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Applying for a Mortgage

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There’s always talk about home-buying and mortgages, but with interest rates being at all-time lows over the past few years, I feel like the talk about those things have picked up. Not only that, interest rates are likely going up this year so people are trying to get in before it’s too late. In this post, I want to talk about mortgages, how they work, and what happens when applying for a mortgage.

What’s a mortgage?

A mortgage is a loan you get from the bank or another lender to buy a house. When you submit an offer to buy a house, you’ll apply for a mortgage, and it’s a very involved process. More on that later.

In a mortgage, you’ll have options for what your term is. Your typical options are 15-year, 20-year, and 30-year.

You’ll also have to make a down payment. Current trends show that a lower down payment is pretty common. Depending on the type of loan, you can put down 3+%. And how much you put down matters. If you put down less than 20%, you’ll have to pay Primary Mortgage Insurance (PMI).

Here are the pieces of your typical mortgage payment – principal, interest, taxes and insurance, and PMI (if applicable). Taxes and insurance are commonly put in an escrow account and paid when they’re due by the lender.

Mortgage application process

From application to closing, it’s about 45-60 days. During that period, you’ll go through underwriting. In underwriting, they’ll have you submit documentation to confirm your credit report, annual income, current assets and liabilities, employment information, prior tax returns, among other things.

After you’ve cleared underwriting and they’ve confirmed everything, you’ll head to closing. At closing, you’ll sign a lot of papers. You’ll likely need to bring your checkbook with you as well.

There are closing costs associated with your mortgage. Some of these can be added to your total mortgage and some of them need to be paid. Closing costs are normally 3%-6% of the total mortgage and can include real estate commissions, taxes, insurance premiums, title fees, and record filing fees.

And if you’re buying, you’ll also need to write a check for the down payment.

Who gets a mortgage?

There is a slough of factors you need to meet when applying for a mortgage. Credit score matters. Usually, you’ll need at least a 620 credit score (all else being equal) to get a mortgage. Though the better the credit score, the better interest rate you’ll get.

The debt to income ratio needs to be under 50%. The lower the debt to income ratio (all else being equal) the more you can afford. If you have a 45% debt to income ratio and can afford a $250,000 mortgage, you’d probably be able to afford a $300,000 if your debt to income ratio is 25% (this is just an example, I didn’t do the math on this).

Condition of the home. With an FHA mortgage, they are a little pickier on the condition of your home. Usually, it’s just the outside of the home they’re picky with. Chipped paint is a typical thing they take issue with, so just be aware of that.

Applying for a mortgage is necessary for most people so it’s important you understand how they work.

Related reading:

Understanding 15-Year vs. 30-Year Mortgages in the USA

What to do when you’re one month behind on your mortgage

Why Financial Literacy is Important

Disclaimer:

**Securities offered through Securities America, Inc., Member FINRA/SIPC. Advisory services offered through Securities America Advisors, Inc. Securities America and its representatives do not provide tax or legal advice; therefore, it is important to coordinate with your tax or legal advisor regarding your specific situation. Please see the website for full disclosures: www.crgfinancialservices.com

5 Ways to Get Financial Freedom in 2022

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5 Ways to Get Financial Freedom in 2022

Getting on the path toward financial freedom is something anyone can do. While it does take time, attention, and diligence, getting a grip on your finances and making wiser choices can help you get past a paycheck-to-paycheck existence, ensuring you can achieve financial freedom. If you aren’t sure how to begin, here are five ways to launch the journey and make real progress and have financial freedom in 2022.

1. Aggressive Budgeting

If getting financial freedom is your goal, you need to budget aggressively. This goes beyond allocating funds to handle your minimum debt payments and other expenses. It involves being a ruthless cost-cutter who prioritizes their spending based on their values and goals and puts every extra cent captured toward debt repayment or savings.

However, you don’t have to make yourself miserable to go this route. Instead, you simply want to avoid all expenses that don’t bring you legitimate value, allowing you to focus more money on debt repayment and saving.

2. Boost Your Income

Increasing your income is a straightforward way to put yourself on the path toward financial freedom. When your income rises, you can direct more money toward debt repayment, saving, and investing, allowing you to reach your target sooner.

Exactly how you pursue this could depend on your current education level and skill set. In some cases, returning to college to get on a different career path could be worth considering. In others, actively pursuing new responsibilities at work and striving to exceed expectations at every step could let you secure a promotion.

One of the biggest must-dos in this situation is avoiding lifestyle inflation. When you earn more money, it’s easy to assume that increases in your spending don’t matter as much. In reality, by keeping your lifestyle in check, you’ll make progress faster, making it easier to achieve your financial goals.

3. Invest More Than the Minimum

When it comes to investing, many people set aside 10 percent for their retirement and assume that’s enough. However, if financial freedom is your goal, then you need to take it further.

Along with maximizing your retirement savings, open a brokerage account and invest more there. Brokerage accounts don’t have the same limitations as retirement-oriented accounts, allowing you to set aside far more.

While there isn’t a specific target you need to hit, aiming for around 20 percent of your income isn’t a bad idea. If you have more money that you can direct toward investing after that, feel free to do so. As long as you’re investing wisely, any extra cash you commit will simply help you achieve financial freedom faster.

4. Focus on Your Health

While focusing on your health might not seem like a path toward financial freedom, it can play a surprisingly big role. When you keep your physical and mental health in peak condition, you may have fewer medical needs, allowing you to spend less on healthcare.

Plus, happy, healthy individuals are more productive and better equipped to handle stress. That can help you succeed professionally, making it easier to secure promotions and increase your earnings.

5. Don’t Overlook Financial Protection

For many people, a single financial emergency can significantly derail their plans. Make sure you have the right protections in place whenever possible. Along with medical insurance, you may want to explore healthcare supplements, long-term disability, and similar kinds of optional coverage. That way, if the unexpected happens, you’ll have a financial safety net.

Precisely what you’ll need and the coverage amount you’ll require depends on your situation. If you have a family and a limited amount in savings, you may need more coverage, particularly if you’re the primary earner. If you’re single and have ample amounts of savings in an emergency fund, you may be able to scale back a bit.

Consider how losing your income source, high medical costs, or similar issues might impact you. Then, look into plans and policies that offer you some level of protection. That way, a single incident won’t keep you from heading down the path toward financial freedom.

Can you think of any other ways someone can get financial freedom in 2022? Have you tried any of the approaches above and want to tell others about your experience? Share your thoughts in the comments below.

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10 Questions You Need to Ask Your Parents About Their Finances Now

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10 Questions You Need to Ask Your Parents About Their Finances Now

If you’re the adult child of aging parents, having open, honest conversations about finances could be essential. By learning more about your parents’ situation, you can make sure that their future is bright. You’ll have a chance to intervene if necessary and prepare for emergencies. Plus, you’ll be better equipped to navigate their passing if you’re the executor of their estate. Thankfully, by asking the right questions, you can head down the right path. Here are ten questions you need to ask your parents about their finances now.

  1. What Does Your Financial Plan Look Like?

First, you want to ask your parents for an overview of their financial plan. Along with insights into their income and expenses, it’s wise to discuss savings and retirement account balances. That way, you can determine how long those funds will last.

Additionally, you may want to touch on other aspects of their financial lives. For example, since home equity can be tapped, knowing how much is available may be wise. Asking about their medical insurance – particularly their long-term care coverage – is similarly intelligent, ensuring you know how much funding is available if they need prolonged care.

  1. Are You Worried About Running Out of Savings?

This question is less about learning the nuances of their financial situation and more about discovering their mindset. It lets you know if their savings account balances are a source of stress, giving you an opportunity to find out more about their concerns. Then, you can work together to address them.

Additionally, it can let you know if there are mental health issues forming, such as depression or anxiety. In some cases, it may even allow you to discover signs of cognitive decline, depending on how their answers compare to the reality of their situation. In any case, it’s a smart question to ask.

  1. Is There a List of All of Your Accounts Available?

Having a list of all of the financial accounts available is crucial for several reasons. Along with simplifying the management of their estate after their passing, it gives you an overview of what has to be covered if they’re suddenly incapacitated or experience an unexpected drop in income.

Ideally, the list should include specific details regarding the accounts. For debts and expenses, the company name, account number, due date, payment amount, and remaining balance are critical, as well as any logins or passwords. For savings, investment, life insurance, or similar accounts, the company name, account number, logins, passwords, account value, and beneficiary name are musts.

  1. Do You Have a Will (and Who Is the Executor)?

Knowing if your parents have plans for their estate helps you prepare for their passing. If they have a will, find out its location. Additionally, ask for the name of the executor, as they’ll need to be involved quickly after your parents’ passing. You should also find out if they used an attorney to draft the document and the lawyer’s contact information, giving you another resource should your parents’ copy become misplaced or damaged.

If they don’t have a will or estate plan, it’s wise to recommend they get one in place. You could help them find an attorney and offer the pay the cost, as well as accompany them if that makes them more comfortable.

  1. Do You Have a Life Insurance Policy?

Ideally, information about any life insurance policies should be on the list of accounts. However, if you don’t see a life insurance policy, ask about it directly. If your parents are still working and have a policy through an employer, they may have forgotten to include it in their list, so it’s wise to follow up.

  1. Do You Have a Financial Power of Attorney?

A financial power of attorney gives a person the ability to name someone who can make financial decisions for them if they are incapacitated. Finding out if they have a financial power of attorney in place and who is named on the document is helpful. Then, if there’s an emergency, you know who is able to handle certain activities and make various decisions.

  1. Have You Had Any Trouble Remembering to Pay Your Bills or Balancing Your Accounts Lately?

While anyone can make a mistake on occasion, if your parents are forgetting bills or struggling to balance their accounts regularly, that could be a sign of mental decline. Many older adults with memory issues have trouble tracking their obligations. Additionally, they may struggle to handle the calculations involved in balancing their accounts or may have difficulty keeping tabs on the date.

If they are having difficulties, it’s wise to create a plan to ensure their financial life remains on track. Also, speak with them about scheduling an appointment with their medical provider to determine if there is an underlying cause.

  1. Where Do You Keep Your Financial Paperwork?

If your parents pass or become incapacitated, you may have a need for different kinds of financial paperwork. For example, you might require deeds to certain property, account statements, or past tax returns. By asking where they keep that information, you’ll know where to look should the need arise.

  1. How Do You Typically File Your Taxes?

Knowing how your parents usually file their taxes is beneficial. Not only does it give you a source of records, but it also lets you know if they’re receiving help or handling the work on their own. Plus, it could make filing any final tax returns easier if you can turn to the same method, though this isn’t always the case.

  1. Do You Have a Safe Deposit Box?

Many people use safe deposit boxes to store valuable items. If your parents have one, find out which institution it’s at, the location of the key, and any other details that help you access it after their passing or as an approved financial representative.

Without the location information, tracking down a safe deposit box can be tricky. Similarly, if you don’t have a key, getting access requires extra steps. You may have to pay a fee to have it drilled. Additionally, if they don’t have the ability to drill the lock on-site, you might have to wait to access the contents, which may not be ideal.

Can you think of any other financial questions you need to ask your parents now? Share your thoughts in the comments below.

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Retirement Costs to Consider

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Retirement Costs to Consider

You save for years and years…decades and decades. When you’re saving for retirement, an important consideration to keep in mind when you set your nest egg goal is your retirement costs.

When determining and estimating retirement costs, you need to consider what the average expenses are in general and for the retired folks in your area/state. Once you figure out the generalities, you must adapt them to your situation.

Some items to consider:

  • Travel – Will you stay in your current home? Will you move to a warmer state or a state without an income tax? Do you have family spread around the country? Will you take vacations on an annual basis? If you’re planning on traveling every year, possibly multiple times a year, it’s important to factor those costs into your monthly/annual budget – so you can save for it.
  • Healthcare costs – When you get older, your body doesn’t typically work as it has in the past. You are also more susceptible to illness (as we’ve seen over the past two years). As a result, your healthcare costs go up.
  • Housing – There are a few things to consider when determining your housing costs. Will you stay put or will you move? If you move, will you downsize? If you move, will you move to a different state? Does that state have income taxes? What do you anticipate energy costs will be?

Typical retirement costs

People 65 and older have spent an average of $4,847. On average, utilities, public services, and fuel cost an additional $3,743.

On average, Americans spend $10,160 per year on transportation. Retirees spend a little less. Anywhere between $4,963 and $6,618.

The general American population spends $5,204 on healthcare. Retirees spend between $6,792 and $6,619.

American retirees spend $6,303 on food. They also spend, on average, $2,282 on entertainment.

Expect to spend between 55%-80% of current expenses in retirement.

There are 9 states without a state income tax – Alaska, Florida, South Dakota, Tennessee, Texas, Washington, and Wyoming.

These are the states with the cheapest monthly utilities – Idaho ($343.71), Utah ($350.17), Montana ($359.03), Washington ($369.18), and Nevada ($3376.93).

Conversely, here are the top 5 most expensive ones – Hawaii ($730.86), Alaska ($527.96), Rhode Island ($521.98), Connecticut ($496.07), and New York ($477.31).

Related reading:

Managing High Inflation in Retirement

5 Solutions for Managing Money After Retirement

Retiring Out of State

Disclaimer:

**Securities offered through Securities America, Inc., Member FINRA/SIPC. Advisory services offered through Securities America Advisors, Inc. Securities America and its representatives do not provide tax or legal advice; therefore, it is important to coordinate with your tax or legal advisor regarding your specific situation. Please see the website for full disclosures: www.crgfinancialservices.com

Managing High Inflation in Retirement

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Managing High Inflation in Retirement

Inflation is high. We all know that. I’ve been writing about it for months and it appears that it’s here to stay. With all of that said, I saw a question the other day about how to manage the high inflation when you’re in retirement, and I thought it was a good topic to talk about today. So we’re going to discuss high inflation in retirement, how it’s impacting retirees, budgeting strategies, investment strategy changes, and if inflation will be an ongoing concern for retirees.

Inflation right now

It’s high…no surprise to anyone. In January it was 1.4%, in April it was 4.2%, in July it was 5.4%, in October it was 6.8%, and in December it was 5.9%. That’s historically high. The highest it’s been in 40 years. Will that stay, only time will tell and we’ll get into that later.

How is it impacting retirees?

Things are getting expensive, so when you set a budget at the beginning of your retirement you account for the current price of the things you need. You should also account for increased costs of items as time goes on because there can be big or small increases…either way, prices costs will go up.

Groceries and energy are two prime examples of things that have gotten more expensive recently. So when those things went up in price, it probably pinched people’s budgets, and/or pushed forward costs that probably weren’t expected for several years. Odds are, they’re spending more money now on food and energy than they anticipated. Hopefully, people have been able to make adjustments already.

Budgeting Strategies

There really aren’t a lot of tips I can give you. The best thing I can really say is to cut costs where it makes sense to account for things that are now more expensive. The other tip, though this is more of a gamble, is to not make any changes now and make changes in the future when inflation comes down.

Investment Strategies

With your investment, you’ll need to reallocate some assets. I wouldn’t take any money out of stocks. What I would do is take some money out of your bond investments and put it into precious metals. The FED said that they plan on hiking rates three times in 2022. Bond prices will go down when interest rates go up. Increasing your stock allocation or putting some money in precious metals could be a good way to combat inflation.

High inflation here to stay?

No, I do think it will be here until the FED hikes rates, but my reasoning for that has to do with what happened in 2018. If the FED can raise rates without putting a cork in the recovery, then I think there’s a possibility that inflation and the federal funds rate will stay elevated until the bubble pops.

Related reading:

Why Asset Allocation Matters

The Factors Causing Inflation

How to Beat Inflation with Investment

Disclaimer:

**Securities offered through Securities America, Inc., Member FINRA/SIPC. Advisory services offered through Securities America Advisors, Inc. Securities America and its representatives do not provide tax or legal advice; therefore, it is important to coordinate with your tax or legal advisor regarding your specific situation. Please see the website for full disclosures: www.crgfinancialservices.com

What New Year’s Resolution Can Help You Meet Your Financial Goals?

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New Years Resolution Financial Goals

With the new year approaching quickly, New Year’s Resolutions are on many people’s minds. If your goal is to improve your financial situation, choosing resolutions that can help you head in the right direction is wise. While the exact objectives you set may vary depending on your personal situation, there are many that work well for most people. If you’re trying to meet your financial goals and don’t know what New Year’s Resolution Financial Goals, here are a few to consider.

Create and Follow a Budget

If you do nothing else in 2022, make this the year that you create and follow a budget. With a budget, you get critical visibility into your finances. Plus, it allows you to generate a plan in advance that can propel you toward success, giving you a roadmap to follow as you strive for other  New Year’s resolution financial goals.

In many cases, creating and following a budget is easy. You can use websites or apps that allow you to set spending limits and track your activities, or even go with a simple spreadsheet to monitor your income, savings, expenses, and debt repayments. That way, you’ll know where your money is going, allowing you to gain better control over your financial life.

Pay Yourself First

When most people receive their pay, they focus on handling debt payments and household expenses. While tackling those costs is essential, it’s wise to start at a different point. By paying yourself first, you set yourself up for financial success, ensuring that saving is a priority.

Typically, paying yourself first can involve a variety of approaches. Along with dedicating money to retirement, stashing money in an emergency fund qualifies. Ideally, you want to commit at least 15 percent of your income (including the employer match) to retirement and have three to six months of living expenses set aside. That way, you’re ready for your golden years and can easily navigate the unexpected.

You can also focus on goal-oriented saving as a form of paying yourself first. For instance, setting money aside for your or a family member’s education can count, as well as funding a large purchase, vacation, or something else. However, those goals should only fall in this category if your income genuinely supports it. Otherwise, you could be creating a hardship.

Eliminate Extraneous Recurring Expenses

Recurring expenses can easily fall off of a household’s radar, particularly if they’re smaller. Costs like streaming services (both audio and video), fitness center memberships, magazine subscriptions, and similar expenses chip away at your budget. If they aren’t providing you with enough value, then it’s best to cancel them immediately.

There are tons of small expenses that can crop up as part of daily life, from online payment fees to bank account service fees and credit card interest. It’s easy to not pay too much attention to these, but they can add up over time and put a strain on your budget.

Make reviewing your accounts to identify and eliminate extraneous recurring expenses a priority this year. That way, you can free up a little bit of cash without much effort, giving you a quick financial win.

Tackle High-Interest Debt

High-interest debt is a significant burden that makes it harder to achieve your other financial goals. If you have high-interest credit cards, personal loans, payday loans, or similar debts, make conquering them a priority.

In most cases, going with either the snowball or avalanche method is best. With the snowball, you focus on your smallest balance first, putting as much money toward it as possible and making the minimum payment on every other debt. Then, when you pay that balance off, you redirect all of the cash you were sending there to your new smallest balance debt.

With the avalanche approach, you choose the debt with the highest interest rate to focus on first. It’s a more cost-effective option, allowing you to pay the least amount of interest possible. However, if that debt is large, it lacks the quick win you can get with the snowball method. As a result, it’s best to choose the option that will keep you motivated, ensuring you stick to the plan long-term.

A side benefit of tackling debt is that it usually boosts your credit score, too. If improving your creditworthiness is a priority, you can use this resolution to make it happen.

Learn About Investing

Once you have your retirement account funded, a solid emergency fund, and no high-interest debt, it’s time to think about investing. That way, you can help your money grow faster, potentially allowing you to retire early, live more comfortably, or accomplish other financial goals.

While you may be tempted to jump right into the world of investing, learning about it first is a better bet. Spend time familiarizing yourself with the fundamentals, such as the differences between bonds, stocks, ETFs, and other investment vehicles. Learn about risk mitigation techniques like diversification, as well as how fees and commissions can eat into your earnings. Find out about the tax implications of making withdrawals or trades, ensuring you’re prepared for what occurs.

Once you’ve taken a deep dive into investing, you can determine how you want to proceed. You may be comfortable with a self-directed approach, especially with the number of robo-advisors available that can help you create a portfolio based on your priorities, risk tolerance, and more. If you aren’t, then it’s best to research financial planners in your area, allowing you to find an expert that can help you make choices that align with your risk tolerance and goals.

Define Goals That Align with Your Priorities

While the resolutions above are great starting points, they are based on classic advice and personal finance best practices. As a result, they may be inspiring to some but not connect well with others whose financial situations make those steps unnecessary or poor fits.

If you’re already doing everything above or those objectives aren’t a great match for you, that doesn’t mean you can create New Year’s Resolutions that will allow you to achieve your goals. Just spend some time genuinely defining what you want to accomplish financially. That way, you can create personalized resolutions that speak to you on a deeper level.

Get Specific and Make Objectives Actionable

Ideally, you need to get specific and make your objectives actionable. For example, instead of saying you want to “spend less money” or “save more,” go with goals like “reduce my monthly dining out spending by 20 percent” or “increase my savings account balance by $2,000 within 12 months.”

Then, add in why you want to make those things happen. For instance, the goals above might turn into “reduce my monthly dining out spending by 20 percent, allowing me to pay down my high-interest credit card faster” or “increase my savings account balance by $2,000 within 12 months so that I can launch my new business.”

By resolving to spend time genuinely identifying your priorities, you know what targets will motivate you to keep making smart financial choices. In the end, you’re increasing the odds that you’ll stay on track because you know the “why” behind your actions. It’s simple yet powerful, so take the time to determine your priories as the new year begins.

Are there any other New Year’s resolution financial goals that can help  you have a successful year? Did you use any of the options above and find them effective? Share your thoughts in the comments below.

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End of Year Money Moves

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We’re getting close to the end of the year so I think it’s a good time to review how to set yourself up for success for next year. Here are some end-of-year money moves you should make.

Year in review

I think it’s important to reflect on the year that has been – financially, emotionally, physically, and spiritually. If you’re not evaluating your progress as a human, I think you are doing yourself a disservice.

We’ll stick with the finance side of things in this article. Did you achieve the goals you set out to reach when the year started? If you had a goal to pay off debt, did you? If you had a goal to increase your savings rate for retirement, did you?

I think that’s important for two reasons. One, you review your progress to see if you were successful or not. Two, you use this year’s progress to help set your target for next year. If you achieved your goal, you can set a higher target for next year. If you didn’t, maybe keep the same goal and try to hit it next year.

It’s also a good idea to review your investment/retirement portfolio at the end of the year. If you’re investing your retirement savings, there are some sectors or asset classes that performed better than others throughout the year. If that’s the case with your portfolio, the percentage you’re at now is probably different from where you started.

Typically, I like to leave it be, but if you’re in a stage of life where you have to be more selective, then being overweight in a risky asset is probably not a good idea. When you review your investment portfolio make sure that you’re still in good shape with regard to your risk tolerance and time horizon, and you’re pleased with your account’s performance.

Set goals for next year

After you review your progress from this year, set your goals for next year. If you saved more than you set out to at the beginning of the year, use the ACTUAL savings as your goal for next year. If you paid off some debt, redirect toward another one.

What happens if you don’t have any more debt? Congratulations! Then make sure your emergency savings are adequate. If it’s sufficient, beef up your retirement savings or something else you’re saving for.

When you’re making your money moves for next year, make sure you’re designating time to assess your progress throughout the year.

Related reading:

How to Set Investing Goals

Worthy Goals to Set and Crush

Disclaimer:

**Securities offered through Securities America, Inc., Member FINRA/SIPC. Advisory services offered through Securities America Advisors, Inc. Securities America and its representatives do not provide tax or legal advice; therefore, it is important to coordinate with your tax or legal advisor regarding your specific situation. Please see the website for full disclosures: www.crgfinancialservices.com

Steps For Making Money Online

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Have you decided this is the year when you’re finally going to start earning money online? If so, your timing is excellent, because 2022 promises to be a major growth year for e-commerce businesses of all kinds. Step one, however, is to choose the field that is most suited to your skills and preferences. Deciding on the main kind of work you’ll be doing should be priority-one, so expect to spend at least a week, and several hours per day, investigating what’s out there and what you might enjoy doing to earn regular income.

After that, having the right education is perhaps the single most important factor of all. Many business schools, for example, now offer graduate degrees that focus on e-commerce and entrepreneurship. Other valuable ingredients for online success include patience. It can often take up to six months before e-businesses show a profit. You’ll also need the right equipment, high-speed internet connections, a versatile smart phone, and an office space to accommodate your new job. Start networking now with friends and professional contacts to gather ideas and get started. Here are more details about each step of the process.

Obtain an MBA Degree in E-Commerce

A graduate degree, particularly an MBA (master’s in business administration) is one of the most valuable tools you can have when beginning an e-commerce enterprise. The best part is that students can choose elective classes in MBA school that teach advanced techniques for running e-commerce, startup, and small businesses. But paying for a grad degree can put a strain on any budget. That’s why many prospective MBA candidates turn to private lenders for student loans that cover all the costs of a master’s degree in business. Not only do private loans come with realistic payback schedules, but you can significantly improve your credit score just by making on-time payments.

Get All the Technical Equipment You Need

To run your own online business in an efficient, profitable way, it’s essential to acquire the appropriate equipment. Once you decide on a particular niche, be sure to get a computer that has the power, speed, and memory your new business needs. Many people discover that all they need to do is upgrade the system they already own, while others need to do more.

Be Patient

Online businesses take time to get going. This is especially true if you intend to sell higher-priced products, like computers, or services, like consulting or tax planning. Be certain to have a large enough financial reserve to sustain you through at least six months after launch. As long as you don’t expect profits to start pouring in immediately, you’ll be better equipped to handle the slow growth of the typical e-commerce company. Resources like business coaching can help you develop your patience and fill those anxious moments with productivity rather than chaos.

Network and Keep Meticulous Records

Solo entrepreneurs need to keep detailed financial records because tax reporting requirements are specific and precise. Never assume that your bank statement will be enough. Maintain files for all transactions from day-one. Plus, start building a professional network from the minute you decide on what your new company’s niche will be.

How to Set Investing Goals

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Saving money for the future is important, but I believe it’s even more important to invest that money and make it work for you. With that said, you can’t just start investing. You need to lay some groundwork first, you need to have goals in mind, and you have to be intentional so that when things get difficult, you stick with the plan instead of abandoning it during the discomfort. Today, we’re going to talk about how to set investing goals.

What kind of goals are there?

There are typically three-goal time horizons: short-term, medium-term, and long-term. A short-term goal is something you plan on achieving in 2-10 years. Saving for a down payment is a pretty common goal that fits into that window. A medium-term goal is 10-20 years. Saving for educational expenses for a child fits into that window. A long-term goal is retirement or anything else that’s 20+ years down the road.

These time windows are my opinion, though I think they’re pretty close to conventional opinion. Also, there are more goals than the ones I listed above.

How to think through your goal-setting

There are three things to keep in mind when you set investing goals (not to mention figuring out the goal itself). How much time do you have? Is this a short-term, medium-term, or long-term goal? Do you have time to take some risks or do you have to play it safe?

Speaking of risk…what are you comfortable with? Usually, this goes hand in hand with how much time you have. A short-term goal like saving for a down payment will need to be invested conservatively, if at all. In this scenario, you’ll have a set price you’re saving for so you can’t take a chance that the market dips and your savings fall below what you need it to be at.

Conversely, when you’re saving for retirement, you’ll have an opportunity to be more aggressive (at least in the beginning) because you have time to make back the money that you’ve potentially lost.

The last part of positioning your portfolio according to your goals is your comfort level/investor psychology. Time horizon and risk tolerance are small factors here, but it’s more about how volatility affects your mind. If the market drops and you’re panicked, maybe you need to be more conservative.

How to invest based on your goals

Here are some thoughts on how to invest based on your goals. If you’re saving for a short-term goal, like a down payment, I wouldn’t even invest it. UNLESS you’re very confident and you’re an expert in the particular field (though that applies to all of the time horizons).

If you’re saving for a medium-term goal, like saving for college, here’s what I’d do. You can be a little aggressive in the beginning because you have time to earn some money back. As you get closer to the end of your window, you’ll need to be more cautious. Maybe start 50/50 (stocks/bonds) and as you get closer, either get out of the market entirely or something like 10/90 or 20/80.

For your long-term goal, you’re able to be more aggressive for a longer period of time. 90/10, 80/20, 70/30, 60/40 all work great here. It depends on what you’re comfortable with. Same as the last one, as you get closer to the end of your window, you need to shift your allocation to be more conservative.

Keep in mind, these are blanket recommendations. I don’t know your situation, so you need to talk to a professional first before you set investing goals and make investment decisions.

Related reading:

How to Invest for the Long Term

Financial Resolutions: Debt, Saving, Investing, Real Estate, Crypto

Worthy Goals for You to Set and Crush

Why Asset Allocation Matters

Disclaimer:

**Securities offered through Securities America, Inc., Member FINRA/SIPC. Advisory services offered through Securities America Advisors, Inc. Securities America and its representatives do not provide tax or legal advice; therefore, it is important to coordinate with your tax or legal advisor regarding your specific situation. Please see the website for full disclosures: www.crgfinancialservices.com

Financial Resolutions: Debt, Savings, Investing, Real Estate, and Crypto

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financial-resolutions

The new year is right around the corner so I thought it fitting to layout some resolutions for a few different financial topics. Here are financial resolutions for crypto, investing, real estate, savings, and debt.

Debt

Pay down or pay off your debt. If you have credit card debt, make it a goal for next year to pay it off completely. The interest rates that credit card companies charge are so brutal. Getting rid of credit card debt would relieve a lot of stress and save you a lot of money that you’re wasting on interest. Not to mention, whatever you’re currently paying towards your credit card can be used for something way more productive.

If all you have is a mortgage, make extra payments. If you have no debt, congratulations! Try and save more so there’s no chance of you going into debt again.

Savings

Would you like to buy a house next year? Save for your down payment. The bigger your down payment is the smaller your responsibility will be; in terms of monthly payments and in terms of total money owed. Especially if your down payment is 20% or more. If that’s the case, you don’t have to pay mortgage insurance (AKA PMI).

If a down payment isn’t something you need to save for, increase your savings rate for retirement. Or set yourself up to cover some unexpected expenses by creating an emergency fund. Do some math, establish a goal number (emergencies, down payment, retirement savings), and then create a plan to save and hit that number.

Investing

For the most part, investing will take place in your retirement account. And for most people, the amount of time you have until retirement is a couple of decades. With that said, you can be a little more aggressive with your investments.

If this description doesn’t fit you, then figure out what works for you. Determine your time horizon, risk tolerance, and what you’d be able to tolerate in terms of short-term losses. If you’d like to get a good idea about what your preference is, take our risk tolerance quiz.

Real Estate

This one is a little challenging because it’s not like you’re going to move once per year. Also, investing in real estate isn’t for everyone. So I’m going to try and hit a few groups with this one.

Buy a new home. If you need more space for your growing family, you got a new job that requires relocation, you want to be closer to your church or family members, then make a move.

Make improvements to your current home to increase the value of your home or to make better use of the space. It can also improve tax credits especially if you use sustainable materials like solar panels. Either way, the improvement has a positive effect on your living situation.

Most people can invest in real estate, they just do it differently. Some people are going to invest in physical properties and some can invest in Real Estate Investment Trusts (REIT). Either way, you need to be picky (like all investments) so you get a good return on your money.

Crypto

This applies to everything in this post, but especially here…do your homework. I like crypto. I think there are investment opportunities, but I also think there’s a possibility it all collapses. I like the technology it’s created on, but I don’t know how it’ll transform and what the adoptability will be. Invest only what you can afford to lose is my best advice. With all that said, make financial resolutions to get more educated about cryptocurrencies and the blockchain.

Related reading:

8 Ways to Improve Your Retirement Savings in 2018

Diving Deep into Debt

Worthy Goals to Set and Crush

How to Invest in Cryptocurrency: A Guide for Beginners

Relocating Without A Job? Here Are 10 Tips

Disclaimer:

**Securities offered through Securities America, Inc., Member FINRA/SIPC. Advisory services offered through Securities America Advisors, Inc. Securities America and its representatives do not provide tax or legal advice; therefore, it is important to coordinate with your tax or legal advisor regarding your specific situation. Please see the website for full disclosures: www.crgfinancialservices.com