Make the Most of Your Money – DIVERSIFY!

Posted on February 3, 2010. Filed under: Informed Investor Alliance, Making Life Easier | Tags: , |

Mission Viejo Book Signing – ‘Making the Most of Your Money’

Last week I visited the Mission Viejo Library to get a copy of what is supposed to be the best personal financial planning book on the market right now. Entitled ‘Making the Most of Your Money’, it was written by Jane Bryant Quinn.  Honestly, I had never heard of Jane Bryant Quinn until recently, but she definitely is a highly respected voice in the money management community.

Jane got off to a light start, joking that she almost named her book ‘Making the Most Out of What’s Left of Your Money’. She agrees that the economy is in a bad place, adding that the government needed to step in in order to prevent a full-on depression. But this cloud has a silver lining – the economy is recovering. Nevertheless, we’re still feeling some economic aches and pains, which is why keeping our finances in mind and tightening up our ship is such a good idea.

Jane covered quite a bit of financial planning territory. Regarding our current bull market, she recommended diversifying accordingly. She also touched on inflation, predicting that fortunately this monster won’t go very high.

For the U.S. government’s role, Jane pointed out that Congress may soon be restoring the Paygo law, which is intended to control government spending. This, along with a tax increase, could significantly help our budget.

So how do savers and investors pick their way through the current financial wilderness?

First and foremost, according to Jane, get OUT of consumer debt. “Debt is like feeding your dollars to squirrels.” Do NOT make it normal. Debt and credit are not glamorous. Sure, they seem fun at first, but when it’s time to retire and your mortgage is soaring, the debt beast will likely bring you to ruin.

In the Real Estate arena, Jane cautioned that we shouldn’t expect the height of where we were in 2007 for many, many years. OK fine. Thanks for that. In general, home prices follow the inflation rate. Currently, consumers aren’t thinking of their homes as investments. But that’s OK. Because when all is said and done, according to Jane, it STILL PAYS to OWN a HOME!!!!!! But watch those HELOCs. Let’s get back to that concept of paying down our mortgage, people. Jane also advised don’t take a reverse mortgage until you’re in your 80’s, even though you are allowed to in your 60’s.

If you’re underwater on your rental investment, it’s probably a good idea to lower your rent to keep your tenants. You must be prepared for losses for years and years if you are a serious real estate investor.  Make sure you have liquid cash flow.  You can also consider short sale or foreclosure if the property is a huge drain. Talk to a professional Orange County financial planner and / or consider some by the book investment education.

As for stocks, Jane mentioned that she talked with many of the top financial masterminds all over the nation. Apparently, the majority of them have the bulk of their own funds in a broad market index, something like S&P…

She added that for young people, lifestyle funds are a good idea, even though they’ve received a bit of a bad rap.

Jane also stated a good formula for your retirement fund risk is this: subtract your age from 110. Whatever that number is, that’s the percent you should be investing in stocks. As you get older, this formula helps you safely transition into a majority of bonds and a lower risk portfolio.

There are so many valuable insights in this book, it was THICK!  I’m sure  ‘Making the Most of Your Money’ is truly a valuable guide to sound financial planning.  But seriously, no matter how many books we read someone, who does financial planning for a living will always be better than we are, IMO.  You should have a professional on your side.  Just like you should in real estate!!

Speaking of property, if you would like your diversification strategy to include owning some Orange County Real Estate, I’m happy to help.  Contact me at 949.338.7408 or angie@askangie.com.  Or follow me @AngieWeeks or @WeeksTeam.  Happy investing – feel free to post what has and has not worked for you here!

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    Orange County, CA Real Estate for hip first-time buyers and investors. Plus, fun things to know and do in OC.

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