NataliePace.com Home Page Article
you feel like you got suckered over the past few years, you're probably right.
Getting even (as in back to even), however, requires getting the financial education
you should have received in high school. Having Money Wisdom makes it easier
to do the math on successful investments, and to surround yourself with other
financially literate team players. A winning team scores.
As long as you still believe
in the 10 Money Myths I list below, you are vulnerable to being the prey of
unscrupulous salesmen, relentless debt collectors, scam artists, phishers, myth-mistaken
friends/relatives, banksters and other financial predators. And sticking your
head in the sand, and focusing on something you feel you have control over --
your job -- isn't a good solution either.
Being a super income earner
is great. However, that investment of your time will not outlive your
job. On the other hand, if you save 10% and that 10% earns 10% (what stocks
and bonds have done for the past 30 years), then you will have more money than
you earn in seven short years and your money will make more than you do within
25 years. Teens who start investing wisely with their first job could retire
before they are 50.
It's easy to think that
you don't have the time or money to do this. Today's professional also wears
the stethoscope of Dr. Mom, the whistle of soccer coach and wields a mean Garden
Weasel. S/he works out on her lunch hour and looks hot in swimsuits! However,
a beautiful bottom line is just as desirable and once you set your budgeting
and investing plan up right it is far less time and money than you are currently
So how do you set it up
right? You replace Money Myths with Money Wisdom.
- I'll start investing
when I pay down my debt.
- My To Do List is
- It's too hard to
navigate a global economy.
- I'll need a PhD in
economics before I can do it right.
- Wall Street is corrupt.
- I've got too many
bills to invest.
- Who's got the time
to read the business section daily and watch CNBC 24/7?
- Gold is where it's
- Someone manages my
money for me.
- I'm doing great.
here's the Money Wisdom you need to adopt in place of those Money Myths.
Your Gains, Not Your Debt. At the end of 7 years of paying off debt,
you will still be in debt and you'll have nothing to show for it. If you lose
your job, you're in trouble. After 7 years of investing wisely, your assets
equal more than your annual salary and you are on your way to financial freedom.
As Martin Luther King says, "Darkness cannot drive out darkness, only light
can do that." Similarly debt cannot drive out debt, only compounding gains
can do that. Your retirement accounts allow you to negotiate better terms
for your debt, to compound your gains tax-free (if they are in a tax-free
retirement account) and the money is yours to keep no matter what (no debt
collector can take your retirement money). In short, if you're in debt, it's
your budget that needs trimming, not your investing.
Good Plan Saves Time. A plan that is set up right (according to Modern
Portfolio Theory) is stress-free, works great and requires rebalancing only
once or twice a year. Imagine how much less time you'll spend arguing over
money, when your money is making money for you -- while you sleep…
ABCs of Money. Writing is easy once you know the ABCs. Did you ever
learn the ABCs of financial literacy? Do you understand Modern Portfolio Theory?
What the average annualized returns of stocks, bonds, real estate and gold
are? How to evaluate the fiscal health and debt of companies you are invested
in? Knowing these basic facts will make it easier to do the math on successful
investments, and to surround yourself with other financially literate team
players. There are always good investments, in any economy.
Modern Portfolio Theory is easy-as-a-pie-chart and makes annual rebalancing
simple, too. MPT with annual rebalancing works wonderfully through bull and
bear markets because your safe side wins when stocks wane, your equities outperform
when Wall Street rises and your annual rebalancing means you have a strategy
for capturing your gains.
- Main Street Owns
Street. For every Enron, there are 95 companies that are making the
products we love. However, headlines focus on the shenanigans of the few corrupt
companies and CEOs more than the Good Guys and Women of Wall Street. How many
times have you heard about the losses at Merrill Lynch and other bailed out
companies, as opposed to the healthy balance sheets that Schwab and TD AMERITRADE
maintained before, during and after the Great Recession?
- Incorporate the Thrive
Budget. If you are buried alive in bills it is because you are overspending
on basic needs. Get the big ticket spending under control and you'll have
a lot more time and money for fun, charity, education and investing. Cutting
out café lattes will only make you cranky. It will not make
While You Sleep. If you're investing on headlines, you'll always be
late, which translates into buying high and selling low -- a losing strategy.
A diversified plan protects you from bear markets and maximizes gains in bull
markets. Since both stocks and bonds have earned more than 10% annualized
for the past 30 years, if you are invested, you are meeting your goal of financial
Low; Sell High. Gold has been the top performer for the last decade.
However, it is the worst performer over a 30-year period. If you purchased
gold at $850/ounce in 1980, you had to wait a quarter of a century for the
value of your investment to return. If you purchased gold ten years ago, you've
earned almost 5X return on investment!
are Salesmen. Unfortunately, the reason so many Americans are stuck
trying to pay off homes they can't afford or other real estate that they purchased
at the top of the market is that someone was selling them into that dream,
using selective data to convince them that it was a great idea. That same
tactic was used at Goldline to sell gold bugs into buying coins that would
need to go up 55% for the customer to break even. Once you know what a reasonable
price and rate of return for an investment are, you're more likely to make
a timely, rewarding purchase and to take profits at the most advantageous
moment. Also, as TD AMERITRADE Joe Moglia reminds us, "The typical financial
consultant covers 400-500 accounts. They get paid on the ones that have the
greatest assets. They realistically can’t get to the majority of their client
Debt is $2.5 Trillion (source: FederalReserve.gov). If you're drowning
in debt or buried alive in bills, you're not doing great. Debt compounds,
meaning you sink further into the quick sand the longer you wait. The sooner
you face and identify the source of the problem, the sooner you can start
on your way to financial freedom. So, be bold and brave and honest with yourself,
and seek the wisdom of tried and true systems that have a history of performing
well over time. Be wary of anyone who promises the moon, any salesman, any
guru, anyone who demands a fee up front or of betting your future on a "Hail
Mary" solution (like Vegas, the lottery or options trading). Trust results.
If you think of all the
time you spend worrying about money, you know that getting smart about investing
is actually going to take less time. Money while you sleep is the best remedy
for anyone weighed down with the responsibilities of today's demanding world.
To learn more about Modern
Portfolio Theory, the Thrive Budget™, Stock Report Cards™ and the
Billionaire Game™, read You
Vs. Wall Street (published by the Vanguard Press, a division
of Perseus Books). I have activated links to each of these 10 Money Wisdom tips,
where you can learn more about them as well.
About Natalie Pace:
Natalie Pace is the author of You
Vs. Wall Street and Put
Your Money Where Your Heart Is. She is the founder and CEO of the
Women’s Investment Network, LLC (a global financial news, information and education
site), where she has been adding a splash of green to Wall Street and transforming
lives on Main Street for more than a decade. Natalie is a blogger on HuffingtonPost.com
and a repeat guest on national television and radio shows such as Good Morning
America, Fox News, CNBC, ABC-TV, Forbes.com, NPR and more. As a strong believer
in giving back, she has been instrumental in raising tens of millions for public
schools, financial literacy, the arts and underserved women and girls worldwide.
Follow her on Facebook.com/NWPace.
For more information please visit NataliePace.com.
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in North America. This article is intended to educate and inform individual
investors, and, thus, to give investors a competitive edge in their personal
decision-making. The publicly traded companies mentioned in this article are
not intended to be buy or sell recommendations.
ALWAYS do your research
and consult an experienced, reputable financial professional before buying or
selling any security, and consider your long-term goals and strategies.
Investors should NOT be all in on any asset class or individual stocks. Your
retirement plan should reflect a long, safe strategy, which has been designed
with the assistance of a financial professional who is familiar with your goals,
risk tolerance, tax needs and more. The "trading" portion of your portfolio
should be a very small part of your investment strategy, and the amount of money
you invest into individual companies should never be greater than your experience,
wisdom, knowledge and patience.
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the date of this publication and are subject to change without notice. This
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