Savers vs. Investors: Which One Are You?

Don’t get it twisted saving and investing are not exactly the same thing. You have to use both skills to build wealth and accomplish your goals. But, there are major differences between the two.

An investment is ownership and saving is not. You save to preserve money for the present and immediate future. You invest to grow money for your future.

Saving is a short-term situation (less than seven years). You can also liquidate your money almost any time you need it. Your goal is to protect this money from the market’s ups and downs. This is money that has to be there when you need it. Savers use savings accounts, money markets, checking accounts or certificates of deposits to accomplish their goals. You can use these tools for day to day expenses, building emergency funds, saving for home down payments or some other short-term goal.

Investing is a long term situation (seven years or more). It usually takes that long for investments to mature. Investors typically own a portion of whatever they are investing in. Investors use stocks, bonds, real estate and other equities to accomplish their goals. You can use these investments to build wealth, finance retirement or for some other long-term goal.

Saving is the best options anytime you have a time horizon of less than seven years.

For example, let’s say you have $2000 that you will need for a home down payment in two years. Your best bet is to save it. Put it in a savings account or certificate of deposit. Why? Because, you are going to need your two grand when it’s time to buy your house. You can’t afford to expose your $2000 to the market’s ups and downs. You need guaranteed money in a short period of time.

Investing is the best options anytime you have a time horizon of seven years or more.

On the other hand, let’s say you have $2000 and you want to use it to start saving for retirement. Your best bet would be to invest it. Investing in this example is better than saving because over the long term investments will earn you more money than saving. There are more risks connected with investing, but you minimize some risks when you invest long term.

In the end you have to use both techniques. Keep this in mind when you are managing your finances.

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Double Your Money with the Rule of 72

The Rule of 72 gives you a good idea of how long it takes to double your money.

Here is how it works. You divide 72 by the amount of interest and the answer gives you the approximate time it takes to double your money. (72 ÷ I = T)

For example, you invest $500 in a certificate of deposit that pays 3 percent interest yearly. You divide 72 by 3 (72 ÷ 3) and you get 24. So, it takes about about 24 years to double your investment.

Which scenario is worth your time and hard earned money?

This rule further proves the necessity for you to make every business compete for your money. For instance, you invest that same $500 in a traditional savings account at 0.1 percent yearly interest. Divide 72 by 0.1 (72 ÷ 0.1) and get 720. At that rate it would take 720 years to double your investment. If you put your $500 in an online savings account at 2 percent interest it would take 36 years to double your investment. Let’s say you invest in a mutual fund that averages 8 percent each year. It would take 9 years to double your money. Earning higher rates help you maximize compound interest.

Is it worth it?

The rule also gives you an idea of how much you are really paying for something. For example, if you go to your local rent-to-own store and sign a one-year agreement to finance a computer at 12% weekly compounded interest. You divide 72 by 12 (72 ÷ 12). You pay the full price for the PC EVERY 6 weeks. In a year, you will have paid for the computer more than 8 times. Paying excessive interest rates means you’re paying more for an item than it’s worth.

You want to get to the point where your investments double in a reasonable amount of time. You work too hard for your money. Take charge of your finances and prosper.

Picture found at http://www.timeforresults.com/

The Bottom Line

Good Sunday, Family! The Bottom Line is a review of interesting stories from the past week. Enjoy!

Multimillion-Dollar Grant Competition Funding New Job Training

Bernanke: Economy to bounce back stronger

Cash for Clunkers: Is it for you?

Fannie & Freddie: The most expensive bailout

The Monster of Wall Street Lives

Learn the Rules of Engagement and Prosper!

Whether you're an aspiring business owner looking to jump start your venture, or an established entrepreneur looking to reenergize your brand, you have to train today to win tomorrow. These three websites will help take your business to the next level.

Black Enterprise University- the same company that publishes Black Enterprise magazine is now presenting innovation and easy-to-understand on-line courses. These courses cover topics from marketing, social media, winning sales pitches and so much more. Experts include Andrew Morrison, Brent Leary, Melissa Dawn Johnson and many others. Applying their advice will prepare you for to compete for tomorrow’s opportunities.

HP Small Business Connection - HP offers classes that help advance your productivity at home, school and in business. Their courses include helpful insight on software, publishing and online solutions. The site also offers free templates and video courses that will help you succeed in a highly competitive business environment.

Small Business Administration- The SBA is the government’s small business development effort. SBA helps small business owners secure financing, develop networks and compete for private and public sector opportunities. Their free courses include information on Winning Federal Contracts, Franchise Opportunities, How to Win Customers in a Slowing Economy and so much more. This site is unique because the government produces the content. Our government is the world’s largest enterprise. So you are getting guidance from the same institution that spends trillions of dollars each year. Use their techniques and languages to land huge contracts for your firm.

What are you waiting for these courses are FREE! Register right NOW!

Picture found at http://www.marketerreview.com/

Procrastinators Finish Last, If They Finish At All

Do you hold off on major tasks because “you work better under pressure?” If your answer is yes, you are a procrastinator. It may work once or twice. But, if you keep at it you won’t achieve your goals. The American Psychological Association reports procrastination makes people poorer, fatter and unhappier. Business coach Dante Lee puts it like this.

“Often I encounter people who talk about their business goals or concepts,” Lee reveals. “And, they say these are [potentially] million dollar deals.”

Six months later, “they’re still talking about getting that patent or trademark.” One year later, “they’re still talking about getting that patent or trademark.”

What have they accomplished? Nothing.

Lee, 27, graduated from college in three years and founded the Columbus, Ohio-based Diversity City Media. He says procrastination “kills dreams.”

Lee has a few steps to help you defeat procrastination.

Stay Positive- Complaining wastes energy you could be using to accomplish the task at hand. Use that energy to move forward.

Write You Goals- Writing your goals helps you remember them. It also keeps you accountable for achieving them.

Be Responsible- Lee says you should feel guilty if you are telling people about your goals and not achieving them. After feeling guilty do something about it.

Be Patient- It will take a considerable amount of time to accomplish your dreams. You have to be patient and see them through. “Nothing comes over night,” says Lee. “It may take years.”

Measure Your Progress- Take note of your progress, even if it’s small. Your progress will encourage you to continue.

You don’t have forever to accomplish your goals. Psalms 1:3 promises “whatever you doeth shall prosper.” You have to do something before it can prosper. So stop procrastinating and get to it. NOW!

Picture found at media.tumblr.com

The Bottom Line

Good Sunday, Family! The Bottom Line is a review of interesting stories from the past week. Enjoy!

Find Your Dream Job and Make It Work!

Dollar-Cost Averaging Doesn't Require a Crystal Ball

SBA’s 8(a) Program Promotes Equal Opportunities

10 States With Housing Jobs on the Way

The 7 New Rules of Financial Security

What is Your Business Card Saying Behind Your Back?

What is your business card saying behind your back? Graphic artist Sonya Lowery answers that question in her latest book, The Secret Language of Business Cards.

“When you leave a meeting you are no longer speaking for your company,” Lowery says. “The materials you leave behind are speaking for your company.

Lowery leads the Maryland-based Solaris House of Fine Graphics. Her company’s motto is “you only get one chance to make a first impression.”

“If you are leaving behind an unprofessional business card or marketing package,” she asserts. “It is saying that you are unprofessional.”

Your business cards and marketing materials must communicate that you are serious and ready for business. She reveals “it’s very important to appear legitimate.”

“Legitimate marketing materials say that I’m serious about my business and I’m serious about being in business,” the ten-year veteran informs.

Make sure your materials are saying great things about your company. Secret Language offers useful tips.

Never Leave Home Without It- Lowery shares that if you are in business “you must have a business card.” If you don’t, you are communicating that you are “unprepared.” Who wants to spend money with someone who’s unprepared?

Pay For Quality- Avoid using free services or do-it-yourself kits. “Why would I invest in your company, when clearly you haven’t invested in your own company,” Lowery inquires. She says those cards scream that you don’t believe in your business. Hire a graphic designer to develop a professional image for your company.

One Card, One Business- Only put one business on your card. Having more than one business on your card blurs your message. You appear to be an amateur instead of a specialist. “I won’t hire this person for any of those businesses,” says Lowery.

No Write-Ins- Do not hand out cards with errors or hand written corrections. This is tacky and unprofessional. Those feelings will transfer to you and your business. “Those cards go straight in the garbage,” says Lowery.

Read more in The Secret Language of Business Cards (Jordan Maxwell Publishing)

Photo found at http://www.superstock.com/

Rules for Roommates

Are your housing costs draining most of your funds ? If your answer is yes, rooming up with someone is a good cost saving option if you’re single and childless. Having a roommate could help you shave off half of your living expenses. This savings can help you get ahead.

For example, let’s say your monthly housing and utilities expenses add up to $775. Getting a roommate saves you nearly $ 387.50 per month, assuming you split bills evenly. That’s $4,650 in one year. Divide the money into three parts. Then use each third of that money to pay down debt, build an emergency fund and invest in a certificate of deposit (CD). After a year, you would have paid $1,549.92 off your debts. You would also have $1,580.92 more in your emergency fund, assuming you earned 2 percent interest. And, you’d have a $1,611.92 CD, assuming you earned 4 percent. In just 12 months, you’ve built $3,120.84 in liquid investments and $1,549.92 in paid off debts. But, you can’t use the extra money to finance poor spending habits. You have to invest your savings to reap the benefits of financial prudence.

But, before you sign that lease you may want to consider these five tips.

Check Them Out- Perform a google search your perspective roommate. Then check your local courthouse and have a criminal check performed on your roommate. True story, a friend of mine once discovered her roommate was a sex offender. Her landlord almost threw her out. So, make sure your roomy is not a criminal.

Separate Mailboxes- Have your mail sent to a trusted family member’s home or to a post office box. Your mail can contain your social security, bills and other sensitive information. This helps you avoid identity theft.

Protect Your Credit-make sure that each person has the same credit exposure. Don’t put your name and credit reputation on all the bills, share the exposure. Another true story, a friend of mine was not hired for a job they qualified for, because of credit issues caused by their roommate’s irresponsibility.

Buy A Lock For Your Door- having a lock for your door maintains your privacy and prevents identity theft.

R-E-S-P-E-C-T- respect your roommates’ space and property. If you have any issues talk it out like respectful adults. Don’t scream and loudly criticize them over the phone to other people.

Build Wealth with Multiple Streams of Income

What do Oprah Winfrey, Bill Gates, and Jay-Z have in common? They all build wealth through multiple streams of income. You can too!

Having several income sources provides financial security, by giving you more control over your finances and extra income.

“Why would you want to have only one source of income,” inquires Boyce Watkins, PhD, an economics professor at Syracuse University. “You’re only limiting yourself.”

When an entertainer appears in a movie, plugs their clothing line, or produces a reality show they are tapping different streams of income. Each venture delivers a check.

Having many streams can replace lost income. Rapper 50 Cent called Curtis, his most recent album, a dud. But, he earned a reported $100 million profit by selling his Glaceau Vitamin Water stake. That windfall replaced expected income from album sales.

You too can enjoy the benefits of having multiple income streams and here is how. Develop other streams of income by taking advantage of your current skills, side hustling, ownership, or all three.

Do you have the skills to pay the bills? Then put them to good use. People will pay for services from an expert. So expand on what you do everyday. If you are a teacher, tutor children for extra funds. If you are a nurse, provide weekend home care services. If you input data on computers all day, offer data entry services to small business owners. Find other ways to use your skills to make money.

Gain another income stream with a side-hustle. Be creative and earn profits from your passions. If you throw the best events, plan parties and weddings. If people rave about your cooking start a catering service. If you can’t stand a dirty house begin a cleaning business. I’m sure you have several untapped money makings talents. You can offer your services on a freelance basis with elance.com.

A third source can be ownership. Investing in stocks, bonds, and mutual funds can provide long term income opportunities. Operating a profitable business can also put money in the bank. Rental property income is a proven income producer. Having assets that appreciate in value generates profits for your bottom-line. Watkins says “you build wealth in America by owning something.”

“Oprah is not rich because she is on television,” asserts Watkins. “She is rich because she owns the show.”

You can have different functions for each source of income. For instance, you can live off one source, invest the second, plan for retirement with the third, and have fun with the fourth. Don’t discriminate find as many new (legal and ethical) income sources you can.

Check out Dr. Boyce Watkins at http://www.yourblackworld.com/

Photo found at http://www.coolcrys.files.wordpress.com/

Hang Around 9 Broke People and Sooner or Later You Will Be Number 10

I hate to burst your bubble, but nobody is a self-made anything. Regardless of whether you are successful or not, somebody helped you along the way. George Fraser, chief executive officer of FraserNet, Inc., has the same opinion.

“There is no success that you can maintain and sustain on your own,” says Fraser.

Your quality of life is directly connected to the people you spend the most time with. You will eventually mimic their habits, good or bad. If you want to get to the next level you have to reach out to people that can help you accomplish your goals. Fraser notes “as your network grows, you grow.”

“Your success will be directly related to your willingness to ask people for help,” he replies. “Whomever you are asking for help is your network.”

In his book Click: 10 Truths to Building Extraordinary Relationships, Fraser recommends we cultivate three types of networks to get to the next level. “If you’re the smartest person in your network,” mentions Fraser. “You’re in the wrong network.”

Personal- Your personal network helps re-charge your battery. These people help you sort out personal and emotional challenges. Their encouragement helps you to do your best. “This is your circle of friends who support and cheer you on,” says Fraser.

Operational- People you work with and do business with. He points out that “these are people in your place of business that help you achieve certain goals.”

Strategic- These are people you look up to, like your mentors, role models and coaches. They drag you into the 21st century. They are smarter than you. Their guidance takes you to the next level.

Nobody wants to be used. So your networks must benefit everyone involved. Service to others and sharing resources are the glue that holds networks together.

The Early Bird Gets to Retire Comfortably

Pensions are disappearing. Social Security is not quite secure. And, too many of us are retiring in poverty. http://s7y.us/vuf

Throw every excuse out the window. Prevent poverty and start saving for life after work.

It’s simple. Either you prepare for a comfortable retirement or struggle for the rest of your life. The choice is yours.

Maceo Sloan, chairman of NCM Capital, says the best time to save for retirement is “the day you get income.”

Investing now helps you maximize the benefit of compound interest. Besides, investing now is cheaper than doing it later.

Let say a 20-year-old invests $2,000 (or $77 each bi-weekly paycheck) yearly for only ten years and then stops. They would earn more money than you, if you started at 30 and invested $2,000 a year until you retired.

At age 65, the 20-year-old would cash in on $985,364 versus your $596,254, assuming you both earned 10 percent. The 20-year-old has $389,110 more than you because she invested earlier. Over the course of ten years, that 20-year-old invested a total of $20,000 versus your $70,000 over 35 years. Yet, she retires with more dough.

Are extra cell phone features, premium cable channels and eating out now, worth more than your future? If not, prove it to yourself by investing in assets that increase in value (i.e. stock, bonds, real estate, etc.)

Seems like you have 399,110 reasons to save for retirement. Don’t start now, start right now. You don’t have a minute to waste.

For more http://s7y.us/vmr. and http://s7y.us/vnr.

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IRAs Help Keep Poverty Away

Do you want to work for the rest of your life? If not, start financing your future with an individual retirement account (IRA).

IRAs are accounts that help you grow assets for life after work. Those assets could be bank accounts, stocks, bonds and even real estate. You can start using those assets when you are 59 ½ years old.

There are two types of IRAs. Traditional IRAs work almost like 401k plans. The difference is IRAs are personal, so in most cases your employer won’t match your contributions. You pay for this IRA with your pre-taxed income. This is your salary before taxes are taken. That means every cent you deposit in a traditional IRA is tax deductable. So if you invest $100 every pay period, you will have a $2,600 tax deduction. You pay taxes on the withdrawals later.

Roth IRAs work a little different. Like traditional IRAs, the Roth allows you to save for retirement. You pay for Roths with your take home pay. If you start withdrawing money when you are 59 ½, you don’t have to claim the money as taxable income because you've already paid taxes on them. This saves you from having to pay future tax rates.

If you invest $100 every pay cycle in an IRA for 30 years you would earn $470,452.90, (assuming you earn 10 percent). If you take your nest egg and purchase an annuity with it you could expect about $3,200 in guaranteed monthly income. After 30 years, your $100 bi-weekly investment compounds to $1,600 bi-weekly. Is your future worth the sacrifice?

Ground Rules

The IRS has income limits http://s7y.us/vs2. The IRS also limits yearly deposits to $5,000. For those 50 or older, you can contribute an extra $1,000. You are not supposed to withdraw money from IRA plans until you are 59½ years old or experience a financial hardship. If you do, you must add the withdrawn amount to your taxable income and pay a fine.

If you invest the $5,000 max each year, you would earn $904,717.12, (assuming you earn 10 percent).

Bankruptcy courts are not allowed to use retirement funds to repay debts. So most experts discourage investors from tapping IRAs before you reach 59 ½ .

You can start an IRA at your financial institution.

Log on to http://www.irs.gov/

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Don’t Retire in the Poorhouse!

You’re never too young to prepare for retirement. If you don’t invest in your company’s 401K program you will probably be worst off in retirement than your white counterparts. http://s7y.us/vnr

According to the Ariel/Hewitt 401K Plans in Living Color Study, Blacks are less likely to take part in 401k plans. Yet, the ones who do participate in 401k plans are more likely to withdraw money too early. http://s7y.us/vmr. Both actions hinder your ability to retire comfortably.

Many employers are replacing pension funds with 401k plans. These 401k plans help you save part of your income for retirement.

Most employers match a portion of your payment. In effect, giving you free money to invest for retirement. Experts recommend that at minimum you at least invest your employer’s match, on average that’s 5 percent.

Let’s say you earn one grand every two weeks. You start stashing 5 percent or $50 each pay period into your 401k plan, and your employer matches it. That’s $200 per month. After 30 years, you would make $ 356,580.52, (assuming you earn 9 percent interest). If you took that nest egg and bought an annuity you could expect nearly $2,100 in guaranteed monthly income. Plus, each year you get a tax break.

Every dime you deposit into your 401k account is tax-deductable. Investing $50 bi-weekly gives you a $1300 tax deduction. As always there are some rules. You only pay taxes when you withdraw the money.

Ground Rules

You are not supposed to withdraw money from 401k plans until you are 59½ years old or experience a financial hardship. If you do, you must add the withdrawn amount to your taxable income and pay a 10 percent fine. The IRS also forces 70-year-olds to start withdrawing money. Find out about more rules at http://tinyurl.com/n9b4ha.

Bankruptcy courts are not allowed to use retirement funds for debt repayment. So most experts discourage investors from tapping 401k too early.

Talk to your company’s human resources professional today, about investing in a 401k account.

Picture found at www.chenandassociates.com

Nickel and Dime Your Way to Wealth with Compound Interest

A nickel here, a dime there can add up big, over time. Just $20 a week can earn $5,980.77 in five years, assuming you earn 7 percent interest. After 30 years, you’d earn $98,239.22. How? With compound interest.

Economists describe compound interest as interest earned on the starting amount plus the built-up interest, over a period of time. Learn how compound interest works at http://s7y.us/vil

Albert Einstein called compound interest “the most powerful force in the world.” It can work for or against you.

Case in point, let’s says you ignore a $1,000 credit card bill for four months. Compound interest causes that that payment to balloon to $1893.18, assuming you’re charged 17.3 percent interest.

Use compound interest to your advantage by investing in assets (stocks, bonds, real estate, etc.) that grow in value.

For example, if you put a $1,000 one-time investment in an index fund. After five years, you would earn $1,402.55, assuming you earn 7 percent interest.

Let take it a step further. We keep the $1,000 in the index fund. Plus, add $25 every pay period. After five years, you would earn $ 9,401.83, earning the same 7 percent interest.

You deserve a comfortable future. Invest now and enjoy the benefits of compound interest.

This chart was found at http://myblogyourmoney.com

MoneyChimp.com has a great compound interest calculator at http://s7y.us/vhr.

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The Bottom Line

Good Sunday, Family! The Bottom Line is a review of interesting stories from the past week. Enjoy!


The Secret to Their Success http://s7y.us/vb5

The Ins and Outs of Asset Allocation http://s7y.us/vb8

Dumbest Moments in Business in 2009 http://s7y.us/vb6

Hold the Apology: Give Us Our 40 Acres http://s7y.us/vb9

R.I.P.: Budget Woes Spell Doom for Roadside Rest Stops http://s7y.us/vba