Next Gen Financial Planning

As I shared with The Simple Dollar here, there's much more to running a business than providing your product/service!

How much can 1% really be? I can hear your thoughts. Retirement is 30 years away, it’s only 1% percent more. And you think it’s such a minuscule amount for something so far away. Ok smart guy/girl, let’s do the math. First, we should understand that all investments will incur some fees. It’s the normal cost of managing investments and doing business. But not all fees are created equally. For example, it’s not uncommon for some mutual funds to charge as much as 1.5% - 2.5% ...per year in fees. These large variations in fees can come from similar funds that just track other indices such as the S&P 500. Here’s how it plays out. Here’s the scenario. You have 30 years until retirement and you have $100,000 dollars to invest. For simplicity, we’ll use a 10% return and no inflation for illustration. You have 2 funds to choose from. Fund 1: Expense Ratio of 0.50% Total Returns expected after 30 years would be $1,522,03. That’s a solid return. Fund 2: Expense Ratio of 1.50% Total Returns expected after 30 years would be $ 1,155,825. Wait, what just happened? Your 1% Fee just turned into a cost of $366,205.83. Still think 1% is inconsequential? We don’t think so. Your takeaway should be this, fees really do matter. Maybe it’s time to go check how much you are paying in fees. Note: 1% -1.5% fee is very common for investment advisors and within fund expense ratios. If you are unsure, reach out to us and we happily hook you up with complimentary consultation.

Here is a great reminder why we should never pick asset classes based on past performance. This chart shows us what is hot today could easily be the worst performer tomorrow. http://awealthofcommonsense.com//updating-my-favorite-per/

The Amazing Rule of 72* You want to double your money! Who doesn’t? Here’s how, it’s easy. ... Use the formula X * Y = 72 X = number of years it takes to double your money Y = percentage rate of return you earn on your money Let’s try an example: to double your money in 10 years, what rate of return do you need? The answer: 10 * X = 72 Divide 72/10 and you get 7.2 so x = 7.2 percent You need 7.2 percent return to double your money in 10 years. If a 10 percent rate of return will double your money in 7.2 years, it will double your money again in the next 7.2 years. In less than 15 years you’ll have four times your money and sixteen times your money in 28.8 years. Who knew algebra could be so much fun and rewarding?!? Oh please, this is fun! *The Rule of 72 is an approximation. Actual investment returns can fluctuate and therefore may not perfectly mirror this principle.

https://www.marketwatch.com//the-bitcoin-bubble-now-dwarfs

It’s a bird! It’s a plane! No, it’s an HSA!!! No we are not talking about those disappearing funds in your (FSA) Flexible Spending Accounts employers keep pushing on you. These funds allow you to keep it all, forever!

Investing doesn't have to be complicated to be effective and efficient. Look no further for proof than the legendary battle of Warren Buffet vs The Hedge Funds.... Next Gen Financial Planning takes a passive, academic, low cost approach to investing for this very reason. https://www.investopedia.com//buffetts-bet-hedge-funds-yea

I’m not going to lie, I put my credit score on my online dating profile. Oh yes I did! What does that have to do with Emergency Funds? Absolutely nothing, but had I known about emergency funds back then I’d probably have put that on there too. Let’s be real, emergency funds are sexy. Just ask my girlfriend. Let us know in the comments below if you agree or disagree. #emergencyfundsaresexy #nextgenfinanicalplanning