Warren Wealth Article Archive
Articles Posted During 02/2009
Little Ways You Might Improve Your Financial Life
Tuesday 02/17/2009 - 6:11:27 pm
Some things to think about this year and every year.
Presented by Jacob Warren
Content provided by Peter Montoya, Inc.
This is the year! Yes, you can make 2009 the year you alter your financial life for a better financial future. Let's look at some steps you might think of taking with the goal of financial freedom in mind.
No, we're not talking about those ridiculously obvious steps the usual articles recommend, like "write your goals down" and "set a budget". Let's go past the clich's and get into the real issues.
Look at your income source, your expenses and your debt. How do you earn income? If you earn it from one source, is there effectively a ceiling on it, or is there real potential for your income to rise in the next few years? Now look at your core living expenses, the ones you can't avoid (such as a mortgage payment, car payment, etc.). Can any core expenses be reduced? Investing aside, you position yourself to gain ground financially when income rises, debt diminishes and expenses stay (relatively) the same.
Maybe you should pay your debt first, maybe not. If you are a business owner or a professional, for example, you'll likely always have some debt. Your ultimate goal should be to build wealth - and you can plan to build wealth and minimize debt at the same time.
Some debt is "good" debt. A debt is "good" if it brings you income. If you buy a rental property, you're paying a mortgage, but that's considered a "good" debt because you're getting passive income from the rent payments. Credit cards are "bad" debts.
If you'll be carrying a debt for a while, put it to a test. Weigh the interest rate on that specific debt against your potential income growth rate and your potential investment returns over the term of the debt. If the interest rate on that debt looks like it will outpace your income growth and investment returns, then you should really think about paying that debt down fast, because you can't afford that interest rate.
Of course, paying off your debts, paying down balances and restricting new debts all works toward improving your FICO score, another tool you can use in pursuit of financial freedom (we're talking "good" debts).
Implement or refine an investment strategy. You can't refrain from investing, even when the bears are out. You're not going to retire on the relatively small elective deferrals from your paycheck; you're going retire on the interest that those accumulated assets earn over time, plus the power of compounding. Investing can also potentially bring you passive income. Consistent investing, this year and in years to come, has the potential to help you improve your financial life.
Manage the money you make on your way to financial freedom. It's amusing: all these Internet gurus tell you they have a method to make you "financially free" or "debt free", but few tell you how to manage the money you make. Their not-so-subtle message seems to be "succeed and live lavishly" - if you make it financially, you've earned the freedom to blow it all on cars, boats and luxuries.
This is a classic nouveau riche mistake. If you simply accumulate unmanaged assets, you have money just sitting there open to risk - inflation risk, market risk, even legal risks. Don't forget taxes - while not technically a "risk", they are a threat to your money. The greater your wealth, the more long-range potential you have to accomplish some profound things provided your wealth is directed.
If you want to build more wealth this year or in the near future, don't neglect the risk management strategy that could be instrumental in helping you retain it. Your after-tax return matters even more than your investment return, so risk management should be part of your overall financial picture.
Request professional guidance for the wealth you are growing. A good financial professional will really help to educate you about the principles of wealth building. You can draw on that professional knowledge and guidance this year and for years to come.
Jacob Warren
Warren Wealth Management
111 West Port Plaza Drive, Ste 300, Saint Louis, MO 63146
(866) 463- 0752 ext. 52337 toll free, (314) 819-0464
---------------------------------------------------------------------------------
Securities and Investment Advisory Services offered through Woodbury Financial Services, Inc., Member FINRA, SIPC, and Registered Investment Advisor. Warren Wealth Management and Woodbury Financial Services, Inc. are unaffiliated entities
These are the views of Peter Montoya Inc., not the named Representative nor Broker/Dealer, and should not be construed as investment advice. Neither the named Representative nor Broker/Dealer gives tax or legal advice. All information is believed to be from reliable sources; however, we make no representation as to its completeness or accuracy. The publisher is not engaged in rendering legal, accounting or other professional services. If other expert assistance is needed, the reader is advised to engage the services of a competent professional. Please consult your Financial Advisor for further information.
[Permalink]
Presented by Jacob Warren
Content provided by Peter Montoya, Inc.
This is the year! Yes, you can make 2009 the year you alter your financial life for a better financial future. Let's look at some steps you might think of taking with the goal of financial freedom in mind.
No, we're not talking about those ridiculously obvious steps the usual articles recommend, like "write your goals down" and "set a budget". Let's go past the clich's and get into the real issues.
Look at your income source, your expenses and your debt. How do you earn income? If you earn it from one source, is there effectively a ceiling on it, or is there real potential for your income to rise in the next few years? Now look at your core living expenses, the ones you can't avoid (such as a mortgage payment, car payment, etc.). Can any core expenses be reduced? Investing aside, you position yourself to gain ground financially when income rises, debt diminishes and expenses stay (relatively) the same.
Maybe you should pay your debt first, maybe not. If you are a business owner or a professional, for example, you'll likely always have some debt. Your ultimate goal should be to build wealth - and you can plan to build wealth and minimize debt at the same time.
Some debt is "good" debt. A debt is "good" if it brings you income. If you buy a rental property, you're paying a mortgage, but that's considered a "good" debt because you're getting passive income from the rent payments. Credit cards are "bad" debts.
If you'll be carrying a debt for a while, put it to a test. Weigh the interest rate on that specific debt against your potential income growth rate and your potential investment returns over the term of the debt. If the interest rate on that debt looks like it will outpace your income growth and investment returns, then you should really think about paying that debt down fast, because you can't afford that interest rate.
Of course, paying off your debts, paying down balances and restricting new debts all works toward improving your FICO score, another tool you can use in pursuit of financial freedom (we're talking "good" debts).
Implement or refine an investment strategy. You can't refrain from investing, even when the bears are out. You're not going to retire on the relatively small elective deferrals from your paycheck; you're going retire on the interest that those accumulated assets earn over time, plus the power of compounding. Investing can also potentially bring you passive income. Consistent investing, this year and in years to come, has the potential to help you improve your financial life.
Manage the money you make on your way to financial freedom. It's amusing: all these Internet gurus tell you they have a method to make you "financially free" or "debt free", but few tell you how to manage the money you make. Their not-so-subtle message seems to be "succeed and live lavishly" - if you make it financially, you've earned the freedom to blow it all on cars, boats and luxuries.
This is a classic nouveau riche mistake. If you simply accumulate unmanaged assets, you have money just sitting there open to risk - inflation risk, market risk, even legal risks. Don't forget taxes - while not technically a "risk", they are a threat to your money. The greater your wealth, the more long-range potential you have to accomplish some profound things provided your wealth is directed.
If you want to build more wealth this year or in the near future, don't neglect the risk management strategy that could be instrumental in helping you retain it. Your after-tax return matters even more than your investment return, so risk management should be part of your overall financial picture.
Request professional guidance for the wealth you are growing. A good financial professional will really help to educate you about the principles of wealth building. You can draw on that professional knowledge and guidance this year and for years to come.
Jacob Warren
Warren Wealth Management
111 West Port Plaza Drive, Ste 300, Saint Louis, MO 63146
(866) 463- 0752 ext. 52337 toll free, (314) 819-0464
---------------------------------------------------------------------------------
Securities and Investment Advisory Services offered through Woodbury Financial Services, Inc., Member FINRA, SIPC, and Registered Investment Advisor. Warren Wealth Management and Woodbury Financial Services, Inc. are unaffiliated entities
These are the views of Peter Montoya Inc., not the named Representative nor Broker/Dealer, and should not be construed as investment advice. Neither the named Representative nor Broker/Dealer gives tax or legal advice. All information is believed to be from reliable sources; however, we make no representation as to its completeness or accuracy. The publisher is not engaged in rendering legal, accounting or other professional services. If other expert assistance is needed, the reader is advised to engage the services of a competent professional. Please consult your Financial Advisor for further information.
[Permalink]
How Fast the Markets Recover
Thursday 02/12/2009 - 6:08:17 pm
Don't let the headlines get you down.
Look at how the markets have rebounded.
provided by Jacob Warren
authored by Peter Montoya, Inc
The stock market is amazingly resilient. The sky is not falling, despite what the pessimists would have you believe. Yes, the Dow Jones Industrial Average entered bear market territory in early July. Yes, oil prices are incredibly high. Yes, June was a really lousy month for stocks. We can't change all this. But you might be surprised at how fast the stock market can change - for the better. Looking back, the market has recovered remarkably and quickly from some notable downturns.
2001-2002. After the four-day closure of the stock market following 9/11, the Dow fell 685 points (the biggest single-day drop ever) to 8920 on September 17. It kept falling, losing 14.26% in a week to close at 8,235 on September 21. But what happened next? A huge gain. The Dow closed 2001 at 10,021 - a 21% rebound in less than three months.1
There were more challenges ahead. On October 9, 2002, the Dow had fallen to 7,286. But on Halloween, the Dow sat at 8,397 - a 10.6% gain in 22 days.1
As for the people who panicked and bailed out of the stock market, they ended up kicking themselves: in 2003, the DJIA gained 25.3%, the S&P 500 26.4%, and the NASDAQ 50%.2
1987. October 19 was Black Monday: in a contagion of selling exacerbated by unchecked computer technology, the Dow lost 22.6% in one day, falling to 1,738, a 508-point loss.3 (That would be akin to a 2,300-point one-day drop today.) The S&P 500 lost 20.4%.4 By comparison, the initial "Black Monday", the stock market crash of 1929, represented a 12.8% market loss.5
Then the recovery kicked in. During the next two trading days, the Dow gained nearly 300 points and it closed 1987 at 1,939, gaining back all of the loss and ending up 2% for the year.6 By January 1990, the DJIA was at 2,800.7
If you were fortunate enough to invest $1,000 in the S&P 500 index at the close of Black Monday and reinvested your dividends, you would have wound up with about $10,800 twenty years later.3 If you had invested in the Dow stocks a week before Black Monday, you would have lost 30% on your investment in the crash - but if you held on, your investment would have gained 462% over the next 20 years.6
1974. With investors fretting over rising inflation and the energy crisis, the Dow loses 30% of its value during the first three quarters of the year. Suddenly, the Dow gains 16% in October.8 In early December 1974, the Dow is at 577; in July 1976, it hits 1,011.1
I hope these examples give you some encouragement and confidence when it comes to the market right now. The Dow, S&P and NASDAQ have been through some rough periods, but the important thing is to look at how they have climbed across the decades. Of course, past market performance does not guarantee future performance. The kinds of risks described above are only appropriate for certain types of investors.
On August 12, 1982, the Dow was at 777. On January 14, 2000, it was at 11,722.98. That's a 1,500% gain in 17 years.9 This is why people stay in the market through the downturns. This is what the market is capable of achieving. There are periodic descents, but history is definitely on an investor's side.
What should you do now? That's a good question. If you would like to talk about how to invest in light of this recent market, and what financial moves you might make that could help you manage risk and take advantage of a rebound, then talk with me today.
Jacob Warren
Warren Wealth Management
111 West Port Plaza Drive, Ste 300, Saint Louis, MO 63146
(866) 463- 0752 ext. 52337 toll free, (314) 819-0464
---------------------------------------------------------------------------------
Securities and Investment Advisory Services offered through Woodbury Financial Services, Inc., Member FINRA, SIPC, and Registered Investment Advisor. Warren Wealth Management and Woodbury Financial Services, Inc. are unaffiliated entities.
These are the views of Peter Montoya Inc., not the named Representative nor Broker/Dealer, and should not be construed as investment advice. Neither the named Representative nor Broker/Dealer gives tax or legal advice. All information is believed to be from reliable sources; however, we make no representation as to its completeness or accuracy. The publisher is not engaged in rendering legal, accounting or other professional services. If other expert assistance is needed, the reader is advised to engage the services of a competent professional. Please consult your Financial Advisor for further information.
[Permalink]
Look at how the markets have rebounded.
provided by Jacob Warren
authored by Peter Montoya, Inc
The stock market is amazingly resilient. The sky is not falling, despite what the pessimists would have you believe. Yes, the Dow Jones Industrial Average entered bear market territory in early July. Yes, oil prices are incredibly high. Yes, June was a really lousy month for stocks. We can't change all this. But you might be surprised at how fast the stock market can change - for the better. Looking back, the market has recovered remarkably and quickly from some notable downturns.
2001-2002. After the four-day closure of the stock market following 9/11, the Dow fell 685 points (the biggest single-day drop ever) to 8920 on September 17. It kept falling, losing 14.26% in a week to close at 8,235 on September 21. But what happened next? A huge gain. The Dow closed 2001 at 10,021 - a 21% rebound in less than three months.1
There were more challenges ahead. On October 9, 2002, the Dow had fallen to 7,286. But on Halloween, the Dow sat at 8,397 - a 10.6% gain in 22 days.1
As for the people who panicked and bailed out of the stock market, they ended up kicking themselves: in 2003, the DJIA gained 25.3%, the S&P 500 26.4%, and the NASDAQ 50%.2
1987. October 19 was Black Monday: in a contagion of selling exacerbated by unchecked computer technology, the Dow lost 22.6% in one day, falling to 1,738, a 508-point loss.3 (That would be akin to a 2,300-point one-day drop today.) The S&P 500 lost 20.4%.4 By comparison, the initial "Black Monday", the stock market crash of 1929, represented a 12.8% market loss.5
Then the recovery kicked in. During the next two trading days, the Dow gained nearly 300 points and it closed 1987 at 1,939, gaining back all of the loss and ending up 2% for the year.6 By January 1990, the DJIA was at 2,800.7
If you were fortunate enough to invest $1,000 in the S&P 500 index at the close of Black Monday and reinvested your dividends, you would have wound up with about $10,800 twenty years later.3 If you had invested in the Dow stocks a week before Black Monday, you would have lost 30% on your investment in the crash - but if you held on, your investment would have gained 462% over the next 20 years.6
1974. With investors fretting over rising inflation and the energy crisis, the Dow loses 30% of its value during the first three quarters of the year. Suddenly, the Dow gains 16% in October.8 In early December 1974, the Dow is at 577; in July 1976, it hits 1,011.1
I hope these examples give you some encouragement and confidence when it comes to the market right now. The Dow, S&P and NASDAQ have been through some rough periods, but the important thing is to look at how they have climbed across the decades. Of course, past market performance does not guarantee future performance. The kinds of risks described above are only appropriate for certain types of investors.
On August 12, 1982, the Dow was at 777. On January 14, 2000, it was at 11,722.98. That's a 1,500% gain in 17 years.9 This is why people stay in the market through the downturns. This is what the market is capable of achieving. There are periodic descents, but history is definitely on an investor's side.
What should you do now? That's a good question. If you would like to talk about how to invest in light of this recent market, and what financial moves you might make that could help you manage risk and take advantage of a rebound, then talk with me today.
Jacob Warren
Warren Wealth Management
111 West Port Plaza Drive, Ste 300, Saint Louis, MO 63146
(866) 463- 0752 ext. 52337 toll free, (314) 819-0464
---------------------------------------------------------------------------------
Securities and Investment Advisory Services offered through Woodbury Financial Services, Inc., Member FINRA, SIPC, and Registered Investment Advisor. Warren Wealth Management and Woodbury Financial Services, Inc. are unaffiliated entities.
These are the views of Peter Montoya Inc., not the named Representative nor Broker/Dealer, and should not be construed as investment advice. Neither the named Representative nor Broker/Dealer gives tax or legal advice. All information is believed to be from reliable sources; however, we make no representation as to its completeness or accuracy. The publisher is not engaged in rendering legal, accounting or other professional services. If other expert assistance is needed, the reader is advised to engage the services of a competent professional. Please consult your Financial Advisor for further information.
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