Money Management

David Bach Has Financial Answers

January 11, 2018 By Twila Van Leer

When it comes to giving sound answers to personal finance questions posed by the American public, no one does it better than David Bach.

His best-selling “The Automatic Millionaire” was on the New York Times’ best-seller list for an unprecedented 31 weeks for a book on that topic. Over the past decades, he has written nine consecutive New York Times best-sellers that have been translated into 19 languages. He is the only business author to have four books simultaneously on the NYT, Wall Street Journal, BusinessWeek and US Today best-seller lists. His seminars and appearances on top media shows have made him familiar to those who are looking for guidance in their personal finances. More than a hundred million Americans have been exposed to his no-nonsense approach to improving finances.

For simplicity, he boils his advice down into 15 “timeless truths.” To wit:

• Always spend less than you make. Life will be easier and less stressful.

• Automate your financial life, rather than wasting time budgeting. Budgeting causes frustration and failure, he believes. Automation relieves the stress.

• Be an investor rather than a borrower. Investors get rich. Borrowers stay poor.

• Buy a house. Don’t rent. Homeowners and landlords make money and build wealth. Renters stay poor.

• Don’t lend money to family or friends. You’re not a bank and you could lose both the money and the relationship.

• Never invest in things you don’t understand. If a potential investment cannot be explained to you on one piece of paper, it’s too complicated.

• Invest for the long term. Building wealth takes decades, not days.

• Never invest on margin. Leverage kills you when things go wrong.

• Never assume that “things are different this time.” Things work until they don’t work. Never bet the farm. You could lose it.

• Once you become rich, stay rich. It beats starting over again. Talk to those who have been in this position and they’ll attest to that truth.

• Give back. The more you give, the more you will grow, and you make the world a better place. (Bach is known for his charitable contributions.)

• Never give up. No matter how many times you fail, you haven’t lost as long as you get up and try again.

• Compound interest is a miracle that works when you work it. Save $10 per day at 10 percent interest and in 40 years, you’ll have $1,897,233. If the interest is only half that, you’ll still have near a half million dollars, a considerable amount. Your older self will thank you.

A bottom-line quote from Bach crystallizes his philosophy: “When your values are clear, your financial decisions become easy.”

Books Financial Wizard David Bach Recommends

January 9, 2018 By Twila Van Leer

David Bach Book Recommendations — The six books David Bach recommends for those who want to improve their personal finances and build wealth

David Bach is one of the country’s leading financial gurus. His words of wisdom on personal finance are read in a dozen books and touted on top TV shows and other forums. So, what does he read on his own time? Here are six books that he recommends for those who want to improve their personal finances and build wealth:

• “Think and Grow Rich,” by Napoleon Hill. A journalist, Hill researched more than 500 self-made millionaires, including Andrew Carnegie, Henry Ford and Charles M. Schwab, to include in his 1937 best-seller. This classic explains that accumulating wealth has more to do with mindset and the drive to overcome psychological barriers than anything else. It tells you how to start “thinking your way to success.”

• “Business Adventures” by John Brooks. Self-made billionaires Bill Gates and Warren Buffett endorse this book, which posits that starting a business in the best way to start your march toward financial success. It was published in 1969, but though a lot of business practice has changed, the fundamentals stay the same.

• “Your Money or Your Life,” by Vicki Robin, Joe Dominguez and Monique Tilford. Millionaire Grant Sabatier, who claims to have read more than 360 books on personal finance, declares this one the best. It also was the first one he picked up. Another endorsement comes from Chris Reining, 38, who had logged his first million by age 38. The book reiterates over and again the idea that you exchange your life for money. The question then becomes, when you consider what you exchanged for a particular item: “What did I trade for this and was it worth it?”

• “Unshakeable,” by Tony Robbins. After interviewing some of the world’s greatest financial minds, Robbins created a step-by-step on how to transform your financial life and begin to grow wealth. He posits that you don’t have to predict the future to win the investment game. Focus on what you can control and you’ll be the master of your own investment fate, he writes.

• “The Little Book of Common Sense Investing,” by John C. Bogle. Wise investing is the core of building wealth, this author says. He is founder of the Vanguard Group and creator of the world’s first index fund. He details the simplest and most efficient strategy: low-cost index funds, Warren Buffet recommends this read.

• “The Automatic Millionaire,” by Bach himself. The book exposes a handful of money misconceptions that keep ordinary people from achieving financial goals. Bach insists that “you don’t need a budget, you don’t need a lot of money and you don’t even need willpower to accumulate a fortune.”

With 2018 just getting under way, there’s a reading list to keep you learning more about how you can manage your money and start realizing goals to increase your wealth. Happy reading!

Will They Be Ready For Retirement?

January 7, 2018 By Twila Van Leer

Even though it appears that young workers today can look forward to less benefits from government programs and pensions when they retire, they don’t seem to be bothered enough to start saving.

Forty-eight percent of those aged 18 to 30 have zilch in their savings accounts, according to a GenForward poll conducted by the Black Youth Project at the University of Chicago. Associated Press-NORC Center for Public Affairs Research collaborated.

While some of those in the research sample would still be in school, those at the other end of the spectrum are doing no better. In the age group 25 to 30, the great majority had nothing set aside for retirement. All this is occurring at the same time that traditional pensions offered by employers are disappearing, leaving future retirees dependent on their own resources.

Contributing to the problem are new Social Security rules that keep increasing the age limits for participants. It used to be possible to apply for full SS benefits at age 66. Now it is 67. The rising generations have less faith in the federal retirement program than did their parents. Only 5 percent say they have confidence in the program and 28 percent are “somewhat confident.” That leaves well more than half who are not counting on Uncle Sam to underwrite their retirement.

Still, the young people look at the situation through rose-colored glasses, expressing confidence that they will be able to maneuver through retirement okay.

Many are relying on company-sponsored savings plans such as 401(k)s to see them through. One young man who took a finance course in college, was alerted to begin saving at age 20 to secure his retirement. He didn’t begin until several years later, but at least has the concept in mind. He and his wife both have 401(k)s. Some of the younger set reported taking second jobs to give them a savings boost.

There is no simple formula for deciding how much you need to squirrel away for retirement. Depends on when, where and the lifestyle you anticipate. Fidelity suggests as a rule of thumb that you dedicate 15 percent of your current income to that future need. Some young workers have looked at their personal situations and expect to be working beyond usual retirement age — until they are 70 or more.

Some of the confidence these younger generations exhibit is founded in the knowledge that they are just getting started in their careers. They expect to increase their earnings as time passes and to have more leeway for saving. But based on well-founded common wisdom, about half of them are already behind the curve and they may wake up to find themselves retired — and broke.

Biggest Cyber Monday Ever

January 5, 2018 By Twila Van Leer

The phenomenon that has changed the face of shopping in American — doing it online — proved itself well entrenched when Cyber Monday took place on the first Monday after Thanksgiving. When all the calculations are completed, the day devoted to electronics-related items may well have set new records.

Adobe Analytics, the research arm of giant software maker Adobe, reported that as of 4:30 p.m. on Cyber Monday, some $3.4 billion in sales had been recorded, a 17 percent increase over the 2016 Cyber Monday. Web traffic from mobile devices also took an uptick, surpassing desktop computers for the first time. Even a seasoned expert such as Frank Yanover, retired Amazon exec, found he could be persuaded by what they found online. He bought a Vitamix blender for $300, a $200 discount. He also succumbed to a deal from Best Buy for an iPad, ordering by phone and then picking it up from a nearby store. He finished up his unscheduled online spree with his voice-activated Echo by purchasing Amazon’s Echo Dot for $30 — a $20 reduction.

Echo Dot was, in fact, Amazon’s top-selling electronic item for Cyber Monday, followed by Fire TV board games, Fingerlings and Legos over in the kid’s section.

At eBay, they were selling a $745 Apple MacBook Air every five seconds. J.C. Penney reported its top-selling Website item were towels, $25 diamond stud earrings and Liz Claiborne handbags (which, incidentally, features a built-in phone charger. What’ll they think of next?)

Walmart, which has been trying to play catch-up with Amazon, offered three times the number of items online that it did last year, but Amazon appeared likely to retain the record, with 50 percent of all online sales growth this year.

Overall the most popular items sold online during Cyber Monday were computers and small electronics, followed by clothing, according to America’s Research
Group. Ease of shipping is a factor.

People who actually showed up in a store were almost the exception. Parking areas in some of the most popular stores were only half full as shoppers stayed away in droves to do their shopping in the convenience of their homes or offices. Of course, for those who still want the store experience, that means fewer shoppers to compete with.

Holiday Sales Grow From 2016

December 30, 2017 By Twila Van Leer

The 2017 holiday shopping season appears to be a very good one for America’s retailers, many of whom have not had much reason in recent years to be merry. The successful end-of-the-year selling shows that traditional retailers are adapting to the shift to online buying.

The tax overhaul recently passed by Congress could signal more shifts in shopping as ordinary Americans figure out how the changes might affect them and their ability to spend. If they are in the brackets that might benefit from the tax re-do, they might spend more. Or they might put the “savings” into savings.

As the year wound down, it appeared that the 2017 holiday season would stack up very well against previous years. One factor is that unemployment is at a 17-year low, contributing to the highest level of consumer optimism in years. The current spending spree is the most intense since the recession that is now about 10 years in the past.

Consumers are not only spending more this year, but they are putting more of their money into electronics, clothing and toys to a greater extent, according to the National Retail Federation. The federation noted with elation that the week before Christmas, the most critical time for retailers, saw a lot of traffic in stores. Many retailers see 20 percent of their foot traffic during that week. The fact that there was a full weekend immediately before Christmas also boded well for the industry, as late shoppers continued to flood the stores in search of last-minute gifts and stocking stuffers.

Most online shoppers have completed their buying before the last week to allow time for deliveries. They then are more likely to show up in the stores, bypassing the convenience of online shopping for the assurance that their gifts will be on time. Even so, the numbers of shoppers buying online continues to grow. Now, the growth in online sales is about double that level at stores, according to First Data, a payment technology firm. Online giant Amazon accounts for a considerable amount of the growth. Amazon has expanded into new areas, putting more categories of retailers on alert. The firm reported that its Cyber Monday sales tallied the highest in its history. Estimates are that Amazon accounted for more than 60 percent of the total sales for that day.

Some families have begun exchanging “wish lists” before the holidays, consisting of many web links. The shopping then becomes easier and the satisfaction with gifts more consistent.

Stores are responding to the online onslaught by offering more weekend deals and upping their loyalty programs.