Why Investors Can’t Measure Their Own Risk Tolerance

When people start investing money, one of the exercises they engage in is determining their own risk tolerance.  Usually, this process is handled by filling out some sort of questionnaire that has multiple choice questions like the one below. ‘If you had $10,000 to invest, would you….’ Be willing to chance earning 30% growth knowing you could lose 30% Be willing to chance earning 10% growth knowing you could lose only 5% Be willing to lose nothing knowing you could earn no more than 5% We often whisk through these quizzes at a blazing pace because in a simulation exercise we know exactly who we are.  However, there are two types of behaviors that we have within our personality.  How we act in a natural state when we are relaxed and have no pressure.  Then, there is the adaptive state when we are under heavy pressure.  Unfortunately, these quizzes don’t really put us under any pressure so they don’t really ...

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Five Steps To Build Up An Emergency Cash Reserve

One of the most important financial planning questions we often hear from clients is around how much money to have in a cash reserve.  People struggle with this question because the reality is that there isn’t an exact answer.  For many years, the general rule of thumb was to build up three to six months in an emergency reserve in case of emergencies or opportunities.  However, some people feel with the availability of credit and other assets that can be readily liquid that they don’t need to keep much money in an account that doesn’t bear much interest.  Here are five steps to build up an Emergency Cash Reserve. Determine Your Need This is really the first step in figuring out how much money you need for a cash reserve.  Since most transactions are done electronically today, many families really don’t know how much their family ‘burn rate’ each month.  What we are talking about is how much your fixed ...

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How to Tell a Legit Opportunity From a Pyramid Scheme

How can you tell whether you’re looking at a great business opportunity or a pyramid scheme? At first glance, telling the two apart may be difficult. Pyramid schemes often resemble multilevel marketing (MLM) opportunities, but major differences exist. First, multilevel marketing is legal while pyramid schemes are not. Multilevel marketing is also capable of generating long-term profits. Pyramid schemes crumble eventually, leaving some people with huge losses or, at the very least, wasted time. Discover some tips for telling the difference between the two. Look at the Products or Services The foundational difference between MLM and pyramid schemes is that legitimate MLM companies make money from selling products or services. You may be able to bring in extra revenue by recruiting people, but you and your company are making most of your profits from selling something with real value to customers, not from signing up new recruits. If you think about well-known direct sales companies such as Amway, one of the ...

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Four Things You May Not Know About 529 Plans

As much discussion as there is about trying to control the cost of college education, just talk to any parent who is paying to deal with college that no gravity is defying this rising cost.  Amidst all of the projections you read on the college websites, when you add in the cost of your family travel, stops at the bookstore, and home care packages, the overall cost to send your child away for a four-year degree could cost you a long delay in your retirement. In the mid 1990’s Section 529 of the Internal Revenue Code was created.  In 1997 (just twenty years ago) Section 529 was amended by the Taxpayer Relief Act, which provided a handful of higher education tax incentives including the deductibility of student loan interest.  We know how much children are struggling with student loans, and in 2001 the earnings on 529 plans became completely tax free if they were used for college.  As people learn ...

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The Best Five Places To Invest In 2018

We are a few weeks into 2018, and you might be wondering where are the best five places to invest for the rest of 2018.   With the stock markets hitting all time highs, cloudiness over the rise in interest rates, and the bitcoin practically on the news every day, this can make sorting out the best place to invest difficult for the average investor.  As we sort through all of the mazes of information and news, here are five places you should consider investing for the rest of 2018. Artificial Intelligence – AI’s growing market potential, which is estimated to be worth $46 billion dollars in just three years from has several paths to consider when investing. AI can seem confusing to people, but consider something just as Amazon’s just walk out technology http://bit.ly/2rnY8YJ or the new bill shopping chatbot Ask Trim which can automatically shop bills such as your cable bill or mobile phone bill.  AI can be used ...

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The Best 2018 Tax Moves To Make Now

As the new tax law goes into effect, many people are starting to wonder how this will affect their overall paychecks.  You should see some bump in your paychecks when the new tax tables go into effect somewhere in Mid-February or early March, but there are a host of financial decisions that you need to start considering now in order to maximize your own tax situation. Adjust your withholdings – It’s ironic that most people give themselves a high five when they get a refund come tax time. Not only do you allow the Government the use of your money for a year, you also get taxed on your own state refund federally the following year.  Since we have new tax brackets and tax tables, you should really look at your withholdings here in the spring to maximize your cash flow here in 2018. Remember, if you are getting your taxes done, Turbo Tax and Tax Slayer are two low ...

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Can Amazon Get Bigger?

Well, Yes. It seems all we heard about in 2017 was Amazon, Amazon, Amazon.  Weather it was the news of their purchase of Whole Foods, the super successful PrimeDay event, or the addition live Thursday Night NFL games on their video service; it seems that CEO Jeff Bezos (the richest man on the planet) knows exactly how to make Amazon grow. When you look at one of Amazon’s biggest competitors, Wal-Mart; you will see that Amazon’s Market Capitalization is almost double that of Walmart ($558Billion to $286B)1.  But the interesting number is annual sales revenue. Walmart is crushing it at number one in the world at $486 Billion annually.  While Amazon is only at $89B per year.  This might be an indication that there is still plenty of revenue to gain from the competition.  So how is Mr. Bezos going to grow Amazon in 2018. Business to Business. Amazon’s business platform lets small businesses order supplies from other businesses. Their ...

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5 2018 Sticky Financial New Year’s Resolutions

It’s 2018, and that means that most of you have made at least one New Year’s resolution.  For most of you it will surround either diet or exercise, but for some of you getting your financial plan in order may rise to the top of the list. With the average American now surpassing more than $16,000 of household credit card debt, it may appear that feeling flush has left us spending out of control.  In your smart money moves fashion, here are my ideas for a sticky 2018 financial New Year’s resolution that can help you grow your bottom line. Get Your Financial House In Order Set Up An Online Account Aggregation System – At oXYGen Financial, we have been using a personal financial dashboard for almost 10 years in helping our clients get their financial house in order. You can learn more about this by going to oXYGen Financial, but there are also other systems online including Mint and ...

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