It’s All About Supply and Demand with Earning Income

making_big_money_without_needing_academic_successI was talking with a friend recently about the topic of intelligence and how it doesn’t matter as much as many people think when it comes to financial success.   His perspective was that the more intelligent someone is, based on test scores and other discernible measures, the more successful that person would be.   My view is that while having a certain level of intelligence is probably necessary for success in many endeavors, at some point there are other variables that come into play.  Such as focus, persistence, interpersonal skills, and even other forms of natural talent.

Now, to be fair it wasn’t as black and white as that in our conversation.  But generally, I think that being bright is just one variable that comes into play in terms of financial success – and it can be overwhelmed by other variables in some cases.

Well, I found an example of this that’s interesting.  Think about the average salaries of professional athletes. This article from USA Today shows the average annual salary for the major professional sports in the U.S., and the results are eye-opening.

Of the top 4 (I’ll exclude soccer as it’s not really a major sport here in the U.S.), basketball has the highest annual salary at $5.15 million.  The lowest of the 4 majors is football, with a $1.9 million average.  Not bad!

The two in the middle were baseball and hockey, at $3.2 million and $2.4 million respectively.  Let’s take baseball as our specific example we can focus on.  At $3.2 million per year, the annual income of baseball players is pretty darned good!

Looking at this further, we can break this income down to the following approximate rates

  • $267,000 per month
  • $8,800 per day
  • $365 per waking hour (or $1,100 per hour for an 8-hour day)

If we look at it differently, such as based on a per official game played basis, we would still see impressive rates.  Based on a 162-game baseball schedule (excluding spring training), this comes down to nearly $20,000 per game.

How would you like to show up at work knowing that you’ll get paid $20,000 for your efforts?

Tying this back to the debate I had with my friend, please tell me how this relates to having “intelligence”?

I see this as a clear example of how there are often many other factors that can influence one’s success.

  • Special natural talents
  • Ultra-specific skills
  • Solving an unmet need

Of course, I’m sure that natural talents aren’t the only thing here.  My guess is that many ballplayers have natural talent, but the differentiating factors just might be some of those other factors we mentioned before would come into play here too.  You know: working hard, relentlessly pursuing success, tons of practice/effort.

Where this leads to me is the idea that simply being smarter than the next person doesn’t automatically elevate someone to exceptional financial performance.  Rather, it’s harness other talents and cultivating skills or providing service that meets a need that the market will pay for.  Supply and Demand at work!  And then, working really hard for it.

When I was right out of college, I didn’t get any of this.  It took me years to come to this way of thinking about growing net worth, but better late than never :)

My Questions for You

What do you think about the idea that there are plenty of other attributes that can be more important to financial success, beyond intelligence and academic accomplishments?

What factors have truly led you to your biggest financial success?  It doesn’t matter if these are grand accomplishments or modest – you must have done something to reach this success!

On a side note, can you imagine earning $365 per waking hour?  Wouldn’t that be a total game changer?

Keep it Simple: Buy Low and Sell High to Make Money

The idea of getting results through “passive” income is something that is popular in some personal finance circles.  I think there’s something about this that’s rooted in the human interest in getting something for nothing.  In this case, nothing means no time or effort expended.

Frankly, that sounds quite appealing.  I’m a believer in the notion that time is money, or actually more valuable than money since you can’t make more of it.  The less time we have to invest in something while still getting results, the better deal it can be for us.

Back to the “passive” concept.  Sometimes, I think there is a tendency for many of us to want to put things on autopilot.  For example, focusing on index funds and avoiding constant stock trades.  I like doing this, though admittedly there are transaction costs that play a role in my decision.  But the point is that we’re often looking for ways to make money without incremental effort.

But can we make more money for ourselves by simply taking a more active approach rather than a passive one?

Sometimes, maybe not.  Other times, possibly.  I think it comes down to remembering that when it comes to investing or making extra money, it’s often a matter of thinking about the concept of “buy low and sell high”. 

Here are a few examples of how buy low, sell high can be applied to make money:


Yes, this may be the first thing many folks think about when it comes to buy low, sell high.  Yet, many of us also focus on index funds, dollar cost averaging, and other “autopilot” type of tactics.  I’ve been fine with that, as it allows me to focus time on other things.

However, there is something to be said about how the market does provide us with potential opportunities.  There is often some seasonality in monthly stock market returns, which may not occur all the time but trends seem to be there.  For example, a “June Swoon” is not a new phenomenon for stocks.  Additionally, sometimes markets overreact to bad news.  While risky, there are times we can actually strategically buy low and sell high.

Precious Metals

After years of being somewhat low profile, metals saw a resurgence of interest several years ago.  Many people likely made quite a bit of money buying gold low and selling at higher price points later.  Additionally, attention also went toward investing in silver, which showed great price appreciation before coming back down.  Is it a buying opportunity for metals today? Whatever one’s opinion it’s clear that people have made money buy strategically applying the buy low, sell high approach instead of passively buying and holding.

Real Estate

As we know, real estate surged in value in the early-to-middle part of the last decade, with fantastic year over year.  Then the bottom seemingly fell out, and prices plummeted.  If people bought low, when prices were at their nadir, it could have been a money making opportunity.  Around here, I’ve heard stories of people competitively bidding for homes again, and prices seem to be rebounding.  Unfortunately, so do interest rates as well.  Regardless, this could have been a good buy low, sell high opportunity.


Here is where we deviate from traditional investments.  Some people actually do make money buying and selling used cars, including different types of them.  Classic cars can sometimes be bought and sold for profit, and I’ve even heard of someone buying a hybrid car and selling it for a profit later as gas prices surged.  Again, examples of buy low and sell high.


Some collectibles have more clearly agreed upon market value than others.  Often times, some collectibles can have extra value for someone who really appreciate them for whatever reason, while having much less value for others.  For examples, a collection of Elvis Presley records from the 1950′s would have great value for some people but very little for others like myself.  There could be good opportunities to buy such things from people like me, and sell to hard core fans for much more.

Bottom Line – sometimes by getting out of the passive/autopilot/low effort mindset, we might actually make more money and get potentially out-sized returns.  No guarantees, but sometimes active effort yields extra results.

My Questions for You:

Do you ever think about the concept of buy low, sell high in terms of money-making opportunities?

Or, are you more of a buy-and-hold, or autopilot type of investor?

Can you think of any other situations in which you’ve taken advantage of buying low and selling high?

Making Money Flipping

make money flipping

Flipping can be profitable!

How can I make money flipping? That’s a question that came to mind recently as I made a relatively innocuous visit to a local financial institution.

So, the reason I was there was to get something from a safe deposit box.  As I’ve written before, the question of whether or not to get a safe deposit box is one that involves a series of trade-offs.  There are benefits, and there are drawbacks.  However, one of the positives that I didn’t even think about was the idea that they could be in short supply!

As I showed my ID at the bank, and got the signature card (which they required me to sign before accessing the box), I noticed that I’ve had the box for years now, longer than I had realized.  You can see the dates you have visited on the card, including your first visits.  Then, I commented to the guy that I was surprised at how long this bank had been open, since it was around the time I got the box.

He then said that I was smart to get it when I did, because there aren’t any more available.  In fact, he mentioned that there was a huge waiting list now.  He also noted that it was really, really tough to find a safe deposit box anywhere in the area.

I don’t know how many other people would have the same thought I had, immediately after.  Maybe it’s just those of us that are personal finance enthusiasts, but I immediately thought to myself: “hey, I wonder if I could sell this thing an make a profit. Maybe I could have flipped this a few years back, when they sold out?”.

I asked the guy (jokingly) if I could sell my rights to the safe deposit box to someone else who really wanted it, in order to capture a profit.  He laughed, and gave me a “haha, nice one but no way” kind of look.

Flipping safety deposit boxes…well, it was a good idea, while it lasted – for those few seconds, anyway!

Of course, flipping really involves buying something and then selling it soon after, to score a quick profit.  This got me thinking of ways to make money flipping:

Flipping Houses

This was a blazing hot phenomenon in the early 2000′s, before the housing market sunk.  People would buy a place, do some quick rehabbing, and resell for a profit.  Or, in some cases, they might just buy and sell soon after without doing much else.  When prices are increasing, that could be possible in some locations.  Given the recent real estate rebound in some places, it’s a good question: can people make money again flipping houses?

Flipping Cars

While I have never done this, someone I know told me about how he bought a vintage car years ago and then resold it soon after for a profit.  Clearly, depending on the knowledge of the seller and the buyer, as well as demand, it could be possible to do this.  There are people out there buying and selling cars for profit.  My thinking is that it would be much harder with newer cars, but with older cars that could be hard to find and have varying levels of demand, it could be more feasible.

Another good example I recall from not too many years ago was how someone bought a hybrid car, drove it for a year, and sold it for a profit after gas prices surged.  Not bad, as that person was effectively getting paid to drive the car, once that transaction was done!

Flipping Collectibles

This might be a related to the car example above, as vintage cars could be considered collectibles by some people.  But there are treasure hunters galore out there, scouring private sales for antiques and other collectibles.  Some of these same people can turn around and “flip” something they bought at a bargain price from an unassuming seller.

While I have never taken advantage of anyone, I remember how I would “flip” baseball cards when I was a kid.  This is back in the stone ages, when there was actually a big market for cards.  I have zero interest in any of this now, and haven’t for over 20 years.  But as a kid, I bought a few cards via mail that were hard to get locally, and then turned around and resold them for a profit.  Big bucks weren’t made, and in fact I would say that the proverbial one that got away - in terms of money-making opportunities – was a specific group of baseball cards I bought.  Anyway,  I did make some money flipping collectibles.  Enough to make me happy as kid at least :)

Flipping Websites

Since starting this blog over 3 years ago, I’ve learned a few things about the world of online business.  One thing I discovered is that there are people who flip websites.

You’ll often see how this is possible, if you pay attention.  People will start up a site, get it going, then cash out.  Or, they could buy a dormant blog and reinvigorate it or extract revenue from it in the short-term.  Then, turn around and sell it for a profit.  If someone buys an asset for $2,000 and resells it a few months later for $3,000, that’s a 50% return on investment in a short amount of time.  It’s not easy to find those types of return on an annual basis, unless you’re talking about the Japanese stock market’s returns!

Speaking of online flipping, another way people can flip is by flipping items purchased on craigslist.  There are people who might buy worn out furniture, for example, and rehab it at low cost.  Then, of course, try to turn around and flip.

Bottom line:  some might wonder how to make money flipping, but if we can time things just right in terms of supply and demand and think opportunistically, we just might be able to make side income flipping items.

My Questions for You

Have you ever flipped anything for a profit?

If not, have you known anyone who has made some decent money doing this?

What things would you be interested in flipping to make money?

10 Ways to Make Extra Money

A nice way to supplement regular income can be to find ways to make extra cash.  It’s fun to get some money in ways that don’t involve the main source of income, as it often ends up being excess that we weren’t counting on to begin with.  Extra money almost seems like a bonus of sorts!

Here are 10 ways to earn extra money

  1. Tutoring.  Surprised to see this first? Well, if you’re reading a personal finance blog, you’re likely interested in self-improvement and open to learning.  Why not pass on some knowledge to others who might need help?  Perhaps you can feel good about helping others, while earning some supplementary money as well.  $10 to $20 per hour might be possible, you never know.
  2. Freelance writing.  If you have specialized knowledge, or are simply passionate about a subject, you might be able to land a gig as a freelance writer.  Again, if you’re reading this personal finance blog, you probably have an interest in money and related topics. If you have writing ability, maybe somebody out there has a need for some help? Perhaps you could get $15 to $25 per article, who knows?
  3. Selling non-traditional ads.  I spoke about this in a post about how to monetize anything, where different ideas of selling “ad space” were discussed. For example, selling space on your car, side of a home, etc.  Sometimes thinking out of the box a bit, and doing something non-traditional, can yield extra money. There is value to the number of eyeballs and impressions seeing an ad, even if through such alternative channels!
  4. Participating in market research.  This might be more lucrative depending on your line of work or specialized knowledge, but there are opportunities to get paid to participate in market research.   I did this in college once, getting some money to answer questions for perhaps 30 minutes of time.
  5. Walking dogs.  I wouldn’t find this to be fun, and don’t have time for this anyway the way my life is structured. Plus, I’m allergic to them:)  However, if you have the free time, like pets, and wouldn’t mind a little extra exercise, perhaps you could try this.
  6. Yard work.  This is something I have outsourced, as I prefer to do other things with my time.  With plenty of people like me out there, why not take advantage of the situation and do some outdoors work? If you like time outside and can do things quickly, perhaps you can make a little extra cash with a short time commitment.
  7. Mystery shopping.  I’ve never done this and don’t know anybody who does this, but from what I understand there are people who can earn a little bit of money on the side doing this.
  8. Selling blood or plasma.  Okay, another thing that I don’t want to do.  Plus, I don’t think you can do this all that frequently.  But if you would like a little bit of extra cash, this is one source that might be good for a few bucks on a periodic basis.
  9. Entering sweepstakes.  This might not directly result in money, but there are some giveaways/sweepstakes/contests that might offer pretty good chances to win.  Some bloggers offer such contests, and the number of entrants might be surprisingly low considering the quality of some prizes.  Maybe you could turn around and sell your prize, or just save money you could have spent if you had bought it instead.
  10. Blogging.  Hey, you might earn a few bucks this way! J  If it’s something you might do for fun as a hobby anyway, maybe you could make a little bit of money in the process?

My Questions For You

How many of these things have you done, or would you actually consider doing, in order to earn extra money?

Are there any on the list that you just have no interest whatsoever in doing?

Do you have any other legit ideas for ways to earn some extra income?

7 Steps to Protect and Grow Income

Personal finance can cover a broad range of topics, including saving, investing, debt management, and career.   I definitely discuss them all here, along with other money-related topics.

Having said that, the thought came to mind that it’s good to sometimes ground ourselves in what’s important, how the process works, and in what order things occur.  This got me thinking about how the category of income generation – be it from career, business, etc – is a foundation to our overall financial success.

Think about it, working backwards: before we can invest anything, we need money to invest.  This is possible if we have savings.  If we have savings, it means that we needed to have income exceeding our expenses. In order for that to happen, we needed to be making money in the first place!

Thus, as the foundation of our finances, we need to be earning money and generating income.  Now, people that sponge off others or let others take care of them might not be attuned to this part, but doesn’t it make sense? We need income before we can save anything, and then in turn invest.  Income is the engine that drives our finances.

Along those lines, I came up with the following 7 steps to protect and grow income:

  1. Get a good education.  Enough of the notion that education is optional, or not important anymore. That’s crazy.  Some people question whether it’s best to choose college or entrepreneurship, but I say that education is foundation for success and that many folks are looking for shortcuts.
  2. Continuously learn.  It’s not enough to get a degree or even advanced degree(s) and say that we are done. Rather, we need to keep learning every day, and embrace the idea that every day brings new experiences and new knowledge to acquire.
  3. Protect your career.  Make sure you don’t take your job for granted.  Work to over-deliver and make yourself indispensible.
  4. Grow your career.  Your career is probably what brings in the flow of money. If we want to increase cash flow, we need to go beyond protecting our job.  Rather, we need to look for ways to become really good at what it is we do, get attuned to how things really work in business (or whatever field you’re in), and be savvy networkers.
  5. Invest in health.  If you’re not healthy, you either won’t be able to work or your ability to successfully do so will be compromised.  This happens as people get older, but many younger people simply don’t think of this or brush it off as a “someday” kind of event.  Someday probably comes quicker than we realize if we don’t pay attention, so it’s important to be healthy and ideally energetic too.  Even proper sleep and money can be related!
  6. Be insured.  What if you can’t work, and can’t make money? Depending on what the issue is, insurance might be a financial life saver.  You may want to spend the proper time focusing on protecting against losses – with disability insurance as a good example.
  7. Think entrepreneurially.  At some point, it’s important to remember that we are all essentially unofficial “business entities” of our own, even if individual employees.  We sell our professional services for wages.  We are the product. We need to be able to keep that mindset and thrive as people, rather than purely thinking of ourselves as simply employees.  Money can be made through different business structures with you playing different roles, be it employee or owner.  Being flexible, adaptable, and ready to operate in different environments is important.

My Questions for You

Do you agree that income generation and cash flow are the foundation of personal finance success?

What are your thoughts on the list? Do you follow all of these?

Do you have any additional tips or thoughts to add, on protecting and growing income? I’m interested in what you have to say, and what you can share with readers.

5 Ways Education Can Impact Your Net Worth

Education and Wealth Go Together

Most of us have probably heard some variation of this advice before: “Get a good education so you can get a good job and have a successful career”. It’s been a standard approach for years, where many well-meaning parents and other elders encourage younger people to build their foundation with a solid education.  In other words, get an education to increase wealth down the line.

However, the tried and true advice about getting a good education has been questioned of late. We discussed this in a post on college vs. entrepreneurship, debating the notion that college might not be worth it these days, it’s not for everyone, and that many people could be fine without it in this current environment.

Clearly, based on what I wrote in that post, I don’t agree that college has become less necessary. Rather, I believe that a good, solid formal education has become more important than ever, and included it as one of the top ways to grow and protect your net worth.

Sure, some people are entrepreneurs that strike it rich based on risk taking and innate business sense. And yes, some people do burden themselves by going to unnecessarily expensive schools that offer a poor potential for high ROI. Nevertheless, I think its great advice for a young person by recommending they focus on getting a good formal education.

Here are 5 reasons I came up with to support the notion that a good, formal education is worth investing in:

  1. College graduates make more money.  This has been documented over the years. Over a lifetime, this can truly add up to a substantial difference in net worth.
  2. A college degree is required for many jobs.  Many white-collar, professional jobs simply require an undergraduate degree as a minimum screening criterion. If a person doesn’t have a degree, they probably won’t get a chance to enter certain fields at all. Often, the requirement is to have a graduate degree as well. If you don’t have a degree, you might not get a chance to play the game – and might hit an early, low plateau even if you do get an entry-level chance.
  3. A college degree helps shape your personal brand.  Where you go to school can – for better or worse – play a role in getting into graduate school, getting certain jobs, and connecting with other people. It helps tell a story about you, and gives people a base level of confidence in your ability to show ambition and hustle.
  4. A formal education teaches you how to critically think.  Often times, the specific skills we learn in school are never used, but we develop the skills of critical thinking and learning how to keep on learning. I had a former college friends mother ask me, years ago after I graduated, if I was using the specifics I learned in college in my first job. I said no, maybe 5% of the skills carried over, but I’m so glad I had the education. She looked at me puzzled, like I was crazy, and asked me how I could be glad for the education if I don’t use the skills I learned. I told her that I wasn’t applying very many skills I learned directly in college, and learned most things new on the job. However, without my college education – even though there was minimal transfer of skills from my degree and stuff was all new – I never would have been able to be prepared to do this job without my degree and education. She didn’t get it, as she clearly didn’t understand the concept of learning to learn and having intellectual context.
  5. You form a network of other professionals.  It doesn’t matter what you do, nor does it matter if you aspire to make a lot of money. The bottom line is that the people you meet in school, as well as other alumni from your school, can help open opportunities to network, learn, bounce ideas off each other, and possibly find work.

Overall, the way I see it, it’s important to convey to younger people that a good, solid, formal education can help put them in a better position to grow their net worth over the course of their lives.

My Questions for You:

Do you agree with the notion that a formal education is truly necessary in this day and age?

Do you think that those who dismiss college for entrepreneurship are being shortsighted and caught up in get rich quick hype, or do you think that things are changing?

How has your level of education impacted your career, income, or other aspects of your financial life?

Monetize Anything!

So many opportunities to monetize!

There is a lot of talk online, particularly among those owning blogs, about monetization. The idea that one can monetize a blog is alluring to many newcomers to the blogging world, and they often get into it for those reasons. Of course, many give up after a few months when they aren’t happy with the 50 cents they’ve made to date :). However, for those who stick around and work at it, monetization can happen, as evidenced by the success of many site owners.

This got me thinking that with the focus on making money online, there might be other areas that we can look to generate side income.  These possibilities don’t have to necessarily come from websites. Rather, we can look to our everyday life to create ways to make some extra money!

Now, I’m writing this half-jokingly, coming from the perspective of amusement in the monetization craze, as well as genuine interest as well. With that in mind, here are some present and future ideas that just came to mind regarding monetizing anything:

  • Car.  Instead of buying a nice, name brand car, perhaps buy an old, cheap, yet reliable enough car. Then, look at your car as one big advertising vehicle – literally. No free bumper sticker messages, now you can start slapping ads all over the car! Sell a client on the number of eyeballs that will be seeing their ad as you drive each day, week, and month.
  • Home.  In some cities I’ve seen older apartment (or condo) buildings, which happen to be situated by a highway, with ads on them. Whether painted or affixed, these ads just might be generating some cash flow each month. Now, I sure as heck wouldn’t want a sign on my home, but if you don’t care – and you own the property – it’s an option!
  • Clothes.  Go to a business, and tell them that you’ll be glad to wear a coat with their logo on it. Maybe they will give you one on hand, or you can “rent” ad space by putting their logo on it. For example, maybe a restaurant could give you 10 free meals for affixing their logo to their coat. Or, maybe another business could pay you a certain dollar amount per month for advertising in this way? Hard to enforce and hard to keep from being laughed at doing this. I wouldn’t do it J But hey, it’s a potential monetization vehicle, right? After all, when people see us wearing clothes with a brand logo on it, it’s free advertising for the company, right?
  • Email Signature.  If you send a fair amount of personal emails, maybe you could sell some ad space there? Set up a signature for your email, and offer a client the chance to put a company logo or url there. Hey, maybe they’ll get a targeted audience?
  • Voicemail. If someone calls, maybe your voicemail message can say “this message was sponsored by Company XYZ, the purveyor of the finest in Product 123”, before getting to your standard greeting.  Yet another way to sell out!
  • Tweets. There are people that do this already, getting paid for tweets. I haven’t done this, but think it’s an interesting concept that’s apparently working well for a number of people.  Worth considering, perhaps?
  • Texts.  Some people sent out a ton of texts every month. If you do, and can give up a small percentage of available space on each text for a sponsored message, couldn’t that be worth it. Your friends and family would understand :)

Some of this might be going way too far, at least based on what I would actually do. But if we think about it, advertising space can take on many forms!

My Questions For You

Are you actively trying to monetize online?

Would you ever consider any of these other alternative approaches to monetizing?

Can you think of any other wacky, out of the box ways to monetize and make a little extra money via advertising?

Diversification of Investments AND Income

We have all heard about diversification when it comes to our investments.  Most people tend to believe that putting all your eggs in one basket is a highly risky approach to doing things.

This could apply on several levels. First, in terms of diversification among asset classes. For most of us, it’s probably not the best idea to be investing 100% in stocks – or bonds, or any other asset class.  Even if you did diversify well, you probably wouldn’t want to put all your money in one particular investment in an asset class. For example, within stocks, you wouldn’t want to put all your money into one particular stock – diversification within asset classes is important too.

All this being said, I think we can agree that for the average person, investments ought to be effectively diversified. But what about income?

There is regular chatter among many personal finance bloggers about the value of diversifying income streams. But I wonder this: among most mainstream (non-PF Blogger) folks, why is diversification of income not seen as being as critical as diversification of investments?

Think about it – most people will not put all of their investments into one particular company.  Sure, there are some who don’t believe in the concept of diversfication vs. investing in what you know, but that’s not super common. By default, if people have a 401k, they’re probably invested in many different companies by virtue of having mutual funds.  Or, if they own a home, they might have some equity in place. Perhaps they have bonds, or cash. Either way, it’s highly unlikely that their investments are tied up into one single company.

However, when it comes to income, many people seem to view it differently. Frankly, I used to be the same exactly way until the last year or so.  This meant looking at a job as THE source of income. Without a job, there’s no income.

Realistically, that’s probably the case with most people, I’d assume. It’s the way our society seems to be set up. However, this mindset seems to lag the sophistication we collectively have about diversification of investments. Shouldn’t income be diversified too?

If the primary source of people’s day to day money needs is their income – while savings are for retirement and other longer term needs – then it seems to make sense that income should be protected. This can happen by having a great career, but even then – you could be at the mercy of your employer, your industry, or economic conditions.  So, why not diversify income sources?

Again, while many personal finance bloggers think about this, I wonder why this concept of income stream diversification isn’t has seemingly top of mind as investment diversification?

Recommendation: let’s consider it to be essential to have multiple sources of income.

If we wouldn’t invest all our savings in one company, why invest all of our income potential in one company? Let’s really take action and work on multiple streams of income in the New Year!

My Questions for You:

Why do you think it is that many people might be hesitant to invest all their money in a particular company, but will totally depend on an income stream coming from one company in employment?

Are you taking action on generating an income stream that’s different from your day job?


Factors that Influence Retirement Savings: An Adviser?

We all want to be able to have enough money for retirement.  Many people are not on track to do so, which makes it paramount to understand what actually helps us get enough money for our older days!

A recent article from Smart Money listed three factors that are drivers of retirement success. Here they are, and I’ll follow with my comments.

  1. Employing a consistent, long-term savings and investing strategy
  2. Working with a financial adviser
  3. Saving money in your workplace retirement plan

Here are my thoughts:

  1. I absolutely agree with this.  Being disciplined with our savings efforts, and doing in regularly over a long period of time, can do wonders for one’s retirement. It’s really straightforward in principle: save, do it regularly, do it early in life, get a solid rate of return, and let compounding work it’s magic.  Now, there’s more to it, such as protecting cash inflow, managing one’s career, and diversifying income streams.  In any event, regularly saving and investing consistently over a long period of time is a great practice.
  2. Hmmm. I  manage my investments on my own.  Would it help to have an adviser? Apparently, according to the article, it would.  They show that people who have an adviser have a higher probability of replacing income in retirement than do those without an adviser.  With me, it’s kind of a control factor, wanting to make the decisions on my finances individually. I’m not into sharing these decisions:) Plus, admittedly, there could be some hubris involved. Beyond that, however, I just feel safer managing my own money. Maybe this is something I should revisit, in terms of considering a financial planner.
  3. Yes, I agree with them on saving in a workplace retirement plan.  When you do so, it can often become automatic. This aligns well with #1 above. Plus, when you consider that some employers offer a 401k match, it becomes an even more attractive option. When it comes to that retirement plan, think carefully before ever taking on a 401k loan, and just don’t use that 401k for credit card debt, needless to say!

As you can see, the one area for which I’m not totally on board is the adviser factor. I’d like to learn more about the study that yielded the findings quoted in the article, just for my own curiosity so I could better interpret the data.   Who knows, I might be able to be convinced to revisit this one.

Also, their recommendation to save at least 10% is good, but I would suggest higher. To be fair, they did say “at least”.

Anyway, I’m all in on #1 and #3, and skeptical on tip #2.

My Questions for You:

What do you think about these tips? Any more that you would add?

Considering my own thoughts on advisers, I’m curious what yours are. Do you have one? Are you considering one? Feel free to convince me on your views:)