The Markets are Down! The Sky is Falling! Run For Cover!

Is this what you hear in the media and from your friends and family. Ok cowboy, slow down there and let’s take about 4 steps back and think about how things really are in a more objective sense. The markets are down, there’s no question about it there. But that doesn’t mean that the sky is falling and it doesn’t mean you should drop everything and run for it. Now is the time to be patient, calm, and possibly add more.

Leave Your Investments Alone! Do you know what Paper Loss means?
Sure, you might actually be down 50%. And those of you that are probably still feeling the pain. But did you know that whatever you are down, it’s only a paper loss? Which means you technically haven’t “lost” the money. You’re just “down” that amount on paper.

I can understand how much psychological strain this can put on you, however it’s really no reason to sell everything off and hide in your closet hoping it’ll all go away. Unless you have a plan, the worst thing you can do is to sell and hope that things will turn out. In reality, you have to endure this crisis and think about what longer-term term plan is.

Review your Investment Objectives and Stick to them!
When you initially invested in the markets, I sure hope you had goals about an investment objective. If you didn’t it still isn’t too late, take a moment to think about what you want out of your investments and write them down. For example, how much money do you want in retirement?

Like I said in my article about goals and dreams, write down what you want in life even if it seems outrageous to you now. If you don’t dream, it definitely won’t come true. Dream big! Why not? It’s your life and you only get one shot at it. So if you’ve only got one chance, then make the most of it by giving yourself a chance!

Put More Money in the Markets!
Sure the markets are down and they could go further down but valuations are cheap! Be sure to make sure what date I wrote this article before you run to the nearest broker to buy all the stock you can with your savings, retirements savings, and even aunt Nicole’s inheritance!

I definitely think it’s an attractive to enter the market but you really need to put your eggs in different baskets. By that I mean you need to diversify and you also need to dollar cost average your investments. Diversify by buying stocks and fixed income securities that don’t correlate with each other too much.

Dollar cost averaging means that you buy one stock at different prices even if it’s higher than when you originally bought it. This is so that over the long term you can “average” your cost base of an investment. In the long run even if the market falls you won’t lose too much. But if the market takes off, your investments will definitely be looking pretty good. I will write a dollar cost averaging blog entry within the next few days, so stay tuned!

Mo2 Thinks
The markets are done, and yes everyone is groaning about it. But guess what? Everyone is struggling so don’t let the pessimism get to you! Always think positive and try to learn as much as you can about finance and investing! My goal here is to help you start your quest to learn and to provide you with as much information as I can. If there’s a certain topic you want me to write about, e-mail me or leave a comment telling me what you would like me to write about and I will do the best I can.

Good luck!

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How One less coffee a day can save you over $1,000 a Year

Stick Only to Your Morning Coffee
A lot of us can’t start off the day without a coffee. I’m guilty of this, before going to work I have to have my cup of Java before I can start the day on the right foot. There’s just something about the wonderful smell and taste that helps me get my day under way. Caffeine is bad for you as many studies show, but some of it can also be good for you, other studies say. Well, to be honest, as with everything, most things can be good for you if you keep it in moderation.

I’m often also guilty of drinking a second or third cup of coffee during the day I know many other people who are. When they have a “coffee break” they actually get another coffee. And the problem is, most of these people that get the second or third coffee aren’t really thinking what that second and third cup is doing to both your physical and financial health. As for our coffee problem, the best alternative would be: Drink Water. =)

Keep Track of Your Savings!
Every cup of coffee you don’t drink saves you money, so keep track of how much you don’t drink! Make an Excel spreadsheet, write it on a notepad, do anything that will help you keep track of how much you’ve saved!

Feed Your Piggy Bank!
For every coffee you don’t drink, help your piggy bank savor some extra coin! Well you don’t have to take that literally; you can tally up how much you saved in a week or a month and move that extra money somewhere such as a savings account or buy some mutual funds. Do something with that money so you can differentiate it from everything else you spend the money for, that way you’re actually putting the money you saved into good use, saving for your future!

What that $1.75 could translate to over the long term…
$1.75 or $1.50 whatever you save doesn’t seem like much but let’s do some math.

$1.75 x 365 days a year is $638.75. If you get a return of 6% then that would be $638.75 x $677.08. Now that’s some decent cash.

If you drink something a little more expensive (a lot more actually) like a latte then you’d be saving a lot more! Say the average latte is $3 and you refrain from drinking that extra latte a day, that would be $3 x 365 = $1,095. At 6% return that would $1160.70 a year!

Now to use the latte example, if you were to save that money for 20 years and keep it all saved at a 6% return, then it would turn into $36,557.70! That’s not too shabby is it now? Now obviously, not everyone will be drinking 2 lattes a day but you get my point hopefully.

Mo2 Thinks
This coffee example should show you how much saving a few dollars a day could leave to your financial freedom. There are several ways to save money everyday and you should make an effort to figure out how to pinch pennies without hurting your lifestyle or seeming to be cheap. You don’t want to be thought of as cheap, but there are ways of being conservative with your spending.

The next and probably more important step is to make sure you separate your savings from the money you use to pay for your other stuff. By differentiating what you are saving and putting it somewhere you can invest it, you’ve taken a massive step into helping yourself become that much more financially responsible!

Take Action!
Get a pen and paper out and write down the daily expenses that you have and write out how much you spend on them. See if there are ways to reduce your spending on these expenses and work on reducing them day by day. If you don’t have one already, open up a free high interest savings account at your bank. Every bank should have a free account with unlimited transactions to save your money.

Transferring money into this account from your chequing account could cost you money so you could keep track and put money in this account once a week or even month. I would do it once a week so that it makes it easier to keep track and you can feel the difference your savings are making to you mentally. In addition, by putting money away weekly it’ll keep you disciplined in continually saving money.

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Are Goals & Dreams Really Necessary?

Everyone talks about how important goals are, but do you really need them? Some people may not need them, but if you want to make big achievements in life you need goals and dreams. Writing your goals and dreams down are extremely important so that you can keep track of your successes and failures. By keeping track, you can determine where you are excelling and where you are lacking effort. With this mindset, you will grow and so will your goals and dreams ultimately leading to your fulfillment of even the wildest of dreams!

Write Your Goals & Dreams Out
Writing your goals and dreams out not only helps make it visual, you have made a commitment to yourself that you will do your best to achieve them. It’s only the first step, but it’s a big step in the process. Have different headings for each time period of your goals. Divide your goals and dreams into short (less than 3 months), medium (less than 1 year), and long term goals (longer than 1 year). By dividing your goals and dreams out, you can concentrate your efforts on your short-term goals, while having in the back of your mind your medium and long terms goals.

Review and Revise Your Goals and Dreams!
On a weekly or monthly basis, be sure to take a look at your list. This way you can review them and strengthen your will to work harder on yours goals. If something has changed you can revise your goals to make them stronger or to have them match your current state of mind.

Reviewing is extremely important to keep you on track and to give you that extra step when you are going through trying times. Your short-term goals will be relatively fresh in your minds, but you need to review your medium and longer-term goals consistently so that you know which direction you are heading in. Feel free to add onto your goals and dreams whenever necessary.

Achievements!
If you work hard enough at it, you will achieve your goals and dreams down the road. Sometimes you might fall short and won’t even be close to where you wanted to be. But don’t look at what you weren’t able to achieve, look at the things that you were able to get done. By thinking positively and looking at the progressive steps that you were able to make, you will able to help yourself take that extra step that could make the difference.

Mo2 Thinks
Setting goals, writing them down, and reviewing and revising them is a great recipe for success. Investing is the same as your goal setting, by having short, medium, and longer-term goals you can help create the financial freedom that you are looking to attain.

In the shorter-term you should think about ways of saving money. Simple things such as one less coffee a day or eating out less. Think about ways to help you in the future by spending less today.

In the medium-term set goals of how much saving you want to do in the year. For example, if you have a certain figure in mind that you need to retire. Such as the portfolio number I discussed in an earlier article, then take that apart and see how much you need to save for it. If the figure is $10,000 then divide that by 12 and think about how you are going to come up with $833.33 to invest every month. See how this ties in with your short-term goals?

In the long-term you will be looking at big-ticket purchases like a car, home or even retirement. The portfolio number will be a big factor here by determining how much you need to retire. Think about the things you want and need in your future and retirement and set specific goals so that you know what to work towards in your future.

Take Action!
Grab a pen or pencil now! Grab a scrap piece of paper! Write down the 3 headings, “Short term”, “Medium Term”, and “Long Term” You don’t have to write all your goals and dreams now, you can always add and change them later. Some of your goals and dreams could be outrageous! For example, it could be to buy a $10 million apartment in New York. It’s a dream and you shouldn’t be ashamed for dreaming! Why not take a shot at it? We only live one lifetime, take action!

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