Assignment
Major Threats to financial security:
Taxes
Health
Bottom-line of Financial Independence: Never too early too save
Challenges faced by millenials (Budgeting, saving):
Housing
Revenues, earnings fixed expenses
How to think about savings when barely getting by?
Think about savings, spending, and investing
Figure out a percentage for each (How much of spending is what you need?)
Investing
• Holding savings accountable for working for you
When you know your expenses, you can think about investing
• Know what you spend money on
o Is your spending necessary
Savings
Helps to have friends who are fiscally responsible
Should we be budgeting for philanthropy?
• Can start thinking about early (said first panelist)
• Both saving and giving are habitual
o What if you dont come from wealth
• You get everything in life you want if you help other people get what they want
Emergency Funds (Should we have? How big?)
• Yes
• Typically six months of your savings
o Why?
o Takes 3-6 months normally to find a job
How to put financial life in order?
• What does financial independent look like for some like you?
o What you want to be in future?
o Where you want to be
Compound Interest of Investing/Saving
• Start early
• Advantageous for young people
Compound Interest
• Expands your money exponentially
Have to have 11 times final salary for good retirement
Rule of 72
• For compounding to work, have to start early
Tax defferred
• Consequences for taking out early
Tax Free
• Money invested in after tax basis
• To take this savings out no tax consequences
IRA
How to win friends and influence people ( Book )
Important component of being a good entreprenuer
Greatest Salesmen in the World (Book)
"Its not about finance, its about you"
Good entrepreneurs and successful people read good books such as these
Reason you get paid to do something is because you work
Questions:
• Robo-adviser; good one, low fees ?
o Stash Wealth
o Specially tailored for millenials
o Basic customized plans
• How do student loans affect young adult ability to save?
o Loans are negative savings
o Interest rate on loans
o Never pay interest on credit cards
- Higher interes (20% vs 2-3%)
• Besides Getting good grades, what can students do to attract potential employers?
o Good question
o Certain threshhold that shows your a hard worker
- Have you shown leadership; started anything that shows your a collaborator
- Not fake joining for resume; legitimate leadership
o Have to be enthusiastic; know the company; dont ask any questions about benefits; show interested in long term (Interview)
o Diversify activity; networking
o Degree isn't enough; sell yourself
Diversification is important
• "Divide your portions into 7-8, you never know what misfortunes will befall upon the earth"
o Solution is to diversify and not put all your eggs into one basket
o Getting into 11 times your final salary is doable, must be consistent
• Longevity Risk
o Risk of outliving your money
o People lives getting longer; money must stretch
- Medical advances (Cancer)
- Statistics: 65 Y.O couple, 50% chance one of them lives to 95
- How many people save enough money to last to 95?
• How does national debt influence our personal financial future?
o Social security (Interesting point: Old panelist: "They told me social security wont be around when I need it, and its still around")
o Deficit is huge,
o For own financial planning; social security, medicare may be around (may limit amount taken out)
• Unofrtunate events derail financial plans, ideal amount of life insurance?
o Depends on our family circumstances
o Different factors (Son going to college; save the house)
o Disability insurance
• Abandonement risk
o When people pull all their money out of the market
o IF you abandon investments even once, doing serious financial damage to yourself
o Dont worry about market until you have significant amount of money.