Tagged: multiple income streams

Don’t Retire, Strive for Financial Independence Instead, Part 2

Our featured writer, Richard Eisenberg, continues his analysis of the benefits of planning for financial independence instead of retirement.  This, the second part of his article, includes a review of several retirement calculators. These calculators can give you a sense of what sort of capital is needed in order to realize the type of retirement you wish to have.  As you will see, not all calculators are the same.  So, choosing the right one is important. FFN  Editors

Plan For Financial Independence, Not Retirement (Continued)
Richard Eisenberg, Contributor to Forbes Magazine, Personal Finance Section (www.forbes.com)

Two Types of Retirement Calculators

If you’re trying to figure out your Financial Independence day, should you bother using an online retirement calculator? I think it depends on the tool.

Most retirement calculators are actually best for people in their 20s, 30s and early 40s who have years to save furiously once they see their “number.” The electronic number crunchers typically ask few questions, partly because younger people can’t possibly determine for sure their retirement income sources or expenses.

“When you’re further away from retirement, these calculators are directional in nature,” says Kent Allison, a PwC partner and leader of the firm’s financial education practice, based in Florham Park, N.J. “When you get closer to retirement, you really have to get into a nitty-gritty cash flow analysis.”

He’s right. If you’re three to 10 years away from retirement, that’s the time to figure out where the money will come from to cover what Pat O’Connell, executive vice president for the Ameriprise Advisor Group, calls the three types of expenses:

Essential expenses that’ll be covered by guaranteed income sources, like bonds, Social Security and a pension.
Lifestyle expenses purchased with money from your investment portfolio.
Unexpected expenses, like health care and long-term care costs, paid for out of your emergency savings fund.
Three Good Calculators for People 50+

There are, however, a few excellent calculators – not always free – that are specifically geared for people in their 50s and 60s. They can help you firm up a retirement cash-flow analysis.

One is Retirement Works2 for You, created by retirement adviser Chuck Yanikoski primarily for what he calls “nonaffluent people trying to play their cards as smartly as they can.” It costs $189 for the first year; annual renewals are $44.50.

RW2, as it’s sometimes called, asks a lot of questions; Yanikoski says you should plan to spend one to three hours answering them. (“Retirement is an extremely complicated thing,” he says.) But the results can be valuable.

As soon as you input your data and answer the questions, you’ll get an online report card with retirement planning advice and letter grades telling you how well you’re set under “normal” circumstances, if you live an extra long lifetime, if your investments don’t perform well, if inflation shoots up and if you run into high medical expenses, including long-term care.

You’ll also see how your cash flow would be affected if you delayed retirement and lowered your standard of living.

Two other calculators worth considering:

The free Ballpark E$timate from the Employee Benefit Research Institute’s Choosetosave.orgsite and the American Savings Education Council; Next Avenue has a link to the Ballpark E$timate calculator.

E$Planner, created by Lawrence Kotlikoff, an economics professor at Boston University. There’s a free version of E$Planner Basic as well as one that costs $40, with “what if” investment scenarios and Social Security options. The downloadable $149 product also offers “retirement spend-down” strategies, helping you determine how much to withdraw from your portfolio.

Use an Adviser to Plot Your Findependence

Whether or not you use a calculator to come up with your Financial Independence Day, I strongly suggest you work with a financial adviser to run the numbers.

“The decisions are major,” Allison says. “A wrong one could cost you a lot. So even if you don’t normally want to spend money on a financial planner, this is the one time to do it.”

Richard Eisenberg is the senior Web editor of the Money & Security and Work & Purpose channels of Next Avenue. Follow Richard on Twitter @richeis315.

(This article is available online at: http://www.forbes.com/sites/nextavenue/2013/07/01/plan-for-financial-independence-not-retirement/)

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(Disclaimer: The views expressed in the above article are strictly those of the author.  They do not necessarily represent those of FFN. Please use due diligence prior to applying the concepts, recommendations and/or purchasing any products or services offered by the author).  FFN Editors


Don’t Retire, Strive for Financial Independence Instead, Part 1

Our featured article in this edition of Financial Freedom News recommends a very different approach to the idea of planning for retirement.  Richard Eisenberg, a contributing writer for Forbes magazine, recommends that we focus on attaining financial independence instead of planning for retirement.  In this two-part article Richard outlines his views on how to make this goal a reality. 

In this article, we are given the 5 rules for declaring our financial independence.  The second part of this article, in our next edition, will discuss several types of retirement calculators and their role in the planning process. FFN Editors

Plan For Financial Independence, Not Retirement
Richard Eisenberg, Contributor to Forbes Magazine Personal Finance Section (www.forbes.com)

 Declaring your Financial Independence Day is a better idea than trying to come up with “the number” you need to retire, especially if you’re in your 50s or 60s and don’t have much time to pump up your savings.

What exactly is financial independence or, as some call it, financial freedom? That depends on your own definition.

In a new Capital One 360 survey, 44% of U.S. adults said financial freedom meant not having any debt, 26% said it meant having enough saved for emergencies and 10% defined it as being able to retire early.

I go with Jonathan Chevreau, the Toronto-based author of the new U.S. edition of Findependence Day, a “fictional finance” book, and creator of the Findependenceday.com site. His novel is about a young debt-ridden couple, Jamie and Sheena Morelli, and their road to reaching you know what.

Chevreau says that when you’re financially independent, you work because you want to, not because you have to. “Findependence is necessary for retirement,” he says. “You can be findependent and not retired, but you can’t be retired without being findependent.”

Chevreau targeted April 6, 2013 – his 60th birthday – as his Findependence Day and reached that goal, but he still edits Canada’s MoneySense magazine. “I have a job I like, so why would I quit?” he asks.

5 Rules to Declare Your Findependence

Chevreau’s five rules for achieving findependence:

1. Pay off your home in full. “That’s really the foundation,” he says.

2. Find multiple sources of income for retirement. These can include interest and dividends from your investment portfolio; rental real estate; freelance or consulting work; Social Security; an annuity; and perhaps a guaranteed pension.

3. Develop “guerrilla frugality” habits. Chevreau calls this “becoming a Frooger.” Keeping expenses low while working full-time will make it easy to live that way in retirement and reduce the amount of savings you’ll need for a comfortable retirement.

“If you spend like a millionaire, you’ll end up a pauper,” says his book’s protagonist, Jamie. “Spend like a pauper and you have a shot of becoming a millionaire.”

4. Save 20% of your gross income. This will be impossible for many people, but not for others. If you can’t save 20%, try for 15 or 10%.

5. Invest with a “Lazy ETF” portfolio. That means selecting, say, three exchange traded funds– a U.S. stock fund, an international stock fund and a U.S. bond fund – and holding onto them.

Review their performance once a year. Then rebalance your portfolio if the markets shift and you discover you have a higher percentage in one of these asset classes than you want. (Use index funds instead of ETFs, if you prefer.)

Women, Men and Money

At the risk of overgeneralizing, I think many women gravitate toward the concept of financial independence, while men often prefer focusing on “the number.”

In the initial episode of the two-part Consuelo Mack WealthTrack public television series on Women, Investing and Retirement that premiered June 28, Jewelle Bickford, senior strategist for GenSpring Family Offices, said the first question her male clients ask in their monthly or quarterly meeting is “how has their portfolio done, whereas the women tend to think: ‘Will I have enough?’”

(This ends part 1 of this article.  Part 2 will follow in our next post). FFN Editors

Let us know your thoughts iregarding this nformation in the Reply Section below.  Also, please click “Like” and “Share” this artilcle with others who may be interested in achieving financial freedom.

(Disclaimer:  The views in the above article are strictly those of the author.  They do no necessarily represent those of FFN. Please use due diligence prior to applying the concepts, recommendations and/or in purchasing any products or services offered by the author).  FFN Editors 

How to Reduce Your Risk When Investing in the Financial Markets

When investing in the financial markets, managing risk is a critical factor.  How to accomplish this is a widely debated topic.  Our featured presentation from the Wealth Directions Channel (http://GetWealthDirection.com), offers an approach which uses stock options as a vehicle for risk reduction in investing.

Options use for the average investor gets mixed reviews.  Some swear by it, others feel it’s too complicated and therefore unacceptable for the average investor’s needs.  However, the presenter asserts that stock options need not be that difficult. He suggests a 3 step process to make options a viable tool in the financial freedom seekers arsenal.

Let us know your thoughts in the Comments section at the end of this page. Also, please “Like” and “Share” this information with others who are interested in achieving financial freedom.  FFN Editors

(Disclaimer: The views expressed in the above video are strictly those of the presenter.  They do not necessarily represent those of FFN.  Please use due diligence prior to applying any of the concepts, recommendations and/or in purchasing products or services from the presenter).  FFN Editors

How to Invest for Financial Freedom with Little or No Money

This edition of Financial Freedom News features a video by Mr. Ian Thompson with 21st Century Investing.com that outlines the key steps for the small investor’s success. Often considered as something…”nice to do if I can ever get enough money together to start”, investing is actually an important component in creating financial independence.

It is one of the main ways to build a passive income stream. And, can become one of the pillars of a multiple income stream (…that phantom notion often spoken of, but, rarely seen implemented ). 

In fact, Mr. Thompson advocates becoming wealthy as the ideal way to achieve financial independence. And, it’s hard to argue with that idea.

So, take a few minutes and view this video. And, let us know your thoughts about this information in the Comments section at the end of the page. Also, please “Like” and “Share” this post with others who may be interested in achieving financial freedom.

(Disclaimer: The views expressed in the above video are strictly those of the presenter.  They  do not necessarily represent those of FFN.  Please use due diligence prior to applying the concepts, recommendations and/or in purchasing any products or services offered by the presenter).  FFN Editors 

Try the 5% Solution to Achieve Financial Freedom

Do you find it difficult living up to the old adage that says the way to financial security is to save 10% of your earnings…daily, weekly and annually? Well, don’t give up hope of ever achieving your financial freedom goal. Daniel Myers offers a smart alternative. He says go for a 5% saving/earning target instead. It may take a little longer but can prove more doable.

Let us know your thoughts about this approach in the comment section below. Also, please “Like” and “Share” this with friends and family.

The 5% Solution To Financial Freedom

By Daniel Myers on February 26, 2009, Investopedia

Conventional wisdom says “save 10% of your income to achieve financial security”. This little piece of advice has become conventional wisdom because it’s true. However, many people struggle to pay their bills every day and see saving 10% of their income as a fairy tale – an insurmountable hurdle that makes them give up before they can save any amount at all. However, a new twist on that traditional advice may make that savings goal more achievable.

Instead of saving 10% of your current income, another alternative is to focus getting that 10% from two sources: 5% by making extra income and 5% by lowering expenses. The key is to make small but concise financial moves – and avoid counting on striking it rich with one big payoff, such as by winning the lottery. Read on for some ideas on how to find an extra 10% to save for your future financial security.

Cut Spending by 5%
A spending cut may seem old-fashioned and trivial, but remember that many fortunes have been made by those who simply spent less than they earned and invested the difference in assets that increased in value over time. Small savings will add up quite a bit over the course of a year and, more importantly, over your lifetime.

You may scoff at the idea of cutting spending as a strategy, but it works. It should come as no surprise that some very well-off members of society still clip coupons. For them, of course, it’s a matter of principle, but for you, those little savings add up and, more importantly, your efforts become part of your money habits. These habits determine your future. Maybe you or your kids will someday be billionaires who still use coupons. (To lean more, read Warren Buffett: The Road To Riches and Downshift To Simplify Your Life.)

Start With Household Bills
Utility bills come every month like clockwork and can add up to a hefty sum by year’s end. To lower these bills, consider switching to providers that offer better rates, or cutting unused services. There are hidden benefits to making these changes as well. For example, most of us will become more active when we cut our cable and head outside to occupy our time, which may lead to lower medical bills in turn. Getting all those premium HD-channel packages can add up to quite a bit. According to MSNBC, the average cable bill was around $60 in 2006. Don’t let yourself think, “Cable’s not that much money, so why bother?” Instead think, “No one watches that tier of TV channels, and cutting it will leave me with 1% to save.”

If you’re planning on saving energy (and therefore saving money on your electric bill), there are a lot of little things you can do around your house. Unplugging unused electronics, switching to energy-efficient light bulbs, using sunlight to your advantage for heating and lighting, and many other techniques are just a start. And, if you’re making some long-term plans, consider installing energy-efficient appliances for additional savings. (For more insight, see Ten Ways To Save Energy And Money.)

Save on Insurance
Insurance companies typically offer discounts if a consumer buys multiple types of insurance (such as both auto and home insurance) from the same provider. Likewise, having one’s spouse go under the same insurance provider for auto insurance may result in a discount to the policy’s premium. Advertising claims shout that you can save hundreds by switching our car insurance company, but you should consider shopping for homeowners insurance (a.k.a. property insurance) as well. Due to differences in insurance underwriting, there is potentially a lot of variety in rates and coverage between the major insurance companies, so shop around. (To learn more about underwriting, see Is Insurance Underwriting Right For You?)

Taxes Are an Easy Target
By knowing legal deductions available ahead of tax season, you could save hundreds or even thousands of dollars by making smart decisions that lower your tax bill. For example, some retirement account contributions qualify for a tax credit, not just a deduction, for those under certain income limits. (See IRS Form 8880 for details.) It is at least $200 per person per year and in some cases can be up to $1,000. This is only one example, but every public library and major bookstore should have a good tax guide – get one and read it! IRS.gov is also a good source of information. Tax savings can mean big money for you. (For more insight, read Give Your Taxes Some Credit.)

Professional Services Can Add Up
Many people simply have a certified public accountant (CPA) prepare their taxes without drawing on their expertise to actually save on taxes. If you use a high-end CPA to prepare your taxes when a standard tax preparation firm could give you the same service for less, it could cost you $500 or more per year. Determine whether you really need a CPA. If it makes financial sense, hire one and hire a good one. (To read more on this topic, check out Crunch Numbers To Find The Ideal Accountant.)

Vanguarding® is staying focused on your future. Learn more Consider what you pay for other professional services as well. For example, some doctors will give discounts for payments made upfront, presumably to prevent having to wait for insurance companies to pay them weeks or months later, if at all. If you have a major medical bill that you’ll have to pay out-of-pocket, consider asking for a reduced fee for early payment. The worst they can say is no.

Increase Your Income by 5%
Most people think that in order to really save money, they’ll need to increase their income by about 50%. If you are convinced this is true, and no amount of reasoning will change your mind, then you’ll need big changes to get there. These changes include earning advanced degrees and changing jobs, or even careers.

However, many people overlook some simple ways to earn more. Here are a few to consider.

Get Your Company’s Retirement Plan Match
This is free money – take it! You only need to contribute enough to get the full match. If your employer matches your 401(k) or other retirement-plan contribution dollar-for-dollar up to 3% of your salary, then you need to contribute 3%. It’s just like a 3% cash bonus, but you’ll have to wait until you turn 60 to cash the check. Later on, you can evaluate how much more to contribute above and beyond the company match, but the first priority is to get that match. (To learn more, read Making Salary Deferral Contributions.)

Add to Your Workload
If you’re an hourly worker and can work an extra hour or two per week, go for it. Working an extra shift once a month accomplishes the same goal. Both are a big boost to your income, anywhere from a 1-5% boost in the average month.

Add to Your Skill Set
Instead of just demanding additional pay, ask your employer what additional skills or certifications (think online classes or vocational school) could lead you to higher pay, even if it’s only 1-2% more annually. Put yourself in your boss’s shoes. Your boss wants more profit than he or she can produce independently – that’s why you were hired. When you can earn additional profit for your company, you command more in pay. Helping others reach their goals can reap big rewards for you.

Create Multiple Sources of Income
Besides serving as an insurance policy if you happen to lose your job, a part-time job or even freelance work can help you to get to the goal of an extra 5% income. It can also be a nice change of pace from the daily routine.

These steps, if taken singularly, appear insignificant, but collectively they lay the groundwork for your personal financial success. No drastic changes are needed, only a little conscious effort. Most people make changes only if they can easily save 10-20% of their income or get a big raise, but financial success rarely works that way. If you don’t have a plan after that big raise comes, you will find that your newfound cash quickly disappears. More income isn’t always the answer – it’s good habits that will lead to financial security.

(Disclaimer: The views in the above article are strictly those of the author.  They do not necessarily represent those of FFN.  Please use due diligence in applying any of the concepts or recommendations including the purchase of products and/or services offered by the author.)  FFN Editors

Build Wealth Like Millionaires Do


Would you like to build up a nice nest egg for the future?  Maybe you would like to really expand your wealth to something more significant.  Something approaching the millionaire status.  Well, our featured author, Liz Davidson, writing for Forbes Magazine, has a number of suggestions to help you get to your goal.

Please give us your thoughts in the comment section below.  And, indicate”Like” and “Share” this article with any one you think might be interested in the topic. FFN Editors

“Eight Ways To Build Wealth Like Millionaires Do – Make It A Game”

Liz Davidson, Contributor, Forbes Magazine 

The economic downturn has taken its toll on Americans – business owners and workers alike. Many of those who lost their jobs had to take substantial pay cuts in order to work. Overtime is a thing of the past and many who would like a second job find they are few and far between. Just because times have been challenging doesn’t mean it’s impossible to build wealth. In fact building wealth can actually be enjoyable, even fun.

There are opportunities out there for everyone whether it is in an emerging industry such as “micro jobs” or using a special talent you possess and enjoy turning into wealth building opportunities. Here are some ways to build wealth either in a small way to make ends meet or in a big way that could be life changing, either way any of these could be a positive move in the right direction:

Take a few micro jobs.

With the economic downturn and the technology/social media upturn, a new industry has emerged that helps people with small jobs or tasks such as running errands or something more interesting such hiring a micro jobber to “ask someone for forgiveness” for you (that would certainly get their attention.) On the other hand, some jobs could actually lead into something else such as reviewing resumes for job seekers, or recording video testimonials for websites. The micro job site takes a cut of course, but you net out a profit for a few minutes of your time. When you take the micro jobs, invest the funds to build wealth. You’d also have some great stories to tell.

Resource – Micro jobs

Invent something and sell the concept.

One of my favorite inventions is the pool sweep, not that I have a pool but I just think it is an amazing invention. Millions of pool owners agree since every swimming pool owner I have ever met has one of these devices that crawls along the bottom of the pool vacuuming up leaves and debris for them. A penniless engineer named Ferdinand Chauvier brought his family from the Belgian Congo to South Africa and eventually invented the first automatic pool vacuum in 1974 when he came up with the prototype for the “Kreepy Krauly” as he called it. Pool owners everywhere gladly pay for this amazing device. If you are constantly coming up with new ideas or ways to dramatically improve things, in your spare time, make a prototype or sell the concept to a company who buys ideas.

Resource – US Patent Office, United Inventors Association of America, Inventors Blog


When you make negotiating a game to pay less for everything you purchase, you can not only save thousands of dollars on things you are purchasing anyways but you can make money by reselling. A friend of mine loves a deal and his idea of fun is calling his cable TV company to let them know he received an offer from a competitor to see what they will offer him to stay. I observed him getting a free month and a three-month premium package for his phone call. The key for him is making it a game which he uses for every single purchase he makes and he saves thousands of dollars as well as getting free services along the way. He took it to a new level with his baseball card collection and resells cards he got amazing deals on and now makes enough to make his house payment every month. You can do the same.

Start couponing.

It may not seem like a $1 off coupon makes much difference in your grocery budget but the bottom line is saving money on purchases increases wealth. People who use a coupon system report saving as much as 40% on a regular basis on their groceries and household items. It takes less than an hour a week to organize and can make you $50 an hour because of the savings on the regular household items you are buying anyways. Couponers see it as a challenge to get the absolute lowest price on their groceries and many make it a fun competition by texting each other after leaving the store to compare how they did. Whether it’s a small item or a big one if you can pay less, you are ahead.

Resources: Southern Savers; Best Coupon Sites for 2012

Turn your hobby into a business.

You have a special interest or talent, why not use it to build wealth? I already mentioned my friend who turned his baseball card collection into a major money-maker and there are tons of other examples we hear about every day for someone who takes some initiative. An employee one of our financial planners recently met with at a work site financial planning session mentioned that he recently started an online book selling business. He loves to read and is adept at IT so he combined his interest with his talent and started selling used books on Amazon. He was already making a profit in the first three months and planned on using his profits to fund Roth IRAs for him and his wife. He also can get even more enjoyment from his love of reading since he can resell his books for a profit. The IRS is on his side too since he now has some additional write-offs.

Resource: Business deductions are critical for tax savings; Reporting Self Employment Income

Reduce your tax bill and invest the difference.

Educate yourself on smart tax reduction strategies such as what I just mentioned in turning your hobby into a business. Some tax strategies include harvesting losses against your gains, getting double tax breaks on medical expenses by funding a HSA with your employer, or “bunching” your expenses or even your year-end bonuses into the following year so you don’ t phase out of student loan interest deductions or taking losses on rental property.

Investing $3100 in a HSA in 2012 saves $775 on your federal income tax if you are in a 25% tax bracket because the funds are pre-tax and are withdrawn tax-free if used for medical expenses. By NOT getting phased out of student loan interest deduction of $2500 per year, you could save $625 on federal income taxes if you are in the 25% bracket and “harvesting losses” against investment gains could have unlimited potential. For example, a $10,000 gain on a security held a year and a day would incur a 15% capital gains tax (20% in 2013) so it would cost $1500 in taxes. If you took a loss of an equal amount in the same year, that gain becomes tax-free. Becoming versed in tax strategies can save you thousands of dollars each year that can go to your wealth building instead of to the IRS and your state tax department.

Solve a problem.

You can earn thousands per problem solved. For example, some students at Chicago University came up with an idea to install a “round up” button on cash registers so customers can automatically donate to charity by rounding up their transactions. These students won $10,000 to give to their favorite charity! Innovators Felipe Husser and Jeff Warren won $360,000 for Peepol.tv which created a streamlined platform for watching videos of breaking news events around the world which as you can imagine would be valuable to news organizations and even governments worldwide. There are also thousands of extremely smart problem solvers out there who are unknown and simply need a venue and a problem to solve for a fee and then invest the difference to build wealth.

Resource: Idea Connection

Throw parties and sell tickets.

House concerts and small local venues have increased in popularity to promote up and coming artists and musicians using social media. If you love to entertain and bring people together, why not get paid to promote your favorite musicians at a house concert or other venue? If you already are entertaining and absolutely love it, expand your horizons and your network and make some extra income doing it.

You don’t have to host it in your home if you don’t have the space or that doesn’t appeal to you, but you could host it at a community center or some other neutral space. A friend of mine in Scottsdale Arizona used to host networking events at local resorts who wanted to show off their venues and provided the room and the food for free. She picked up the drinks and charged the attendees. It worked out well as she developed a name for herself while making a profit.

Resource: House Concerts 101

There are opportunities out there in any market environment to build wealth and if you can pair up your skills and talents with what you love to do, you can actually build wealth by having fun. Isn’t that how it should be?

Liz Davidson is CEO of Financial Finesse, the leading provider of unbiased financial education for employers nationwide, delivered by on-staff Certified Financial Planner™ professionals. For additional financial tips and insights, follow Financial Finesse on Twitter and become a fan on Facebook.

(Disclaimer: The views in the above article are strictly those of the author.  They do not necessarily represent those of FFN. Please use due diligence in applying the concepts or recommendations and/or in purchasing products or services from the author.)  FNN Editors

Learn How The Stock Market Works

Want to learn the basics of how the stock market works and have fun doing it?  Well, here’s an entertaining and painless way to get a sense of one of the major financial freedom achievement vehicles.

As important as investing is in the array of tools used in the quest for financial security and independence, it can be a rather dry topic for many.  So, we’re featuring a little video that does the job nicely.

It’s called, “Working Dollars”, and was produced by the New York Stock Exchange.  And,  was a way to explain to investing newcomers how the financial markets work.  It’s from 1957, so it’s a little dated.  However, it’s certainly worth watching.  See the link below.

Let us know what you think of its content in the comment section below.  Also, please “Like” and “Share” this with others who might be interested. 

“Working Dollars”


(Disclaimer:  The views in the above video are strictly those of the producers.  And, do not necessarily represent those of FFN.  Please use due diligence in applying the concepts and/or recommendations or in the purchase of any products or services offered by the producers.)  FFN Editors