Hope for your financial life and beyond

High Risk Investing: When I Turned One Thousand Dollars Into…

I marvel at how Wall Street creates wealth. This even happens sometimes through high risk investing. An investor purchases a few 100 shares in a small company that hits it’s stride or a start-up that goes supernova and they become a millionaire inside a decade.

high risk investing

That’s not normal. For most investors it takes multiple decades of steady, solid investing to create significant wealth. But it does happen from time to time, as we all have seen.

That’s why the latest opportunities or fads like cryptocurrency and NFTs attract us. It’s why we get caught up in new companies and try to buy in on the opening day of trading. IPOs (initial public offerings) tend to be extremely volatile. That is why investors are better off waiting for several months before they decide to purchase shares.

What if you could purchase shares in a company before it went public though? That would be an extreme level of high risk investing. You are essentially putting money into a company that might not even make it to market. That strategy is more like speculating than investing.

But would you do that given the opportunity? Put money on the line with a chance to hit it big or lose it all? I did once and here’s that story.

[Read more…]

Solar Energy: Is It a Worthwhile Investment?

The history and development of solar energy is quite fascinating. It has been a viable option for electricity for some time. But for the consumer marketplace, it started to became affordable around 2005. 

In relationship to the cost effectiveness of solar energy for consumer, a growing awareness of environmental concerns has developed in recent years. Solar systems and the green energy movement have coincided with one another. Those considering “going green” often look to solar energy as a first step in those efforts.

Additionally, solar panels can have economic benefits to the consumer. Of course, people are looking to them to save money in their monthly budget. But others are also considering the investment side of solar energy. One, as an investment in their current home. And two, as an investment in which they can diversify their cash and make money in the long run. 

So is solar energy right for you as a cost savings measure or as an investment? Here are some beginning things to consider.

[Read more…]

Three Loans that People Consider an Excellent Investment

Should you ever get a loan? Why not pay cash for everything? Is that even possible?

Technically the answer is yes, it is possible to pay cash for everything. And it is probably the prudent way to proceed. Why would you go into debt and owe all that money?

People often view loans as a negative thing in the modern world. It is proven that people get into trouble when borrowing money from a bank. You can also get into trouble if you borrow money from friends or family. And of course it matters what you borrow the money for. Some things may be helpful in the long run. Others, not so much. 

There are a lot of different loans on the market that are designed to meet your needs. In fact, some of these loans many people would actually call a good investment. Let’s take a look at several loans that many consider good and one that is a little more iffy. 

[Read more…]

Your Best Investment Ever Won’t Be In The Stock Market

What is the best investment you’ve ever made? Historical analysis suggests an investor in the U.S. stock market can reasonably count on an average annual return of 8-10%. There will be good years and bad to live through, but that’s a pretty good return for your money.

best investmentWhile the stock market is known as the great creator of wealth, it’s not the best investment you can ever make. It’s also not land, rental properties, CDs, bonds, or commodities. None of those will bring the level of return needed to really succeed in your life, in your career and with your finances.

One investment outshines all these in terms of total lifetime return. That’s the investment you make in yourself. Nothing will move you forward quicker, push you farther and have more lasting impact than the time and money spent on oneself. Here’s how.

[Read more…]

6 Ways We Survive the Dark Side of Rental Real Estate

My wife and I purchased our first home to be used as a rental property seven years ago. That move was the culmination of several years’ worth of reading about and planning to own rental real estate. It took us that long to feel knowledgeable and confident enough to put a plan into action that would earn us a steady income stream aside from our normal careers.

For the most part, our experience has been a positive one. In fact, I’d say overall it has been great. However, we have had our share of challenges along the way, like:

rental real estate…an unexpected new well we had to drill and install (that was pricey!)

…leaky copper pipes that had to be replaced in an entire house

…a dual tenant situation where one roommate left, leaving us with half the monthly revenue stream on that property until another roommate could be found

…tenants who don’t inform you of repair issues in a timely manner (“Really? It’s been leaking how long?”)

…tenants who won’t pay on time, or ever

…tenants, who by their actions force you into court (that’s a post in itself!)

…managing the finances to account for repairs, taxes and the house that sits vacant for months while you do said repairs or find a new tenant

…dealing with the emotions that come when facing these tough circumstances

…the time it took away from our already busy schedule to take care of all this

Are you prepared for all that and more? If you are game, then I have five suggestions that will help you manage through some of the dark times that will inevitably come. And I’ll tell you the sixth thing we’ve done recently that has taken our rental real estate business to the next level.

[Read more…]

Keep Your Emergency Savings Fund Under Your Mattress?

What should you do with that emergency savings fund money you’ve been accumulating?

I don’t know. Why don’t you just keep it under your mattress? That’s probably the best idea.

(Cricket noise…)

April fools! (Sorry, just couldn’t resist.)

emergency savings fund under mattressNo, no, no…a thousand times NO! Please don’t keep your emergency savings fund money under your mattress. That’s one of the worst places to keep cash around the house. Under the mattress or the bed will be one of the first places a burglar looks for valuables.

Now there is nothing wrong with keeping cash around the house. You might need some for a spur of the moment issue. Banks aren’t always open and you might not be able to get to an ATM. But you don’t want to keep the emergency savings fund around the house.

Why?

[Read more…]

5 Warning Signs When Choosing a Financial Adviser

A few years back, my wife and I encountered some life planning issues that we felt inadequate to handle. Not wanting to cause significant damage to our finances, we decided to seek the counsel of a financial adviser. For weeks we conducted a methodical search to track one down in our area.

financial adviserWe felt very nervous, opening our financial life – warts and all – to a complete stranger. Fortunately, our research found that most of the financial advisers in our area offered an initial consultation that didn’t require we make a long-term commitment to them. So with that encouraging news, we contacted four prospects and scheduled interviews.

In those four interviews, I saw the good, the not so good and the bad of the financial adviser world.

Looking For a Financial Adviser

These were the kinds of financial advisers we encountered:

Interview #1: The Index Guy

[Read more…]

The Hidden Commodities of Real Estate Investing

The following is a guest post from Jim Driscoll, the founder and author of CriticalFinancial.com.

ID-10017132Ever looked at real estate investing as having a vested interest in a packaged commodity? Huh…a packaged commodity? How is that? Well, let’s look at real estate from a broad perspective.

Real estate is made up of an array of commodities each possessing their own intrinsic value; such as wood, concrete, petroleum products, copper, aluminum, and other building materials. The cool thing is they are packaged together into a single investment called real estate, which can be leveraged, depreciated, and purchased with borrowed money.

As if that’s not attractive enough, a fantastic tax benefit pushes real estate into the category of best investment ever’! Is there a greater investment? If there is, I haven’t found it. What other investment allows you to invest potentially 5% or less of your capital, then lets you outsource your interest payments to a tenant.

Ahhh…the utopian investment. Nope, not so fast. Being a landlord is not for everyone. Those middle of the night phone calls to fix a stopped up toilet are enough to weed out a large swath of investors.

Real estate is not liquid. Many investors want to be able to rid themselves of their investment as soon as they think it looks to be hitting a downturn. For some folks though, ‘being liquid’ only creates temptation, and we know what temptation can cause us to do in the highly intense investment game.

After my experiences of losing money through investing in Wall Street products, I have now trained my mind to think of real estate as a forced savings account.

Real Estate = A Friend to Inflation

[Read more…]

This One Stock Chart Could Make or Break You Over the Next 20 Years

stock chartMy investment plan is pretty simple – invest in retirement and non-retirement stock and bond mutual funds and sprinkle in a little real estate investing along the way. I invest for the long-term and don’t pull money out of the market at the first sign of a downtrend. Instead, I continue to invest monthly during a downturn to pick up more shares of stock at lower prices.

Because this is my philosophy, I don’t pay attention to the day-to-day fluctuations of the market. I quit listening to CNBC and other financial news programs years ago. While some of the programming was tolerable, they are news organizations, interested in ratings and what’s happening with the markets in the short-term.

The majority of the opinions I heard on any given day about the state of the markets and what I should be doing accordingly, didn’t jive with my long-term investment strategy.

One aspect of investing that has always intrigued me though is the stock chart. When these pop up on the news channels or I see one online (like I did yesterday) I often take notice.

Short-Term Stock Chart

[Read more…]

5 Common Rental Real Estate Mistakes Landlords Will Make

rental real estate mistakesSo, you are ready to take the rental real estate plunge and become a landlord. Awesome! I hope that you have come to that decision by desire (you really want to do this) and not by necessity (you were forced into it because your house wouldn’t sell). One of those scenarios (hint: the first one) generally works out better than the other.

My wife and I have been renting properties for some time now and our landlord experience has been positive. I believe our success comes from a desire to run a quality business, as we never considered this to be a whimsical adventure. We spent over a year studying the idea to make sure rental real estate was right for us because we knew it has its darker side. I believe we set ourselves up for success as landlords by doing that because we went into it with our eyes wide open.

Rental Real Estate Mistakes Landlords Should Avoid

Even with all our preparation we made some mistakes with our rental real estate. Here are five big ones I want to help you avoid.

1. Paying too much for a property

[Read more…]

Shock Treatment to Break Your Financial Procrastination

Shock coilsCollege breeds procrastinators.

At no time of my life did I put more things off until the last minute than my first few months in college. Every hour something new would entice me to put the books aside and enjoy the other, more exciting things college had to offer.

The pickup hoops game at the gym.

The late night pizza runs.

The cute girl one dorm over.

Time and time again this would happen, especially early on in my college life. As a result of my attention to anything unrelated to studies, I would often find myself starting papers at 11:00 pm that were due the next afternoon. Talk about putting your back up against a wall. It was an all night scramble of writing, filled with Mountain Dew and Ho-Hos.

“Fairly quickly” is the answer to the question “How long did it take you to develop a more disciplined attitude?” Had to…my freshman GPA (and ultimately my graduation) was depending on it. I realized there was no way I could maintain those negative patterns of time management and succeed at that level of education.

Procrastination creeps into all areas of our life. We put off dealing with relationship issues, work assignments, our spiritual health and even kid problems. Perhaps in no area does it rear its ugly head more so than in the world of personal finance. What is it about money that keeps us from confronting our difficulty with managing it?

Are you a personal finance procrastinator? Ever said any of these things:

[Read more…]