as you can okay let's keep going now I'm going to Break It Out by desile and again this is household and this is according to the Congressional research service so the the lower quintile so there's five groups the lower 1 the lower 20% of Americans are making under $22,000 a year then the next group up from that are making you know between that 22,000 and 40,000 the next group up to that is is making between 40,000 and 65,000 um so you can see that you know 80% of Americans households are making less than $65,000 a year now I haven't got to retirement that's coming up here really soon um let me get to the top quintile the top quintile households in America are a little over $110,000 let's call it $111,000 okay so now let's get to what I finally was able to find out so I've shared a lot of information here and I think many of you are listening to this this uh these numbers and saying you know what I'm doing okay you know it's hard to get that high high salary but if you're saving and if if you're uh spending less than you earn if you're saving that and then importantly if you're investing that remember it's not enough to just save you have to invest it you have to get compounding working for you so a lot of you I think are looking at the at least the savings number and saying yeah we're doing okay we're doing okay and I hope you are I hope you are okay so now getting on to the uh uh the the top income in retirement uh and before I get there if you're enjoying this video take a quick second and hit the like button it really does help the algorithm uh find other people that this this video uh and my videos can help okay so um I'm going to break this out the top 10% the top 5% and the top 1% so people people 65 to 69 now this is people that are working and not working top 10% is 200,000 top 5% is$ 260,000 top 1% is essentially $1 million okay so that's 65 to 69 and now for people 70 to 74 numbers come down a little bit top 10% is $170,000 top 5% uh is $26 is that right yeah 265,000 and the last number is a million dollar so retirees to be in the top 1% of all people 65 and older you need to be making a million dollars a year just to put that in perspective that rule of 25 if that's what the uh if that's what the income is then they had they'd have to have $25 million in savings by the the rule of 4% I hope you found this video helpful if you did I know you're going to like this video up here that talks about average income for retirees in America and this video down here that talks about five reasons to retire as soon as you can thanks for watching bye-bye

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The Challenges of Retirement In Australia

Researchers found that the average Australian is planning to retire at the age of 65 and it is expected that over the period of the next 5 years there will be approximately 673,000 workers planning to retire. The income needed to cover living expenses for a couple is around approximately $70,000pa, while for a single person around $50,000pa. And for majority of retirees, Age Pension is either the main or a significant source of retirement income. As I explained in my last video, our government has been working on a superannuation system and explaining it to Australians over many, many years, that now superannuation has become a major source of our savings. For more details, please watch my last week’s video: “What can I do with my super in retirement?” If you watched that video, you might remember when I mentioned that now our government has established Retirement Income Review that is concentrating on the retirement phase of superannuation. And today I will continue the real issue we have in Australia, that is the challenges for the government and us all when it comes to planning our retirement with the view to ensure security of our income and prosperity over the years and also longevity of our savings that is becoming a real challenge for the government and for each person that retires.

My name is Katherine Isbrandt from About Retirement. I am Certified Financial Planner and your are watching About Retirement TV, the only channel that is fully designed to provide you with all the information you need to be well prepared for your upcoming retirement or to improve your retirement financially, if you are already there. Our government has recognised the need to work on the retirement or a pension part of superannuation system, as the number of people retiring is greater than the number of people entering new workforce. This by default will introduce a necessity to have a system where we personally use our savings, primarily from saved superannuation contributions for the purpose of providing income during our retirement, as the government can no longer support such a big number of retirees. And let’s be honest, some people who retire now, have accumulated quite a nest egg in their superannuation, hence they can become self sufficient or only partially supported by Age Pension, while the full Age Pension payments are limited to those that are below the Income and Assets means testing.

But there is another major problem, there are too many people retiring and needing advice, than the number of financial planners or advisers who can support them with professional advice. And now we are hitting a real dilemma that worries me a lot. The government is now forcing super funds’ trustees to provide a meaningful guidance to their superannuation fund’s members as to their retirement choices and how to set them up. The problem is that superannuation rules are very complex, and that complexity does not help. Super funds are just simply not equipped and they do not have staff that is knowledgeable enough to provide that meaningful advice. I can only see on daily basis when speaking with many new clients, what mistakes are being made by super fund staff, when providing advice in the area they have no knowledge or understanding, which exposes members to huge financial risk and risks with the regulator such as Tax office. Also much of the research has been done to understand the pattern of retirement in Australia, and there is not one pattern that will prove that a particular strategy or a specific course of action will work for most people when retiring.

Planning is one thing, but life is often different. The CoreData shows that in many cases it is a retrenchment, health issues or necessity to care for another person that are often the triggers for retirement decision, and very often it is much earlier retirement, which means less savings that maybe a person has been planning for. And this is just one of the examples, when a proper professional advice can assist a great deal. In Australia we generally have two types of superannuation funds: ATO regulated such as SMSF or Self Managed Superannuation Funds and APRA regulated, which are all other types of superannuation funds such as retail, corporate, or industry super funds. A research was done to see the difference between the behaviour of members of those two types of supers and the research found that only half of all APRA regulate fund members aged over 65 took advantage of the favourable rules within the superannuation system for their age. In comparison to 7 out or 8 members of SMSF. therefore we can safely say that majority of SMSF members take advantage of all financial, tax and superannuation benefits available to you.

So why there is such a vast difference? It is because the majority of SMSF member receive professional financial planning advice and more than 50% of APRA funds members don’t. Similarly, to the above, majority of SMSF members will utilise the benefits of Transition to Retirement strategy for example, available to qualifying members, while only a very small number of APRA regulated members take advantage of this strategy. If you do not know what I am talking about, or you would like a refresher on TTR, watch this video: “Can I access my super and continue working – TTR explained” You see, if you were working with a financial planner, your adviser would let you know when to start this strategy, would set it up for you and assist you to take advantage of all benefits out of this strategy, as there are different reasons why it might or may not be suitable for you.

Rules are identical, regardless of the fund you are in. It is a matter of understanding those rules and at what point they become beneficial for you. So as I mentioned before, advised clients will benefit from each strategy as they progress in life and in their superannuation savings cycle. Unadvised members of super funds must know that such a strategy is even available to them in the first place, not to mention, they would need to know how to go about setting it up correctly to their maximum advantage. So the financial outcomes between advised and un-advised clients is quite astonishing. And it is often not the market returns that bring the biggest benefit, but the appropriate strategy being applied, that can be completely different for each person. And if anyone is trying to explain to me that this is due to high cost, I would mostly disagree. I am not trying to say that financial planning advice in inexpensive, but it is the case of understanding the benefit that you can gain before you make a decision of affordability of such a service. So going back to my previous point, our government is trying desperately now to find the solution for the advisory system in Australia, forcing almost all super funds to take over the role and providing such services.

The strangest thing is that in general, super funds don’t want to do this, as such a service will require spendings to implement appropriate support, train their staff, and take on the legal responsibility of advice. The compliance regime is enormous, as I mention before in Australia superannuation system is relatively safe and reliable, however, superannuation in pension stage lacks variety of income and security of it as well as longevity. This is the reason, why my plans consist of mixture of different income streams, because there is not one product that can satisfy all the needs for retirement.

But even taking into consideration everything that I’ve just mention, did you know that Australia is in the top 10 countries when comparing the quality of life in retirement. As a matter of fact, Australia is number 7, behind Norway, Switzerland, Iceland, Ireland, Luxembourg and Netherlands And we are ahead of Germany, Denmark and New Zealand, which are the other countries in top 10. But going back to the research, it is suggested based on the data that the complexity of the superannuation system has created a division between “haves”, so members that receive ongoing service and advice, and have-nots” those that have not received any advice, which are primarily members of APRA-regulated funds. I do hope you found this video of interest and a little bit of food for thoughts. If you believe that you are ready to receive a proper financial planning advice, just book a meeting with me through my website On each page of my website there is a button: BOOK A MEETING that will take you to my personal calendar, where you can choose the date and time that suits you and when we meet, we can discuss your investment and your retirement options.

While you are on my webiste, sign up to the NEWSLETTER to be kept updated with all the changes that can impact your retirement. And if you enjoyed this video, please give it THUMBS UP and SUBSCRIBE to my channel not to miss my next video. And now please continue watching those previously mentioned videos: “What can I do with my super in retirement?” and “Can I access my super and continue working – TTR explained” both videos are of great value and lots of important information to improve your financial planning knowledge. I will speak with you in my next video, bye for now.

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How to Invest for Beginners

Right, so let's say you want to get started with this investing thing. You might have a bit of money saved. It's probably not enough for a house, but you reckon I should probably invest this in something. Maybe you've heard on the news about Tesla or Netflix or Amazon and how, if you'd invested 10 years ago in Tesla then you'd be a millionaire by now or things like that. But if you're new to the game, this whole investment thing can seem like a really complicated black box. Like, how do you even buy a stock? What even is a stock? Do you just go on and buy some Tesla, like, how does it work? (chuckles) And if you try and look into this, you get all these acronyms being thrown around like Roth IRAs and 401Ks in America or like ISAs or LISAs in the UK.

And on top of that, there is the anxiety that we all have that I know investing is risky and I don't want to lose all that my money. So in light of all of that, this is the ultimate guide on how to get started with investing. It is the video I wish I would have had five years ago when I first started investing in stocks and shares. And we're gonna cover this by thinking about investing in 10 different bite size steps. So the first one is forgetting about investing completely and just thinking what happens to my money over time by default. And if you've studied economics, you will know that your money loses its value over time.

Thanks to something called inflation. (bubble pops) Inflation is generally around about the 2%-2.5% mark. And so that means that every year stuff costs about 2% more than it did the year before. For example, in 1970, in America a cup of coffee cost of 25 cents. But in 2019, that same cup of coffee costs a $1 59. That is inflation in action. And so let's say you've got a thousand pounds in your hand right now. And for the next 10 years, you just stash it under your mattress. And you never look at it again, in 10 years time your thousand pounds is not gonna be worth a thousand pounds anymore because everything would have increased by 2%ish every year.

So the value of your money will have fallen. And so if you put your thousand pounds under your mattress for 10 years, you will lose money over time. And this is obviously not good. Even if you put your money in a savings account, like these days, a savings account will give you like 0.2% interest which means your money goes up by 0.2% every year. But because inflation is up by 2% you're still losing money over time. And again, this is not good. Okay, so that begs the question which is key point number two which is how do we stop our money from losing value over time? And the answer is that if we had a hypothetical savings account one that was let's say an interest rate of 2.5% that would match roughly the rate of inflation.

So inflation means everything goes up by 2.5% in terms of price. But our money in our savings account also goes up by 2.5% each year. Therefore we're technically not losing money over time. If you're watching this and you have an issue with the word interest, don't worry stick to it for now, investment is not the same as interest but we'll come back to that a bit later. But the point here is that we don't just want to not lose money which is what happens at our 2.5% rate. We actually want to make money.

And that brings us on to question number three which is, well, how do we actually make money? Now, let's go back to our hypothetical savings account. If hypothetically, we could have a savings account that was giving us a 10% interest rate this will never happen because that's just way too high. But hypothetically if it did, that means that every year we'd be making 10% of the value of the money in our savings account. So for example, if I were to put a hundred pounds in a savings account right now the next year it would be worth 110. And then the year after it will be 121 because it's 10% of then the 110, and then it would be 130 something. And this would very quickly compound so that in 10 years time, my 100 pounds will have become 259 pounds. And if we adjust for inflation that our money is still worth 206 pounds in 10 years time, this is pretty good. We have more than doubled our money, by just putting it in this hypothetical 10% interest savings account.

And it really doesn't seem like it would do that because 10% feels like a small amount of money. But if you extrapolate 10% over 10 years you actually double your money, which is pretty awesome. Sadly these hypothetical 10% saving accounts don't really exist, because it's just way too high and real life is not that nice. These days, most savings accounts in the UK and I imagine around the rest of the world as well, offer less than a 1% savings rate, which means you're actually still losing money over time. But we do have other options to try and get us to this magical Nirvana of like, you know, this 10% saving thingy. And that is where investments come in. So point number four is what is an investment? And the answer is that an investment is something that puts money in your pocket. For example, let's say you buy a house for a hundred 1000 pounds and you want to rent it out to people. There are two ways, that's an investment. There are two ways you're making money from it.

Firstly, let's say you're charging some rent to the people living in your house. Let's say you're charging them 830 pounds a month. That becomes 10,000 pounds a year. And so every year you're making 10,000 pounds in rental income, which is 10% of what you originally paid for the house. That means that in 10 years time you'll have paid off the a 100,000 pounds that you've put in because you're making 10K a year. And beyond that every year you're just making 10,000 pounds in pure profit. So that's pretty good. But secondly, it's an investment because the value of the house itself would probably rise over time. In general, there is a trend in most developed countries that house prices tend to rise over the longterm. And so your house will probably be worth more than a hundred thousand pounds in 10 years time. And in fact in the UK, historically in the past, some people have said that house prices have doubled every 10 years. So maybe your house is worth close to 200,000 pounds.

And so you've made money off of the rental income but you've also made money off of the capital gains which is what we call it when an asset increases in value over time. But the problem is that buying a house is a little bit annoying. You need to have quite a large amount of money for a deposit. You need to get a mortgage. You need to actually have the house. You just sought out the rental management, rent it out to people, all that kind of stuff. If only there were a way of investing without a, having a large amount of money to start with and b, without having to put that much effort into managing the assets as well. And that brings us on to investing in shares. And for me, basically, a hundred percent of my investment portfolio is entirely shares. I have a tiny percentage in Bitcoin and I own this house but I don't consider this house an investment. I'll talk about that in a different video.

Therefore number five is what are shares and how do they work? So buying shares probably as close as we're ever gonna get to this magical savings account that just returns some amount of money each year. And the idea is that when you buy a share, you are buying a part ownership of the company that you've got the share in. For example, let's say the Apple have a particularly profitable year because lots of people have well iPads as per my recommendations and because Apple are feeling kind, they are choosing to pay out a dividend to their shareholders. So for example they might say that they're gonna issue a dividend of a million pounds, and that's gonna be split evenly amongst whoever owns shares in Apple, based on how many shares they own. So for example, if you happen to own 1% of Apple you would get 1% of that dividend that they've issued.

So 1% of a million pounds, which is 10,000 pounds obviously no one watching this actually owns 1% of Apple, unless Tim Cook, you're watching, I don't even know if you own that much because that would make you an extremely rich person because Apple is a very valuable company but that's basically how the dividend thing works. A company decides to issue a dividend as a way of returning some of its profit back to the people who have invested in the company. And therefore you make money through dividends. The second way of making money from shares is sort of like with houses in that you get the capital gains over time. So for example, let's say you bought 10 shares in Apple in 2010, at the time those shares were selling for $9 each. So yoU.S.pent $90 on buying 10 shares in Apple. As of October, 2020, Apple shares sell for $115. So your 10 shares are now worth $1,150 just by the fact that you only paid $90 for them 10 years ago. Okay, so we've talked about what a share is and how you make money from them.

And at this point you've probably got a few questions like how much money you need to get started or how risky is buying shares in a company. And I promise we're gonna get to that. But point number six is how the hell do you buy a share in the first place? And this is where it can kind of get complicated because it's not as simple as going on and just buying a share in Apple.

It doesn't quite work like that. Instead you have to go through, what's called a broker. And back in the day, a stockbroker was a physical person usually a dude who you would call on the phone and say "Hey, Bob, I want to place an order for some shares in Apple." And then Bob would types and stuff into his computer or a place like a paper order. And then you would own shares in Apple. Thankfully these days we don't really have to talk to Bob because there's loads and loads of online brokers instead. And so you make an account on an online broker and then you can buy shares in a company through that. A bit annoyingly, every different country has their own different brokers that operate in that country. Because to be an online broker in a country you have to abide by like a zillion different laws. And so in the UK the system is different to the U.S.

Which is different to Canada and Germany and so on. And the UK, for example, most banks do have their own online brokerage type things. So with most bank accounts you can also open an investment account with them and then invest online. But usually the interface is a bit clunky. It's a bit old fashioned. And so you're usually better off going with an online broker. In the UK, the two that I use are Charles Stanley Direct and Vanguard, but before we get ahead of ourselves and make an account on Vanguard or whatever, we need to understand a few more things.

And so question number seven is how the hell do I decide which shares to buy? And the easy answer to that is that you actually don't want to figure out which shares to buy. You do not want to buy individual shares. And I'm gonna tell you a little bit more about that once I've had a haircut, so see you shortly. All right? So new hair, I've got my Invisalign braces on. So I'm gonna sound a little bit different but where were we? Oh yeah, we were talking about why it's not a good idea generally speaking to invest in individual stocks. And I'm gonna do a video about this some other time, but essentially the issue with investing in individual stocks is it's kind of risky. Like, yes, if you invest in something like Apple, chances are it's gonna be around 10 years from now. But historically there've been quite a few companies that people were like, "Oh my God, this is amazing. This is the thing to invest in." And then that company went bust. So you're automatically exposing yourself to more risk if you're investing in individual stock, also in general, like it's easy to say, hey, Amazon grew 10X in the last 10 years.

Therefore it's gonna continue to do the same for the next 10 years. But that's trying to predict the future. And the past is no real indication of future performance. And so the advice that most people would give for beginners is that you should not invest in individual stocks. You should invest in index funds. And this is what Graham Stephan, one of my favorite YouTubers also says as well. He says, "The index funds are the best, safest, and easiest longterm investment strategy for most people." Which begs the question point number eight, what the hell is an index fund? So there's basically two bits to understand here there's the index bit and the fund bit, let's start with the fund bit. And a fund is basically where investors will pool their money, so multiple investors would invest in the same fund. And then that fund would have a fund manager. And the fund manager decides which companies the fund is gonna invest in. For example, let's say I were managing a fund and I called it Gringotts and let's say a hundred people from my audience decided to invest in my Gringotts fund.

I as the fund manager can say, okay, the Gringotts fund now that we have a hundred people's money let's say it's a 100 million. So everyone's invested 1 million each I've now got a 100 million. I'm gonna put 20% of that in Apple, 10% in Facebook, 10% in Amazon, 10% in Tesla, 10% of Netflix 10% in Johnson and Johnson, all of that sort of stuff. And so you, the investor don't have to worry about this because you trust me and my fund Gringotts to manage your money. And as you know, the fund performs well, because the prices of these stocks and shares increases you get the returns and I take a 1% or 2% management fee. So I make a load of money because I'm earning 1% or 2% off of this a 100 million that I'm managing and you're not worrying about having to pick stocks yourself. You trust me as a seasoned professional to do that for you. So that's what a fund is.

Now, the index bit refers to a stock market index. And so a stock market index would for example, be the FTSE 100 which is the a hundred biggest companies in the UK or the S&P 500, which is the 500 biggest companies in the U.S. or the NASDAQ or the Dow. And these are all different indices of the stock market. And if we use the S&P 500, for example, these are the components of the S&P 500. So we said, it's the 500 biggest companies in the U.S. So number one is Apple and Apple makes up 6.5% of the S&P, Microsoft makes up 5.5, Amazon makes it 4.7, Facebook has 2.2, Alphabet, which is a Google makes 1.5 and 1.5 is about 3% of the total S&P 500. And essentially we've got these 500 companies if you go all the way down… Oh, Ralph Lauren is 496, but chances are, you've not really heard of many of the other ones at the bottom of the list but chances are, you've heard of most of the companies towards the top of the list.

So the S&P 500 is an index of the U.S. stock market. And if you look at the performance as a whole of the S&P 500, you get a general idea of how the U.S. economy is going as a whole. So this is currently what the S&P 500 looks like and if we do a five year time horizon, in fact, let's go max. So you can see the S&P 500 started in 1980.

And since that time this is what the us stock market has been doing. So as you can see, there is a general trend upwards but for example in 2000, there was a bit of a crash, in 2008 famously there was a bit of a crash. And earlier this year, when Corona was first starting to be a thing there was a bit of a crash but then the market basically immediately recovered after that. Okay, so we know what a fund is, i.e. a way of pooling money. And we know what the index is, something like the S&P 500, when you combine those, you get an index fund which is a fund that automatically invests in all of the companies in the index. And so with me, for example basically all of my investments, all of my money is in the S&P 500, which effectively means that 6.5% of my investments are in Apple, 5.5 in Microsoft, 4.7 in Amazon, 2.2 in Facebook, 3% in Google, 1.5 in Berkshire Hathaway and so on. So why is this good? Well, it's good for a lot of reasons.

So firstly index funds are really, really easy to invest in. A big problem that beginners have to investing, it's like, well, how the hell do I know which company to invest in? How do I read a balance sheet? How do I do any of this stuff? If you invest in an index fund, you actually don't have to worry about any of that. Secondly, index funds give you a decent amount of diversification. There are all sorts of companies in the S&P 500. So you're not entirely reliant on the tech sector or the oil sector or the clothing sector or anything to make the bulk of your money. You are very nicely diversified across all these U.S. companies. Thirdly, index funds have very low fees. So because it's not a real person who is deciding what to invest in and doing all this research and trying to make loads of money is essentially a computer algorithm that automatically allocate your money based on the components of the index fund.

The fees for those are really low. And one of the main things about investing for the longterm is that even a slight increase in your fees is gonna massively impact your financial upside. And so for example, an index fund with a 0.1% fee is so much better for you than an actively managed fund where a fund manager is charging you even 1% because the longterm difference between 0.1% fees and a 1% fee is sort of absolutely astronomical over the long term.

And finally, if you look historically and, you know technically historical performance is not the same thing as future performance, but if you look historically very few funds have managed to actually consistently beat the market i.e. outperform the index. And in fact, someone like Warren Buffet famously says that if you gave him a hundred thousand pounds and asked him to invest it right now he would just invest in an index fund, like the S&P 500. And in fact, in 2008 Warren Buffet challenged the hedge fund industry to try and beat the market. He said that hedge funds are a bit pointless because they charge way too high fees and they don't actually get the sort of returns they claim to get. And so he set up this 10 year bet which this company called Protege Partners LLC accepted, where Buffett said that he was gonna bet that the index fund outperformed the actively managed fund.

And he ended up winning that bet and sort of gave lots of money for charity or something like that. But that just sort of goes to show that it's really hard to beat the market with an actively managed fund. Basically, no one can predict what the market is gonna do in the future. And therefore if you hit your ride on index, i.e. you're gambling on the entire market, rather than thinking, you know what I've got some amazing insight that I'll know exactly which 10 stocks to pick that are gonna beat the market.

You might as well hit your ride with the whole market rather than individual stocks. Okay, so we've sorted out the problem of which stocks to invest in by completely circumventing the problem and instead, just investing in index funds. The next big question people usually have about investing in stocks and shares is the amount of risk. And that brings us to point number nine. And the argument usually goes as follows that, "Hey, okay cool. This investing in stocks and shares stuff. It sounds kind of interesting, but my uncle Tom Cobley, invested lots of money in the stock market. And he lost a lot of money. And my parents have told me that investing in the stock market is a really risky thing and I shouldn't do it.

And I should instead invest in real estate because real estate is safe." That is usually the sort of thing, the sort of idea that people have about investing in stocks. And naturally there is the anxiety of what if I lose all my money. So let's talk about that now. So if we take a step back, the only way to lose money in anything is if you buy a thing and then you sell it for less than you actually bought it. Like, let's say you bought a house for 300,000 pounds, and then Brexit happens the next day and the house prices plummet. And now your house is only worth 250,000. At that point, if you decide to sell your house, then yes you are losing money and you've lost 50,000 pounds.

Equally, the only way to really lose money in stocks is if you buy a stock at a certain price and then you sell it for less than that price. So for example, let's say you bought shares in Apple on the 18th of February, 2020. And let's say you bought one share which time was $79 and 75 cents. And because this is your first time in investing you keep on looking at the price of the Apple stock because every time are you thinking, oh, have I made money, have I made money? And really annoyingly for you, you see that over the next kind of few days a few weeks, Apple stock is actually going down.

And then on the 18th of March, 2020, you decide screw it. I'm gonna sell my one share on Apple, because I don't want to lose all my money. And you sell it for a measly price of $61.67. And so you technically lost $18 because you bought it at $79 in February, and you've sold it for $61 in March. Then you think, damn, I've lost 20% of my investment. This stock market thing is BS. I'm never gonna invest in the stock market again, and you call it a day. And this would be a very bad thing to do.

Because for example, if we look at Apple stock price in March, it was $57.31 but if you just held onto your one Apple share in that time, what is it today? It's the 8th of October. Apple is now trading at $114.96. So if you just held on for a few months, you would actually made a lot of money. You would have bought it at $79 and within, I don't know eight months, it would now be worth $115.

That's a pretty good game. And so the real lesson here is that when you're investing in stocks and shares, and also when you're investing in real estate, these are longterm investments. Ideally, you shouldn't be putting any money into stocks and shares that you need to access within the next five years. And actually a lot of people would extend that to 10 years. And it's exactly like that with house prices, it's like if you buy a house as an investment, and then the houses house prices go down it would be completely stupid of you to sell the house unless you are absolutely desperate for the money, because something major has happened.

And instead, if you just held onto the house then you would have made more money in the long run because in the longterm house prices always go up and in the longterm basically the stock market always goes up and that's a bit of, it can be a controversial statement. It is true, but I'm gonna make a video at some other point explaining why it's true but for now take my word for it that over the long term, the stock market always goes up. But having said that again, this is a longterm thing. And so, for example, if we look at the S&P 500 and look at how it was in 2008 at the financial crash right in 2007, it's $1,500 per bit of the S&P 500. And then the crash happens and then by what is it? February, 2009, it's down to 735. So basically 50% of the value has been wiped off of the S&P 500. Now, if you bought it in 2007 and you saw it, you know, get a crushing and crashing and crashing, and then you sold when it was $800.

Now, you've lost a lot of money because you bought high and you sold low. But if you just held on, it took let's see, to June 2007 it's at 1500s, it takes about up until 2013. So it takes about five years for it to get back to its normal level. And even if you'd invested, like just before the crash and then your investment plummeted by 50%, if you would just held on you'd have bought in at the S&P 500 at 1500. And right now it would be 3,445. So since 2008, 2007, when he first invested over the last 13 years the S&P 500 has more than doubled. So you would have more than doubled your money, provided you did not panic sell when the market crashed. Now, hypothetically could the market crashed down to zero and therefore you will actually lose all your money. Yes, it could, but if the us stock market crashed literally to zero i.e. all top 500 companies, including Apple, Google, Microsoft, Facebook, like literally every company in the top, in the S&P 500, all of those got destroyed overnight.

And the stock market crashed to zero. The world would be in some sort of mega apocalypse and you'd have a lot more serious problems to worry about rather than the value of your portfolio, of stock market indices on Vanguard. In that scenario, in that doomsday scenario money would stop meaning anything and you'd be using money to wipe your bum because money has no value because the stock market is completely crashed. It's basically unfathomable that the global economy could be so completely wrecked, such that every single company goes down to zero. In my opinion, and again, you know, I'm not a financial advisor. This is technically not financial advice whatever that means, but in my opinion it's unrealistic to think that if I put my money in stocks and shares, I could lose all of it.

There's basically no way you're ever gonna lose all of it provided you're diversified. If you invested in, I don't know, Myspace in 2000 and whatever it was, and then Myspace crushes and then you've lost all your money because, you know, they have no money, but if you invest in the top 500 companies in the U.S. or the top 500 companies in the world, or the top 100 companies in the UK, it is so vanishingly unlikely that you will ever lose your money. That I don't think that is a risk that we should even be thinking about. So realistic, worst case scenario, yes, investing in the stock market is risky in the short term, but if you're investing in the longterm, the market will always go up and you will always end up making more money in the long run provided you don't have to take money out at inopportune times. Okay, so at this point, we've established that investing in stocks is very good and investing in index funds is a relatively safe way of doing this.

The next question is usually when should you get started? Like how old do you have to be? Is it ever too soon to start? Is it ever too late to start? And here the answer is pretty simple. And basically all investment advice agrees with me on this front. There's a very good website called The Motley Fool and they have a nice article explaining this. Basically, you should start investing as soon as possible. It doesn't matter how old you are. It doesn't matter how young you are. The earlier you start investing the better. There are three caveats though for like sensible financial advice. Firstly, you wanna make sure that all of your high interest i.e. credit card debt is paid off, because when it comes to compounding even though gains compound, losses compound as well. And so if you've got like a 6% credit card debt that's eating into your bottom line every single month you want to pay that off as soon as possible.

Point number two is that you want to make some sort of emergency fund. And people usually say that your emergency fund should have in cash basically three to six months of living expenses so that if you lose your job or if you're hit with some kind of incredible medical emergency, and you're not in the UK where medical care is free, or you're in the U.S. or something like that, then you've got money to do that. And you don't have to take money out of your investments.

And caveat number three is that you don't want to put any money into stocks that you think you might need to use in the next three to five years. So let's say you're 24 and you've just landed your first job. And you're thinking of getting a mortgage and buying a house and you need money for the deposit. Do not put that money into the S&P 500 or into any kind of stocks and shares because no one can time the market. And no one knows whether we might you know, there might be a market crash tomorrow.

All we know is that in the longterm, the stock market goes up, but if you need to buy a house next year there is absolutely no guarantee that that money will still be worth exactly the same or worth more this time next year. So it provided those two conditions are met. Like firstly, you have no high interest credit card debt. And secondly, you've already got your emergency fund. And thirdly, you're not planning to gonna have a major expense in the next few years. At that point, absolutely everyone should be investing something into the stock market. In my opinion, whether you're 12 or 20 or 21 or 22 or 50, it doesn't matter.

And as they say on the market floor there is almost no way your future self will regret making the decision to invest. And as you know at this point, this is because of compounding. The more time you leave your money in the stock market, the more it compounds. And there is a huge difference. There's like lots of interesting numbers about this on the internet that people have calculated that if you start investing at the age of 20, versus if you start investing at the age of 25 or 30, it makes such a huge difference to your bottom line. That basically, as soon as you watch this video and hear about investing, you should start investing provided those three conditions that we talked about are met. All right, so we're nearly there. Now, we're point 11 out of 12 where we said, okay, you sold me on this idea of investing in index funds. All of these three conditions are met. I don't have a high interest credit card debt. I've got my emergency fund, or I'm a student. And therefore my parents are my emergency fund and I'm not planning to buy a house or a big thing in the next three years.

The next question is usually how much money do I need to get started with investing? And I know a lot of students watch my channel and I had a lot of comments on Instagram saying, "I'm 14 years old and I don't have any money. How do I get started with investing?" And the answer here is again, quite easy, basically start with whatever you can. For some of these websites and some of these apps that you can use to invest in stock market indices. You can start with as little as $5 or 10 pounds, depending on the website. You might need to start with a 100 pounds or a 1000 pounds. You can research this and it kind of depends on which country you're in, but basically you want to start investing as soon as possible. And it doesn't matter if it's a tiny amount of money to begin with. Firstly, it's useful to invest small amounts of money because compounding is always good. But secondly and more importantly, the sooner you start investing the sooner it becomes a habit. And so for me, for example, I started investing in 2015.

I knew absolutely nothing about it before then, but I really wish I'd started investing in like 2009 when I first had my first part time job because a, that would have encouraged good financial habits within me. I would have kept aside maybe 10% or 20% from the top line to put into my investments. Secondly, it would have meant that investing became a habit. And so I would have known about the fact that stock market indices exist. I would have done the research. I would have watched videos like this, although these weren't really a thing in 2009. And what I'm really annoyed about with myself is I started making actual money in like 2012 when my first business started to do very well. And between 2012 and 2015, I did not invest any money just because I didn't know that you could. And I didn't know how and I always kinda thought that, "Huh, I'm making money now." It's just sort of sitting in my bank account.

And I know that inflation is a thing. So I know my money's losing value but I just didn't think about investing and didn't realize how easy it is and that it's a thing. And so I really wish I'd started investing my real money in 2012, but the only way I would've done that is if I had started investing from 2009, when I first started making, I don't know, six pounds an hour during my part time job. So again, and I can't state this emphatically enough. Like it doesn't matter if all you have is a small amount to invest even if it's one pound, even if it's 10 P. The process of making the account and researching online stockbrokers in your country and figuring out how to actually do this stuff is like the most valuable thing that you could be doing with your time immediately after watching this video.

And finally, point number 12 is okay, I'm sold, I've got a 100 pounds here and I want to put it inside a stock market index fund. How do I actually do that? And the answer here is you want to find an online broker. So this will vary massively depending on which country you're in, because these online brokers as I said, have like zillions of laws they have to comply with and financial regulations and all this stuff. In the U.S. most people that I know use the Vanguard as well. And my favorite blogger Mr. Money Mustache recommends that as well. Although in the U.S. there are also other services like Betterment, which I'd bet a few friends who use that as well. Again, depending on which country you're in, like literally all you have to do is Google the phrase, best online broker, Germany, or best online broker, Pakistan, or best online broker, India, whichever country you're in.

And you'll find something, read some reviews. Basically the thing you're looking for is you want to be able to invest in index funds and you want the fees to be as low as possible. I think Charles Stanley Direct the fee is 0.25% which was the lowest at the time when I made my account and I think is still pretty competitive. So you want the fee to be like a really, really, really small fraction of a percentage. Then once you've made your account and verified your identity and gone through all the hoops and stuff which sometimes takes a few days, and they send you a letter to the post to verify your address, like depending on what the regulations are. Once you've done that then you can start just putting money in here and there. And all the friends that I've spoken to about this stuff over the last, like four years since I first started knowing about investing in things, they've all started making accounts and sort of making these investment counts for themselves.

For the first few weeks they all sort of compulsively check their phones to see what the stock market is doing. But then very quickly you realize that actually I'm investing for the long term here. I actually don't give a toss what the stock market is doing in the short term. I check my portfolio once every six months just cause sometimes I'm curious. I don't even bother looking at it. This is very much a set it and forget it strategy, you're investing for the longterm. Your money will magically grow over time provided you don't touch it and think, "Oh crap, the stock market's going down a bit. I'm gonna take my money, because I can't handle these losses." There's loads more to say about investing in finance, but hopefully this was a reasonably concise, not very concise.

This is gonna be a long video, but well, hopefully this was a reasonable introduction to how to get started with investing in index funds. If you have more questions about exactly what to do or anything else about money. Do leave a comment in the video description area thing. I'm still trying to think of a name for this series. I was thinking I posted on Instagram. There were a few options: Money talks, was quite a popular one, but that's already a film. One that I really liked was Penny Sitting. I think I might call this series Penny Sitting, that was kind of cool. A lot of people said like, financeshially, financially. 'cause my name's Alica, financially, a few different options. I mean the way you think, if you have any ideas for what this entire series about money and stuff should be called…

And final piece of advice, if you're in the UK, if you're in the UK and you're just getting start with investing, basically go on Hargreaves Lansdown and make a Lifetime ISA. A Lifetime ISA is a very good deal. You can read more about it at within the Lifetime ISA as of 2020, you can put up to 4,000 pounds a year into it. And then you can invest that in the S&P 500, which is what I would do. If you have more than 4,000 pounds a year to invest you can then put another 16,000 into a stocks and shares ISA which I'd recommend doing on a And if you have more than 20,000 pounds to invest in a year and you're doing really well then just open a general investment account with Vanguard. This is what I do, I think it works great. Loads more links in the video description to other resources and bloggers and books and other videos that I would recommend Graham Stephan, has an amazing YouTube channel, Andrei Jikh does a good job with YouTube channels as well, and Mr. Money Mustache amazing, amazing blog J L Collins' amazing blog with a Fantastic Stock series that you should definitely read.

There's so much to explore in this area, and it's a really fascinating topic but thank you so much for watching this video. Hit the video here if you want to learn about how I make the money that I used to invest. It's my video about how to make money online. Thank you so much for watching. Good luck with investing. Make sure you invest in a stock market index fund. Hopefully I'll see you in the next video. Bye bye..

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401K to Gold IRA Rollover

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The Difference Between Wealth Management and Asset Management

OK so now you've been at JP Morgan for about 25 years. Yes. So and now you run one of the most important parts of JP Morgan which as I say is the asset and wealth management business for people that aren't that familiar with wealth management. What actually is wealth management and how is that different than asset management. Great question. The two are often used interchangeably. But but but there they have distinctions. Asset management business is where we manage money on behalf of individuals institutions sovereign wealth funds pension funds. We manage them in mutual funds. We manage them an ETF. We manage them in single stock single bonds hedge funds private equity and the like. And that is the heart of the fiduciary business that we run here at JP Morgan. Wealth management is that plus understanding someone's entire balance sheet. So for the individuals where we manage money we also help them with their mortgage.

We help them with a loan that they might need. We help them with their basic credit card. And so wealth management is trying to help someone with their entire life both their assets and their liabilities their planning their gifting the legacy that they want to leave for their families. The 529 plans they need to prepare to get their kids to go through college. And it's a great it's a great insight into people's you know entire journey. Now many organizations like J.P. Morgan to have wealth management businesses some are bigger than some are smaller. But basically you're managing money for and doing other things for wealthy people more or less.

Is that fairly right for wealthy people. Although you know many of the successful wealth management firms today have figured out how to take all of those great learnings for what they do with very wealthy people and also package them for people who are have their first paycheck. And they want to be able to save a little bit of money or want to have access to things that maybe they wouldn't normally have. And so we've been able to take things like what we do for a super wealthy family package it into a bite size where you walk into a chase branch and you're able to get some of that some of the same advice.

And so it's it's I think it's opening up the world to be able to help people. And you know the most important thing is to be able to save early. And if someone can be there to help you through that you know that's that's one of the most important things. If you look at an average investment in the world if you just look over the past 20 years take a balanced portfolio. It's about six point four percent average annual return for people that generally manage money. The problem is most individuals actual return is less than 3 percent. So it's less than half of that. Why. Because they make emotional decisions when markets are one way or another and they get caught up in the hype of things. And so it's super important to have that advice as early on as we can give it. And I think you know that that's the rewarding part about about this business is being able to try to help people through all of those different journeys that they have.

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Retire Wealthy Home

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31 ways to improve Retirement Planning Part 2

Today's video is the continuation of our last week's discussion about ways to improve your retirement planning. Keep in mind that all those  steps you can use at any point in your life   if you want to put in place some kind of financial plan. If for whatever reason you missed my last week's video part 1   of 31 ways to improve your  retirement planning, please watch it right now,  maybe even before you commence this video and  then please return right here to continue Part 2. This will be so much more logical for you.   My name is Katherine Isbrandt from About Retirement, I am Certified Financial Planner, and you are watching About Retirement TV just about the only place   that will provide you with honest and open ideas  how to be well prepared for your retirement or  if you have already retired, how to improve  your retirement income, assets, and lifestyle.

So last week we discussed, 15 ways to improve  our retirement planning and today I want to share another 16 ideas that I have come up with. Obviously, there would be tons and tons more, depending how detailed we want to become but I think this is a very good start for the new year   which I hope you are planning to make it as one of the best years ever. 16. Be very sceptical of any investing advertised as tax schemes This is how many investors lost a lot of money over the years   Australians are very tax-driven and this  is how politicians win the elections, they know what and how to promise to their voters. This is how many heavily advertised investment schemes were introduced over the years, where the only party making any profits were product providers with most investors never even checking  if such schemes were even approved by ASIC   and ATO for specific tax ruling Fortunately, now there are less of those schemes happening but   that's due to strict regulations that we currently  have in Australia and a very watchful eye of ASIC.   But often even legitimate schemes might  not necessarily be of any value for you.   If the main goal of the scheme is to reduce  your tax with actually not providing you   when any return, either in a form of income, or  capital growth, bottom line, is you are losing money   So always do your due diligence before you  invest any of your savings into any of those tax driven schemes.

17. Understand Australian Superannuation tax and legal system This is a very big task and lots of information to learn not to mention how to find the details that are exactly applicable to your situation but if you can achieve this, you will be on your way to utilise every single benefit legally and financially available to you. This is exactly the reason why wealthy families rely on a good professional advice and superb service   18. Include the cost of assisting your  aging parents and helping your adult children in your budget and in your planning, this is what we call sandwich family.

Have you heard of the naming sandwich family yet? That mostly applies to people aged 50 plus, but could be of any age really. A sandwich family is the one that  on one hand needs to care for the elderly parents   while on the other are still looking after  their teenage children or children that are;  adults but refuse to leave home to start their  own life and rely on your financial assistance. My recommendation here is to find the best solution  of care for your parents, there are lots of options   and some may not cost you all that much, but can  be very beneficial for you and for your parents.   As far as your kids are concerned, of course, if you  are happy for them to stay with you, do that , but treat them like adults. If they work, and they should, unless they're studying but even then a part-time work experience is really recommended  they should contribute their share to family expenses, to your bills, food, you can decide on  their contribution value.   You are a parent, you will always be there for them, I am a mother, I would give anything to my son if there was a problem, but as I said they need to learn their independent  life and you need to look after your needs as well.   19.

Don't withdraw from your retirement  plan unless you really have to. Every single dollar withdrawn from your retirement plan as an extra above what you really need, will reduce longevity of your savings It is not only the actual value withdrawn, but also loss of all future income and capital growth that those funds could have earned over the years. So just to put it into context, if today, at the age of 60 for example, you withdraw $20,000 to buy a better car, because the one that you have although is it  is in a good condition, well it bored you a little bit  and you need a change you have just depleted  your future interest earned on that withdrawal by  $60,775 based on 7% compound interest return over the period of 20 years   So bottom line is that  should you kept that $20,000 in your pension fund, at the age of 80 you would have had additional  $80,775 in your retirement fund. This amount of money can go a very long way 20. Plan for your long-term care   We have not been talking in detail about any  expenses that you should consider in your old age,   when you might require additional medical or  even personal assistance.

Whether it is provided at the Aged Care facility or at your home  you cannot disregard those costs. If you need any assistance in this area, either for your  parent, or for your partner check out my website article Aged Care Planning with Ease, but I will be  devoting more time and more videos to this subject. and if the matter is urgent please just contact me  immediately. 21. Rebalancing portfolio   This one strategy can assist your portfolio performance more than you could ever expect Rebalancing portfolio at the right time to its original asset allocation setup in your investment plan can be very financially rewarding. So you should implement doing this annually or when the opportune time of market condition is presenting itself.

22. Check the performance of your investments or your super at least annually I have been talking about  this extensively in many of my videos.  Don't make rush decisions based on one year performance of your investment or your super or your pension fund. Even if that one year was disappointing. But annual checks are essential and if underperformance continues over a couple of years   then reassess if this is the right fund for you. Having said that, make sure that your expectations are met with the type of the portfolio, taking into account the investment risk.   And what I mean by that is if  your portfolio has a conservative asset allocation   don't expect returns of a balance or growth fund  or returns of the overall share portfolio   This is unfair comparison and you will end up being  always very disappointed, So make sure you compare apples with apples and not with oranges for more information watch my video 11 steps to check your superannuation statement. 23. Check fees and charges included in your investment or your super.  Government has been on the hand for super and  pension funds that have been overcharging members for their accounts for couple of years now for now, this new legislation applies to MySuper products so what we call default funds but that will be extended to more superannuation products in coming years.

Please watch my video "Fees you pay in super" to have full clarity as to what type of fees most superannuation funds charge. 24. Review charges and cover for insurance in or outside of superannuation.  I have not really been discussing  insurance in any great length on this channel   as this has never been requested but also as we  progress in life the need for insurance reduces   But if you still have insurance you really need to understand the cover provided as opposed to the cover required cost payable as opposed to your affordability. If you require insurance should it be within super or outside? There are many things that need to be taken into consideration before you apply or cancel your insurance, so if insurance is what you need feel free to reach out so we can review what you have and what you need 25.

Have a realistic expectation for your retirement. Well what can I say unfortunately we love to believe in miracles   Well for example I cannot save today but I will make it out next year or the year after, well that never happens. or my money will last me  forever because my super fund is the best  and has always been provided the best returns. Well, good luck with this one. Nobody can predict  the market so please start being realistic with your calculations, with your budget that you set up  with the amount of money that you spend and  how much you actually will need in the future   Once the money is gone it is gone and your  retirement might take a completely different turn   26. Always include inflation in  your retirement calculator   When using any calculators, please ensure that CPI (Consumer Price Index) is included.

This will ensure that whatever financial outcome the calculator gives you will be subject to inflation meaning a real value of money in the future. 27. Age Pension is a bonus, not certainty, don't rely on it, but do what you can to get the most out of it. This is my work’s bread and butter, on daily basis, I try to find ways how I can improve my clients Age Pension  Why? Well not because I want our government to pay for your lifestyle,   but because I know very well that this is a guaranteed portion of your income once you are eligible. The more you receive from  the government the less of your own money you have to spend, hence you are protected with your savings for longer. But Age Pension should be a bonus, don't sacrifice all your savings, all your assets, just to get it It is still better to own and control your  $2mil portfolio with no Age Pension then to give the 2mil to your kids just to get Age Pension of $25K. That is just a ridiculous exchange in my book.  28.

Utilise every single benefit you can  that is available to you from the government   There are many ways how you can benefit from our  government's policies.  strategies that can reduce your tax, boost your superannuation savings, and support you financially for longer.  Watch my video "Improve your super and reduce tax" as well as "End of Financial Year Zero Risk 50% Return" Easy strategies and yet, so many don't do it.   29. Understand the importance of Estate Planning this is another area that is a huge topic to discuss, I have only scratched the surface with couple of videos  but they're still worth watching.

"Wills, are they really necessary?" and "Super Death Nomination gone terribly wrong".  The second video will tell you exactly why Estate  Planning is so very important but obviously, it is  not limited to creating a Will or providing Death Benefit nomination to your superannuation trustee   The more complicated your life has been, the more  you should pay attention to estate planning and employ specialists to assist you, if you wish your  assets to be distributed to right beneficiaries in the right way.

30. Do not forget about Aged Care costs in your retirement planning   I have mentioned Age Care before. We tend to live longer and longer, medical progress keeps us alive for much longer than we might anticipate. But what if you run out of money? What if you need to use services of Age Care facility but you don't have any savings to pay  for it. This is a big drama for many,   this is why I stress greatly to save aggressively before you retire and spend modestly once you no longer have a job related income There are many ways to  assist you in reducing ongoing Aged Care fees,   so if this is your problem, please contact me, but the fact remains that you do need to include Aged Care expenses in your planning as well.

31. Always, always work with professionals – accountant, lawyer, financial planner, mortgage broker. Google is just not enough This has always been my motto, I save where I can on things that don't matter or are all of less importance. But I never try to cut down on expenses on any professional service that I need. Good advice, service and support are blessing. Not only you will have things done correctly from  day one, so no fixing, updating, explaining.   It will be done for your best benefit. There is no trial and error situation. A good financial planner will  help you to improve your income, capital growth, avoid costly mistakes improve asset security, peace of mind, very often can help you to have access to government benefits that otherwise, you may not be able to access.

So always use the best professional that really has your best interest in heart. So voila! This is the list of 31 ways to improve your retirement planning   As I said before this list could be extended  to many many more points but some of them I have already discussed in my previous videos, hence the links and others we will discuss in more details in the future.  If there is a topic that you believe is really important and somehow i missed it.

Please let me know in the comments below the video, I would really love to hear your opinion and ideas on that topic as well So please don't be shy and let's have an open conversation.  Many people watching this channel are very  likely in a similar situation to yours   So by answering your question this might help  another person as well If you enjoy this video, please like it, share it, and subscribe to my channel. So you know when my next video is arriving If you want to find more information just jump on my website where you can find all my video,  lots of articles all related to the issue of retirement, investing, Age Pension, Aged Care and lots more And now as usual, please continue watching those informative videos   Fist recommendation is previously mentioned  "Improve your super and reduce tax" to know how to benefit from those government provided strategies for super.

The second recommendation are videos about estate planning: "Wills, are they really necessary?" and the answer of course is: yes but listen to the reasons why. I will be speaking with you in the next video, see you soon. .

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Is There A Silver IRA?

is there a silver ira a silver ira is a self-directed ira that gives investors more flexibility you get to manage the individual retirement account and put any investment into it including crypto you can put precious metals real estate and other assets in a self-directed ira is a silver ira a good investment silver iras are an excellent diversifier for investors with fixed income and stock heavy portfolios because silver isn't correlated to stock market performance holding some of your wealth in silver helps spread risk across a diversity of asset classes and lowers your susceptibility to a market-wide downturn can silver be held in an ira you can't hold physical precious metal in a regular individual retirement account ira however there are specially designed precious metal iras that let you invest for retirement using gold palladium silver and other valuable metals how does a silver ira work a silver ira is a special type of retirement account that allows you to invest in eligible silver coins and bars the rules are the same as those for any other ira except you can add silver and other precious metals to your account whereas regular iras focus on stocks and other paper assets what does it mean for ira approved silver ira eligible silver coins bars and rounds must be produced by a government mint or accredited refiner slash assayer manufacturer and meet a minimum fineness of 0.999 ira approved silver coins include american eagle bullion coins 1 ounce the silver american eagle coin is an american classic can i roll my 401k into silver a 401k only gives you investment options that your employer or plan chooses once the funds from your 401k have been deposited in an ira they can be used to buy gold or silver rc bullion makes rolling over an old retirement savings plan from a former employer easy for you how do i convert my ira to silver rolling over funds to move your ira money into physical gold and silver you need to roll the funds over from your traditional ira into your self-directed ira the irs lets you roll over ira funds once in every 12-month period how do i buy silver with an ira the way the process works if you transfer funds from your current ira custodian investment house and roll over the funds to the new self-directed ira with a form from the new institution along with the application once the funds arrive you contact the gold dealer that you will buy the silver coins or bars from is there a gold ira a gold ira is a type of self-directed individual retirement account ira that lets you own gold bullion you cannot own physical gold in a regular ira although you can invest in a variety of assets with exposure to gold like the stocks of gold mining companies or gold exchange traded funds etfs for a comparison of the best gold ira companies visit https colon slash slash goldira company slash click link in the description below

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Why This Investment System Can Help Retirees Worry Less About Their Retirement Plan

I want to share an investment system for retirees to hopefully assist you as you're thinking about and planning for your retirement we're also going to look at how to prepare your retirement for the multiple potential potential economic Seasons that we may be headed into so we want to look at the multiple seasons and then the Easy System that's going to help lower taxes and then lower risk as well now if I haven't met you yet I'm Dave zoller and we help people plan for and Implement these retirement strategies really for a select number of people at streamline Financial that's our retirement planning firm but because we can't help everyone we want to share this with you as well so if you like retirement specific videos about one per week be sure to subscribe so in order to create a proper investment plan in system we want to make sure that we build out the retirement income plan first because without the income plan it's much harder to design the right investment strategy it's kind of like without the income plan it's like you're guessing at well 60 40 portfolio sounds good or you know May maybe this amount in the conservative bucket sounds reasonable you already know and and you feel that as you get close to retirement that goal of just more money isn't the the end-all goal that we should really be aiming for for retirement it's more about sustainability and certainty and then really the certainty of income and possibly less risk than before the last 30 years uh the things that you did to be successful with the financial side are going to look different than the next 20 or 30 years now if you need help defining the the income plan a little bit then look at the DIY retirement course below this video now once you do Define your goals for retirement and then the income needed to achieve those goals then creating the investment system becomes a lot easier and within the investment plan we really know that we can only control three things in all three things we actually want to minimize through this investment system the first thing we can minimize or reduce is how much tax you pay when investing we had a a client who was not a client of streamline Financial but of a tax firm coming to the the CPA firm in March to pick up his tax return and he was completely surprised that he had sixty thousand dollars of extra income on his tax return that he had to pay tax on right away before April 15th and it was due to the capital gains being recognized and other distributions within his investment account and he said but I didn't sell anything and the account didn't even go up that much last year and I got to pay tax on it but he was already in the highest tax bracket paying about close to 37 percent on short-term capital gains and dividends and interest so that was an unpleasant surprise and we see it happen more often than it should but this can really be avoided and here's two ways we can control tax so that we don't have to have that happen and really just control tax and pay less of it is the goal and I'll keep this at a high level but it'll get the the point across number one is the kinds of Investments that you own some are maybe funds or ETFs or individual uh equities or things like that the funds and ETFs they could pass on capital gains and and distributions to you each year without you even doing anything without you selling or or buying but it happens within the fund a lot of times now we would use funds and ETFs that are considered tax efficient so that our clients they can decide when to recognize gains rather than letting the fund company decide now the second way is by using a strategy that's called tlh each year there's many many fluctuations or big fluctuations that happen in an investment account and the strategy that we call tlh that allows our clients that's tax loss harvesting it allows them to sell an investment that may be down for part of the year and then move it into a very similar investment right away so that the investment strategy stays the same and they can actually take a write-off on that loss on their taxes that year now there's some rules around this again we're going high level but it offsets uh you know for that one client who are not a client but who had the big sixty thousand dollars of income he could have been offsetting those capital gains by doing tlh or tax loss harvesting that strategy has really saved hundreds and thousands of of dollars for clients over a period of years so on to the next thing that we can control in our investment plan and that's cost this one's easier but many advisors they don't do it because it ends up paying them less now since we're certified financial planner professionals we do follow the fiduciary standard and we're obligated to do what's best for our clients so tell me this if you had two Investments and they had the exact same strategy the same Returns the same risk and the same tax efficiency would you rather want the one that costs 0.05 percent per year or the one that costs 12 times more at point six percent well I know that answer is obvious and we'd go with a lower cost funds if it was all the same low-cost funds and ETFs that's how we can really help reduce the cost or that's how you can help reduce the cost in your investment plan because every basis point or part of a percentage that's saved in cost it's added to your return each year and this adds up to a lot over time now the last thing that we want to minimize and control is risk and we already talked about the flaws of investing solely based on on risk tolerance and when it comes to risk a lot of people think that term risk tolerance you know how much risk can we on a scale of one to ten where are we on the the risk factor but there's another way to look at risk in your investment strategy and like King Solomon we believe that there's a season for everything or like the if it was the bird song There's a season for everything and we also believe that there's four different seasons in investing and depending on what season we're in some Investments perform better than others and the Four Seasons are pull it up right now it's higher than expected inflation which we might be feeling but there's also a season that can be lower than expected or deflation and then there's higher than expected economic growth or lower than expected economic growth and the goal is reduce the risk in investing by making sure that we're prepared for each and every one of those potential Seasons because there are individual asset classes that tend to do well during each one of those seasons and we don't know nobody knows what's really going to happen you know people would would speculate and say oh it's going to be this or this or whatever might happen but we don't know for sure that's why we want to make sure we just have the asset classes in the right spots so that the income plan doesn't get impacted so the investment system combined with the income system clients don't have to worry about the movements in the market because they know they've got enough to weather any potential season I hope this has been helpful for you so far as you're thinking about your retirement if it was please subscribe or like this video so that hopefully other people can be helped as well and then I'll see you in the next one take care thank you

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