When I think of what I would share with a recent college grad, saving comes first to my mind. When a person is young they have a distinct advantage – time.
In the financial world, we use something called the “Rule of 72” to estimate what someone’s investing account balance could look like after a period of time, with a certain rate of return. This quick and dirty financial formula first requires a conservative guess for the average rate of return.
A common question we receive at Prosperion is “where all the tax-advantaged investments?” Last week John Booren covered two simple ways to reduce taxes on income, but certain types of investments also have the potential for tax benefits. Specifically there are two under-appreciated and often overlooked investment strategies I’d like to discuss, municipal bonds and dividends.
We live in such a noisy and complex world. The “fiscal cliff”, the presidential election, Greece, France, Italy, China, a tropical storm, the shaky market, low interest rates… it’s enough to make even the most seasoned investor cautious (or crazy). All these fears transform the market into a roller coaster of daily fluctuation. For investors that means only one certainty: uncertainty.
But people still want to retire. Investors still want a steady income beyond their working years. And folks still want to work hard and watch their money grow. The problem I fear is investors spend far too much time watching the price of their portfolio and bypassing what their portfolios are doing for them. In other words the income a portfolio generates is far more important than the daily fluctuation driven by constant volatility.
Colorado’s new favorite Olympian Missy Franklin has amazed us all with athletic feats that have made her a worldwide sensation. Her beautiful smile and contagious enthusiasm make Missy “The Missile” even more fun to watch.
The four gold medals and one bronze won by this 17-year-old Regis Jesuit High School senior are an entrée into a world of lucrative endorsements and prize money. But Missy and her parents say she will start school next week and even swim for the Regis Raiders again. After graduation she plans to go to college and wait to turn pro.
In a world where Missy can expect multi-million dollar offers for her endorsements, she will face the challenges of a windfall of wealth. While most people would be happy to deal with such problems, a sudden change of net worth can be tough to deal with. Here is my advice for dealing with a financial windfall.
Prosperion Financial Advisors
8400 E. Prentice Ave., Suite 1125
Greenwood Village, CO 80111
303.793.3202 - Phone
800.764.0590 - Toll Free
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