Financial Mistakes That Even Experts Make

Financial Mistakes That Even Experts Make

For those just starting out on their own, money can be intimidating. In those first few years, mistakes are just as inevitable as the financial losses that follow a misstep – and as painful as those errors are, they serve as signposts on the road to financial stability.

Even experts who have built their careers around finance have made a few bad calls in their earlier years – and learned from their mistakes. Here are a few of the errors that they made, along with a few tips for avoiding similar mishaps!  

 

Trusting Personal Relationships Over Logic

Financially successful individuals don’t cross friendship and business. While agreeing to invest in a close friend’s or even a family member’s business proposal can seem like a fun idea or even just a polite response to being asked, you should decline. More often than not, interpersonal feelings bias you against an objective view of the asker’s business plan, and leaves you poorer in time, money, and friends.

Expert Case Study: When Jacki Zehner, current CEO of Women Moving Millions invested time and energy in getting a friend’s recording studio off the ground, she lost her investment, her friendship, and most significantly – her time.

 

Failing to Review the Fine Print

Contracts can be slippery, and end up costing you far more money in technicalities and rollover costs than you ever expected to pay when you signed. It can be easy to be lulled into complacency after months of regular payments – and costly! Read the fine print, and don’t forget to shop around for better bargains if you feel that you’re paying too much for the service you receive.

Relatedly, make sure to go over your credit card bills and account statements at least once a month to check for fraud. While reconciling bills and accounts can be a pain during busy months, a quick check will catch any unauthorized transactions and potentially save you thousands of dollars.

Expert Case Study:  Justin Modray, founder of Candid Financial Advice, got caught up in a stressful move to a new house and didn’t notice that he’d been swindled out of three thousand pounds until he checked his statement a few months later. He reached out to his bank and managed to get the stolen funds back – but he made sure to regularly reconcile his accounts after the scare!

 

Overspending

Purchases add up. Even a couple of nice dinners and a great deal at that store you love can launch you significantly over budget. Crunch the numbers! Work out how much you need to set aside for bills, savings, and living costs every month, and then decide how much you can afford to spend on fun.

Expert Case Study: Financial author Kate Northrup blew through far more money than she should have when she was in her twenties. She explains her rationale: “I had this idea that I needed to look a certain way and that I needed to look like I had it more together than I did. That, to me, meant spending more money than I actually had because I wanted to look more successful than I actually was.”

As Northrup suggests, real success comes more slowly, and requires patience and financial foresight. Looking well-off only goes so far when you don’t have money left at the end of the month.

 

Greedy Investments

If it looks too good to be true, it probably is. Stay away from investments that promise quick returns in short periods of time. Not only do such ventures normally crash, but sometimes they can have shady roots! You stand to lose all that you contribute – if not more – by buying into a greedy scheme. Instead, look into more stable, long-term investments.

Expert Case Study: Alex Davies, co-owner of WealthClub, made the mistake of investing almost £20,000 in a minerals company that went under within a year! The nearly double return he received initially slipped through his hands when the questionable firm fell apart. Don’t invest in deals that promise quick returns – they rarely last!

 

While it’s tempting to follow an impulse or make a decision based on emotion, biased or split-second choices will inevitably lead you into financial trouble. It’s vital to keep a level head and learn from your mistakes, regardless of whether you’re a beginner or financial expert!

Finance Philanthropists Who’ve Shared Their Fortune

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There are finance experts who aren’t afraid to spread the wealth.

Wealth management, investments, and studying the dynamics of assets are important parts of economics. The science of money management can be raised to build a business, whether one is educated in public finance, corporate finance, or personal finance. More than that, it’s individuals with this important skill set who have to ability to use their savviness for the purpose of humanitarianism, charity, and altruism. It’s fortunate that many who’ve established themselves as successful in the financial sector turn to philanthropy as a way to demonstrate curiosity and to give back.

Finance philanthropists use donor-advised funds or offer direct gifts to organizations in need. Others sign the Giving Pledge, promising that they will dedicate a great deal of their wealth, approximately half, to that philanthropy. As of March 2017, there are more than 100 self-made moguls and titans who’ve pledged to strengthen and support causes they deem necessary. Many among those who signed the pledge are financiers, who are incredibly generous. Read on to know the names of some of the most charitable financial philanthropists.

Carl Icahn

Carl Icahn is an investor and magnate who has a net worth of 15.7 billion, according to Forbes. Five years ago, he donated an estimated $200 million, with a significant amount of that money going to Mount Sinai School of Medicine. The various family foundations, hold a different number of assets, with the largest possessing about $30 million in assets. Most large gifts directly, including the $20 million to create the Carl C. Icahn Laboratory at Princeton’s Institute for Integrated Genomics. Also, $3 million to create the Icahn Medical Research Foundation.

Mike Bloomberg

Mike Bloomberg is a businessman, author, politician, and philanthropist with a net worth of $49.1 billion. As of May 2017, he was named the eighth richest person in the country, and the tenth in the world. The former mayor of New York signed the Giving Pledge, built up the excess of Bloomberg Philanthropies to $4.2 billion. He’s also given dollars to John Hopkins and his top causes (climate change and global public health). Also, his foundations give money to diverse issues.

Warren Buffett

Warren Buffett, with his $74.9 billion fortune, is a business magnate, investor, and philanthropist. He’s pledged to give away 99 percent of his wealth and has already cumulatively given away billions to his family fortune, the Bill and Melinda Gates Foundation, and the Nuclear Threat Initiative.

George Soros

George Soros is an Hungarian-American investor, business magnate, philanthropist, and author worth $25.2 billion. His umbrella organization, the Open Society Foundation, has gifted $11 billion over the last thirty years. He’s also given to the Central European University in Budapest, donating nearly $1 billion.

Julian Robertson

Julian Robertson is an investor, hedge fund manager, and philanthropist who has a net worth of $3.8 billion. Since he launched the Robertson Foundation in 1996, he’s donated more than $1 billion to charitable causes. Robertson put money toward The Tiger Foundation, Memorial Sloan-Kettering, Environmental Defense Fund, Teach for America, and some other organizations, amounting to hundreds of millions more. He’s also a Giving Pledge signatory.

Some other incredibly charitable individuals include David Rubenstein, Bill Ackman, Charles Munger, George Kaiser, John Arnold, Lowell Milken, Pete Peterson, Sandy Weill, Denny Sanford, Herbert Sandler, Michael Milken, and Stanley Druckenmiller.

An honorable mention is David Rockefeller who was an American banker, the chief executive of Chase Manhattan, and the oldest living member of the famous Rockefeller family until his death in March 2017. His net worth was $3.3 million at the time of his death, and throughout his life, he gave at least $1 billion to organizations and establishments, including the Museum of Modern Art and Rockefeller University.

 

16 Budget Tips For New Entrepreneurs

16 Budget Tips For New Entrepreneurs - Ajay NagpalBudgeting skills are essential knowledge for anyone managing a business, and this is especially true for new entrepreneurs who are looking to enter the business world on a sturdy leg. Small businesses are no joke, and piloting one means keeping one’s eyes ahead, while always knowing how to gauge your peripherals and keep it from crashing. While some things go without saying for business leaders, finance and budget tips bear repeating. Look the 16 tips below, which offer some insight on budgeting for your business.

  1. Keep your personal life separated from business finances, which will ultimately help you with your budget. The commingling of personal and business can distort accuracy. You won’t have an accurate estimation of how much money your business grossed or how much it might need to succeed. Payroll is one of the biggest costs that a business has, so you must identify how much it will cost to pay your salary. The use of appropriate budgeting techniques and credit cards will starve off future obstacles.
  2. Don’t forget about your taxes, which is a recurring expense that’s sometimes left out of financial calculations. It’s recommended that you open a separate bank account and deposit 20 percent of gross revenue or up to 35 percent of your monthly net income. Failing to plan ahead for taxes can lead to a late fee or an audit.
  3. It’s important that first-time entrepreneurs, hold on to all of your receipts, and kept them organized. While many first-entrepreneurs take their largest expenses into account, they sometimes fail to account for overtime and smaller costs. Keeping those receipts on hand offers a clear understanding of your budgets and your finances, providing a glimpse into growth-related expenditures.
  4. Lean on your supplier if you feel like prices are a little too steep for you. As long as you’re polite, it doesn’t hurt to try to cut costs. Inquire if you can get a discount if you purchase in bulk or if you can get a discount by paying for supplies upfront.
  5. Always search for the best deal. By investigating your options, you’re more likely to save your business money in the long run.
  6. Understand that lose is on the table, and a good way to make sure that you hold to what you have is to shed some non-essential expenses.
  7. Overestimate your expenses when you’re planning for the future. If you do this, you won’t be devastated if a surprise cost takes you by surprise.
  8. Rather than hiring costly full-time employees, hire freelance writers, designers, and delivery people. Do so means that you’ll save money on training, hiring, and sourcing. Additionally, you’ll save money when it comes taxes, fees, and payroll.
  9. However, when you choose to hire your employees and budget for salary, consider the cost of training materials, insurance, taxes, payroll fees, and additional equipment.
  10. Shop smart and try to buy used furniture, equipment, and electronics, which will cut down on costs. However, don’t skimp on things you need.
  11. Brick-and-mortar locations are attractive, but when you’re starting out as an entrepreneur, it’s important that you notice that rent, furniture, and transportation can cost you thousands. If you sincerely require a physical location, then try working out of your home. You can even receive tax deductions if you opt to operate out of your home-based office.
  12. Use Mint and similar budgeting software to help you analyze, track, and monitor your spending. There are some intuitive and free programs you can use that will aid with online management of cash and spending analysis.
  13. When you’re looking to create a small business, you’ll have to bear your credit in mind, which is important if you’re interested in taking out a loan. Also, if you happen to take out a loan and you’re late with repayments, it could hurt your credit score and your business. Plan loan repayments within the monthly and yearly budget.
  14. Partner with other business professionals and save money on promotion, flyering, and overall advertising. If you split costs, you’re saving money.
  15. Seek out free advertising by reaching out to news publications to cover your events, pumping up your social media presence, and by volunteering at local events where you can advertise your business and connect with potential customers. Joining an industry association can offer you a network, which is great for word-of-mouth, discounts, and finding new ideas.
  16. Insurance is an important expense that’s not worth skipping. Budgeting for insurance before an incident can ultimately save your business.

 

Simple Tips for Beginning Investors

Simple Tips for Beginning Investors - Ajay NagpalYou’re never too young or too old to budget, save, or practice debt control, and the same can be said for investing dollars.

Being a financier isn’t as easy or as glamorous as the film “The Wolf of Wall Street” suggests, but that doesn’t mean that it’s terribly complicated. Of course, investment is intimidating to those new to the investment game, particularly to those who’ve never allocated funds and other resources to benefit from a ‘return’ –but there is help. Read on to learn some fundamentals about investment and capital gains.

Novice investors are frequently adopt investment diversification and strategy. A return may be in the form of investment income (dividends, interest, rental income) and/or capital gain. There are a range of financial assets, whether discussing low-risk investments, low-return investments, high risk investments, and higher expected commensurate rewards. The most evolved investment portfolios are those that are diversified in investment strategy. Below, please find five investment tips for beginner investors.

Know Someone With Knowledge: If you chat with an investment advisor who can educate you on your options. Through this advisor, you’ll learn if you’re able to invest in your registered retirement savings plan and tax-free savings account. Recognize the pros and cons of different account tips, and act decisively.

Shop Where You Buy: Rather than look to businesses and organizations that you don’t know much about, you may want to look to companies to endorse when seeking to invest. Find companies that you enjoy and patronize. If you enjoy eating Fuji Apple Salad with Chicken for lunch or you love snacking on a Lemon Drop Cookie, you may want to consider buying Panera Bread Co shares. Likewise, if you identify other brands and trends that others enjoy, you’ve figured out a great opportunity for investment. Of course, this differs a bit from serious investing. If you’ve set a lofty financial goal, you may want to consider long-term investments that focus on a well-researched industry.

Expand And Diversify: Inexperienced and budding investors without many assets may find exchange-traded funds and mutual funds are a good product for portfolio diversification. Mutual funds allow young people an opportunity to work with others, and an investment is facilitated by a mutual fund manager. Exchange-traded funds are similar, but function without the guidance of a manager.

Begin Investing Today: Know your limits by putting money away each month, so then you’ll have money to invest personally. Understand that the longer you invest, the more money you’ll make, gaining a compounding rate of return.

Do Your Research: Learn what opportunities your bank has available to you, and find out if you can open your account. Through your bank, you can learn if there is a discount broker program. While high return, these programs you’ll have to go it alone –there will be no one offer insight about when or how to trade or buy.

What’s also important is that you keep yourself informed. Read the newspaper each day, and learn about market vulnerabilities. Do research on the habits of successful investors, and perhaps seek out a mentor.

5 Money Tips You Shouldn’t Ignore

5 Money Tips You Shouldn't Ignore | Ajay NagpalEveryone wants to be wise with money. However, not everybody knows how to do that, even if they aren’t spendthrifts. If you receive certain tips about personal finance from a pro or from someone who knows personally how to manage their finances, you should really listen. Here are five money tips you should never ignore.

Never Go Into Debt

One of the most obvious tips regarding your finances is to never go into debt. That means that if you have a credit card, be smart when you make purchases on it. The best thing to do is to never outspend beyond your means and always pay your credit card bills on time. It will ensure that you are paying off your debt in a timely manner and that you will have a good credit score. It is also helpful to have a credit card with a low introductory APR and initial zero percent interest rate.

Invest in Stocks

Many people make the mistake of putting their money in the bank and only in the bank. Although you will earn interest on whatever you have in your savings account, anything in checking gets zero interest. The best option, especially in the long term, is to invest your finances in the market. You will get the most out of your finances when you invest in stocks that are at least medium risk as the market fluctuates. In addition, investing ensures that your amount will increase over time. You may also want to sell stocks when they go high and stop investing when the market is down.

Invest in a Home

Investing in a home is always a good idea. Buying your own place to call home is better for your long term financial life and your life in general. In comparison, renting can end up becoming a considerably more costly venture because landlords can raise the rent if you aren’t lucky enough to get a place that is rent controlled. You can also increase the value of your home when you own it by making repairs and improvements over the years. Additionally, you can legally rent to tenants for some extra cash as well.

College is a Must

If you really want to earn a good salary, having a college education and degree is an absolute necessity. The majority of employers require a degree before they will consider hiring a new employee. However, keep in mind that you must be dedicated when you go to college. The worst thing to do is enter college, garner tons of student loans and then drop out.

Retire Mortgage Free

Avoid going into retirement with a mortgage. The last thing you want to do is to dip into your retirement funds early, because it results in big penalties later on. It can make retiring more of a burden than anything else because you will find that your retirement finances are depleted when you really need them.

With these helpful money tips, you will certainly become a personal finance master and can enjoy your money in the long term.

The Importance Of Financial Literacy In Today’s Society

The Importance Of Financial Literacy In Today’s Society | Ajay NagpalFinancial literacy is a term used to describe financial, credit and debt management and the knowledge necessary to make financial decisions responsibly. This includes anything from how to avoid debt to how a checking account works. The daily decisions made by an average family when trying to buy a home, balance a budget, save for retirement or fund their children’s education are reliant upon financial literacy.

Lack of financial literacy is a global problem, occurring both in developing economies and in developed or advanced economies. Here are a few trends that show the importance of making thoughtful decisions about finances:

  1. There are complex options

Recently, consumers are being asked to choose between a number of investments and savings products. The products are more complex than in past. Consumers are asked to choose amongst product options that offer various interest rates and maturities. Many people aren’t adequately educated to make these decisions. Choosing complex financial instruments that have a wide range of options can impact a consumer’s ability to finance an education, buy a home, or save for retirement.

2) Consumers are responsible for more of the financial decisions

In past generations, people could depend on pension funds to provide more of their retirement funding. Pension funds are managed by professionals, so the financial burden was placed on companies or governments that sponsored them. Consumers were not a part of that decision-making process and usually did not even contribute their own funds. It was rare for consumers to be made aware of the funding status or investments held by the pension. Now, the responsibility for retirement planning has shifted to the consumers. Pensions are now a rarity, especially among new workers. Employees are instead being offered the ability to participate in 401K savings plans. In these plans, they need to make investment decisions and contribute to the plans.

3) The marketplace is changing

The financial landscape is constantly changing. Because the marketplace is now global, there are many more participants in the market than there used to be, and many more factors that can affect it. Technological advances such as electronic trading have caused the financial markets to be even more volatile. These factors lead to conflicting views. As a result, it can be difficult to set up, implement and follow a financial roadmap.

4) Lack of government aid

One of the biggest courses of retirement income in the past was Social Security. However, the amount paid by Social Security currently is not enough, and Social Security may become completely unavailable in the future. According to the Social Security Board of Trustees, the Social Security Trust fund may be depleted by 2033. At this point, Social Security serves more as a potential safety net that may or may not provides the amount necessary for basic survival.

5) Longer life spans

The last reason is a bit more simple: we’re living longer. As time progresses, the average lifespan is increasing. As a result, we need more retirement savings than prior generations do.

Financial literacy has always been instrumental in helping consumers make smart financial decisions, but now, it’s more important than ever. Make sure you stay informed so that you know what to do when posed with a series of financial options that can drastically affect your life.