Fire crews appear to be on the scene of fire burning near Penticton
hospital (Penticton)
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Penticton Fire Services appear to be on the scene of a fire near the
hospital. Castanet reader Chuck Myers sent in footage of the fire burning
at about 9:1...
Renovating Your Financial House Part 3
The markets rise the markets fall ... how can your build savings in an environment like this? Good question.
As part 3 of a 4 part series on Renovating Your Financial House we will be focusing on how Build Saving to create a life for you and your family!
The solution is not the best mutual fund, investment strategy or tax strategy. This is a great way to sell a product ...but it over looks what it really takes to grow net worth ... the Pareto Principle or the 80/20 rule.
What Pareto taught was for many events, roughly 80% of the effects come from 20% of the cause. So for example 80% of all goals comer from 20 % of the team or 80% of your income come from 20 % of your work.
So you ask how does this relate to building savings?
Here is what I have found after more a decade in the investment business, investment success has more to do with behaviour than the investment. Of course you need the correct product based on your risk tolerance, properly diversified and effectively managed. But this is the 20%.
The 80% is everything else going on in your life that will contribute to a bad financial decision. Things like losing your job, getting injured on the job, separating from your spouse, and premature death of a family member.
If you don't have the rest of your plan set up, along with a contingency fund you will be forced to use your investments at the wrong time. When the job markets are bad, housing prices are down and your accounts are down. And if this wasn't bad enough you may owe taxes as well.
Every year I meet people forced to make these kinds of choices, costing hundreds, sometimes thousands of dollars to fix a short term problem at the expense of things that are really important to them.
Unfortunately you can't see the future. The only way to invest or stay invested is to monitor your cash flow and review your plan regularly.
We've all heard "Buy Low and Sell High". Selling high is hard .... because you don't know when the price is really high. But buying low is even harder. Usually when things are really low ... there is a reason. No one has any money. Make sure this isn't you!
If you don't have a written game plan ... now is a good time to put your goals to paper and set up a sound financial house.
In my final week of Renovating Your Financial House we will be covering Income Management and how to create income to fund your financial game plan. Use my blogs search widget to find all 4 parts.
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