Posts

BIGG Success Logo boxed

How to Weather Financial Climate Change

weather_a_stormBigg success is life on your own terms. There are five elements of bigg success – money, time, growth, work and play. Today we’ll focus on money.

___

___

We hear a lot about climate change and its implications. It occurred to us that financial markets change much like the weather.

So here are 4 tips for weathering financial climate change:

Asset prices heat up and cool down

Stock prices skyrocket. Then they fall.

Real estate prices rise. Then the bubble bursts.

Nothing goes up linearly. Yet most of our projections do. Plan for all weather – diversify.

You won’t create much wealth without taking some risk. But you can manage that risk by investing across asset classes (e.g. stocks, bonds) and within asset classes (large cap, mid-cap and small cap stocks).

Price movements can be extreme

Experts are predicting more volatility in the years ahead. We don’t mind it when prices are rising quickly. But we have to be prepared for the other side as well.

Very, very few people successfully time the market period after period. So it’s important to move your money to less risky assets as you near the date when you’ll need it. If you’ll need it in less than ten years, you may want to look at shifting money to something less risky.

As we always say, talk with your financial planner about your specific situation to determine your best move.

___

Get the tips and tools you need to be a BIGG success.
Subscribe to the Bigg Success Weekly – it’s FREE!

___

Watch your emissions

By emissions, we mean money out the door. In our businesses and in our personal lives, it’s much easier to spend less than to make more.

When you’re getting ready to spend it, think about how many hours you have to work to earn the money in the first place. If you really want an accurate picture, do this on an after-tax basis.

Make the green house effect work for you

When you’re buying a house, ask some important questions. Do you really need that extra room? How often will you use it?

You may decide to buy a smaller house and invest the “green” to further diversify your portfolio and increase your returns.

Also, invest your “green” in energy efficiency. Improving the efficiency of your home pays you back month after month by lowering your utility bills. You can’t say that about most outlays.

Take these four tips and go green to build a sustainable future for yourself. That’s bigg success!

How are you weathering financial climate change?
Share that with us by leaving a comment, e-mailing us at bigginfo@biggsuccess.com or leaving a voice mail at 877.988.BIGG(2444).

Thank you much for visiting us today. Next time, we’ll discuss a positively fantastic way to improve your bottom line. Please join us. Until then, here’s to your bigg success!

 

Direct link to The Bigg Success Show audio file:
http://media.libsyn.com/media/biggsuccess/00496-100709.mp3

Related posts

2114]

1882] 

(Image in today's post from tome123)

BIGG Success Logo boxed

Diversify, Diversify, Diversify

By Bigg Success Staff
09-26-08

Bigg Success with Money

diversify

One of the most important tenets of investing is to diversify, diversify, diversify. However, it’s a principle that’s been around for a long time – remember “don’t put all your eggs in one basket?”

By diversifying, we earn the greatest return over time with the least volatility. There are three ways to diversify your portfolio:

#1 – Diversify across asset classes
Your portfolio should include a variety of stocks, bonds, cash, real estate and more. A rule of thumb is to subtract your age from 120 to determine how much of your money should be invested in stocks (or more likely, stock mutual funds). Most of the rest should go into bonds (or bond mutual funds).

#2 – Diversify within asset classes

Within each of these asset classes, you also want to diversify. For example, you don’t want to own a single stock, or even just stocks in a single industry. You don’t even want to just own domestic stocks. Own multiple stocks in multiple industries in multiple countries.

#3 – Diversify over time
There’s one thing that’s certain about the market – it will go up and down. By investing some amount of money at regular intervals (e.g. with every paycheck), you diversify over time. This principle is known as dollar-cost averaging.

When the market is up, you’ll buy less of the same than when it’s down. So you’re buying less when prices are high and more when prices are low. Doesn’t that make sense? Isn’t that what you would like to do with anything else you purchase frequently?

Two simple solutions

One relatively easy way to diversify is through mutual funds. Pick no-load funds with low annual expenses and good performance. Diversify between stock funds and bond funds. Pick domestic funds and international funds. Then re-balance every year to keep your assets allocated properly.

An even easier way to do this is to pick a no-load mutual fund with a targeted retirement date. Then let them do all the rest. The downside is you may get a little better performance by selecting funds from more than one fund family. The upside is you have pros constantly watching over your portfolio. All you have to do is watch over the pros!

Diversification smooths out performance. When stocks go down, bonds often go up and vice versa. So you get the best possible returns without the volatility of a single class of financial assets.