Investing
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A Tribute to the Man Who Changed My Life, Financially

Written by Barbara Huson

I want to take a moment to pay tribute to John Bogle, the legendary founder of the Vanguard Group and the inventor of the index fund. 

John Bogle, who died last week, taught me more about the wisdom of wealth building than anyone else.

Bogle had a simple, though radical, message: buy a diversified portfolio of low cost funds and stay the course, regardless of the market’s gyration or your fearful emotions.

 “The mutual fund business is where you get what you don’t pay for,” he said. 

Amen to that. And history has proven him right. Over the past 15 years, passive index funds have outperformed almost 90% of actively managed funds.

“If all investors had heeded his ideas,” declared Warren Buffet, another legendary financier, “they would be hundreds of billions of dollars better off than they are now.”

It took me a few years and some painful losses before I discovered Bogle’s wisdom. I’m beyond grateful I did. For over two decades, despite 9 market crashes (when the market falls at least 20%), I’ve done quite well. 

From the bottom of my heart, I say thank you, John Bogle. You left the world a better place.

What teachers are you grateful for in your life? Leave me a comment below.

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An Exercise for Rewiring Your Brain

Written by Barbara Huson

Last week, I heard from a client who was close to tears. Her husband’s business unexpectedly went belly up. Suddenly, they had no income. She was forced to get a higher paying job.  

“Do you think this crisis has anything to do with my decision to make more money and my lack of action?” she asked.

Obviously, it was a rhetorical question.

 I see this pattern all the time. Women who avoid money—making it or managing it—until a crisis hits. Either their world falls apart or feels like it’s about to. That’s when they finally take action.

I did it myself. I waited until a million dollar tax bill almost wiped me out.  Not smart!!

How about you? Are you avoiding financial stuff until the pain gets worse than the fear? Are you looking for a way to get moving without having your world violently (or even mildly) shaken?

If so, try this exercise. It’s called Selective Attention,a powerful tool for rewiring your brain. Focus on what inspires you and stop dwelling on what scares you. It’s a fact: What flows through your mind wires your brain…which governs your behavior.

To change what you do, first change what you think.

Instead of obsessing on all the things that can go wrong, try turning your thoughts to what more money will give you. Think about the freedom, the peace of mind, the myriad of choices financial success makes possible. Think about giving your money to causes you feel passionate about,helping your kids, your parents, people you love. 

That’s what I finally did. I started thinking about what kind of a role model I wanted to be for my daughters instead of fixating on my terror of screwing up. When I made that deliberate shift, when I forced myself to think about how I would be helping my girls, I had no choice…financial avoidance was no longer an option!   I’d love to hear other ideas for getting unstuck.  What worked for you? Leave me a comment below.

My gift to you…get my free pdf 12 Tips for Building Wealth During the Holidays. Download Now!

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My Personal Story with Plunging Stocks (It’s Not Pretty)

Written by Barbara Huson

The stock market took quite a tumble last week. I instantly flashed back to October, 1986, the first time I invested on my own. My broker would send me all these reports and statements, which I didn’t understand, so naturally, I threw them away. 

A year later, October 1987, the market crashed…big time! I freaked out, called my broker, insisted he sell everything. He begged me not to. 

“The market will go back up,’ he said, “It always does.”  

Of course, I didn’t listen. I wanted my money in cash, where it was ‘safe.’  Sure enough, within days, the market rocketed back up. If I stayed put, I’d be a lot richer now. But I learned my lesson.

Fast forward, 10 years later. October, 1997.  My book—Prince Charming Isn’t Coming—had been published. I knew a hell of a lot more about investing. The market crashes again almost to the day. 

This time, I’m on the phone, first thing in the morning, calling Schwab. My now 2nd ex-husband was upstairs, pacing the floor.  He got very nervous when stocks fell. My teenage daughter comes downstairs, sees me on the phone, asks me what I’m doing. 

“I’m buying stock” I tell her. 

“But Mom,“ she says, “The market’s crashing.”

“No, Anna” I say. ”It’s a sale!”

I had learned my lesson: Price swings only matters when you sell. Everything else is just ‘noise.’ You know, the sound of the market doing what markets are supposed to do… up, down, up, down, boing, boing, boing.

I finally understood that eventually the market would go back up. I didn’t know when, but I knew it would. It’s called the Rule of the Roller Coaster: You only get hurt when you jump off.

Has recent market action caused you to panic..or add to your portfolio? Leave me a comment below.

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I Know What To Do! So Why Don’t I??

Written by Barbara Huson

Could this be you? You’ve read volumes on investing, even attended some classes. You understand stocks, bonds, and the value of diversification. You own a few funds in your retirement account.

Still, you continue to ignore or neglect your money, even though you know better. Why?

Blame it on traditional financial education…where the emphasis is on filling your head with facts rather than fostering your courage to change.

Raise your hand if you’ve ever been given the tools to boost Self-Efficacy, the most powerful predictor of financial well-being. (I didn’t think so)

Self-Efficacy—a concept developed by the Stanford psychologist Albert Bandura—is a person’s belief in their ability to succeed in a given task or goal.

If you don’t believe you can invest wisely without screwing up irreparably, you likely won’t even try. Or you’ll stop at the first stumbling block. Or worse, unconsciously make bad choices that reaffirms your limiting belief.

Enhancing financial Self-Efficacy is the secret sauce for financial success. It’s the difference between knowing what to do and actually doing it, between being competent and feeling confident.

Yet, I doubt you’ll be shown how to shore up Self-Efficacy by most professional advisors. But thanks to Dr. Bandura’s research, here are 4 powerful techniques to do just that:

  1. Experience Success—Select a task that’s sufficiently challenging but definitely doable. Have that money talk with your spouse. Organize your financial documents. Balance your checkbook. As the saying goes, “confidence is a memory of success.”
  2. Find Role Models—Observe friends, family, even perfect strangers who are financially savvy. Watching others successfully complete financial tasks provides not only inspiration, but a template to follow.
  3. Get Encouragement—Hang around with people who will cheer you on because they truly believe in you. Those who say, “I know you can do it!” Stay away from naysayers.
  4. Manage Emotions—if you’re depressed, traumatized or anxious, the inner work is crucial. Read self-help books. Find a counselor. Join a support group. Talk to a friend. Whatever it takes to relieve your pain, stress, worry and fear.

What can you do today to increase your Financial Self-Efficacy?

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Figuring Out ‘Financialese’

Written by Barbara Huson

Have you ever met with a financial advisor and wished you had a translator?  I know I did a few years ago when my sisters and I spent months interviewing various advisors for some family trusts.

Nice people, all of them. But once they got started, they were speaking in a foreign tongue.

I thought I knew this language. After all, I’ve written 6 books about money, including Finding a Financial Advisor You Can Trust.

But these folks, at various points in the discussion, had my head reeling. Then it hit me.

No wonder so many women aren’t getting the financial help they need. One conversation with an advisor and their heads are reeling too. And their first reaction is often to put their reeling heads right back in the sand.

Consider this blog, in part, a Plea to Professionals.  C’mon, you people. Speak in plain English. And then  check in with clients at frequent intervals to make sure they understand what you are telling them..  

Even as I write that I know that the truth is, the onus is on us.

I am a Big Believer in working with professionals…be it for a root canal or retirement plan.  And sometimes the latter can be as painful as the former! But it doesn’t need to be.

Not if we’re willing to speak up, ask for clarification, and keep asking until we understand.   Which is exactly what I had to do in those meetings. And you know what? Every expert was happy to explain. And I actually learned a lot.

It all boils down to this. If we don’t understand  ‘Financialese,’ it doesn’t mean we’re stupid. It’s simply a sign to ask more questions.  

The payoff is clarity. But, I’m here to tell you, the real reward is how powerful you’ll feel for standing up for yourself.

Have you ever found your head reeling while talking to a financial professional ? Leave a comment below to tell me what you did.

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5 Terrific Tips for Investing Wisely

Written by Barbara Huson

I promise. You don’t need a boat load of money to build wealth. What you do need is to:  Spend less; Save more; Invest wisely. 

The first two are self-explanatory. Investing, however, is where most people trip up, which is not surprising, given that there’s an entire industry dedicated to making investing sound difficult and confusing.

Let me share with you 5 tips that really helped me finally understand investing (with links to learn more).

  1. EDUCATE YOURSELF

There are only 5 places to invest (called asset classes)—stocks, bonds, real estate, cash and commodities. Your first task is to learn the difference between these assets classes. http://bit.ly/lucrepersonalfinance

  1. DON’T KEEP EVERYTHING IN CASH

Cash in the bank, or under the mattress, may feel “safe.”  But long term, you’re putting yourself at great risk. To ensure you don’t outlive your money, at least a portion needs to be in assets that grow faster than inflation and taxes take it away. If inflation averages 3% and your money is sitting in an account paying 1%, your buying power will significantly shrink over time. (Why Cash May Not Be as Safe as You Think)

  1. UNDERSTAND THE RULE OF 72

This rule explains how long it will take to double your money—by dividing the interest rate or compound return into 72.  Let’s say you own a fund that returns 8% annually. 72 divided by 8 equals 9…so it’ll take 9 years to double your money. Put that same amount in the bank, paying 1% interest, it’ll take 72 years to double. (Rule of 72 Definition & Example | InvestingAnswers)

  1. MINIMIZE MARKET RISK

It’s true, the market, like a roller coaster, feels really risky. But price swings only matter when you sell.   To significantly diminish the risk of loss and increase the potential for gain:

Have a longer time frame. Money you need is less than 3 years should be in cash. Everything else should be invested. The Importance Of Time Horizons For Investing (And Beyond)

Be well diversified, spreading your money among different asset classes. https://www.nerdwallet.com/blog/investing/diversification

  1. SEEK SUPPORT

The whole point of investing is to make sure your money is adequately allocated to meet your short and long term goals. To figure out the best diversification for you, consult a Fee Only Certified Financial Planner.  Start with: www.garrettplanningnetwork.com

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Spooked by the Stock Market? Before You Bolt, Read This.

Written by Barbara Huson

Big news!  We’re now in the lengthiest bull market in S&P history.  9 years and counting.

For some, this is cause for celebration. For others, a source of high anxiety. How about you? Amid shaky global politics and stressful market gyrations, are you ready to throw in the towel rather than endure the tension?

I totally get it. My first foray into the market was 1986. A year later—October 19, 1987—the market took a colossal dive. I freaked out, called my broker, told him to sell everything. He begged me not to.

“The market will go up. It always does,” he insisted. “And you’re going to have capital gains tax to pay.”

But I wanted out—NOW! Well, the market recovered, quite quickly. I lost a lot of money. But I learned a priceless lesson. In the 30 years since then, I’ve stayed put despite at least 8 scary crashes. And I’m very happy I did.

Still I know how agonizing market uncertainty is. Before you do anything rash, consider what my favorite Wall Street Journal columnist, Jason Zweig, advises.

While he agrees the best move now is to do nothing, he also has suggestions for easing your anxiety.

“All your actions should be small, gradual and reversible—in case you’re wrong,” he writes. The bigger, more impulsive your moves, the more likely you’ll look back with deep regret. (Like me in 1987)

Here are some things to do to assuage your fears while protecting your future:

  1. Pay off some or all of your mortgage. “Extinguishing a 4% mortgage, provides you a 4% return at zero risk—a deal you are unlikely to beat anywhere else,” explains Zweig.
  2. Keep any “windfall,” like a home sale or inheritance, in cash “as a psychological cushion against your fear of a crash.”
  3. Stop Dollar Cost Averaging, or automatically investing a fixed amount every month. Then when the market crashes and stocks go on sale, it’s buying time again.
  4. Scale back your stock holdings, say from 70% to 50%.  “You could cut back by 5 percentage points every six months or by 1 percentage point each month.”

I urge you to heed Zweig’s wisdom: better to take tiny, thoughtful steps than make hasty moves that may lead to huge mistakes. 

I’d love to hear how you’re feeling about the stock market these days? Leave me a comment below.

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A Reason to Worry….Or A Call to Action?

Written by Barbara Huson

Even the wealthiest among us—those with earnings over $200,000 or a net worth over $3 million—still worry about money.

Their biggest fear: Inflation.

Inflation is, indeed, a ravenous creature that eats into our cash like a caterpillar on a leaf…slowly, methodically, little bits at a time.

For years, however, inflation has stayed quite low.  But that’s rapidly changing.  The Wall Street Journal just announced, “US inflation hit its highest rate in more than six years.” And inflation is expected to keep escalating.

Is it time to start worrying? Heavens NO!  The worst response to climbing costs (or most anything else for that matter) is to go into fear, which tends to have a paralyzing effect.

Instead, look at rising inflation as a resounding call to action…no matter how much or how little money you have.

The only way to counter the ravages of rising prices is to make sure at least some of your savings is working harder than it would in a bank. How? By investing in assets that grow faster than what inflation takes away.

Now is the time to make sure your money is well diversified. Here’s the standard rule of thumb for investing wisely:  

  • Money you need in the next three to five years–for emergencies, unexpected expenses, or short-term goals–should be in cash or cash equivalents like money market funds, CD’s, or short-term treasuries.
  • Money you’ll need in the next five to ten years should be in a mix of stocks and bonds.
  • Money you won’t need for ten or more years should be mostly in stocks and perhaps commodities and real estate.

You can’t eliminate inflation. But you can do a lot to protect yourself from it.

Tell me about your biggest money fear. Leave a comment below.

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The Hidden Danger of High Earnings

Written by Barbara Huson

I recently attended an event where I was surrounded by incredibly successful women.  Every participant earned a high six or seven figures…more than 90% of the population.  

But as our conversations went deeper, I noticed a disturbing theme. There’s a dark side to high earnings. Whopping wages can be deceptive and dangerous. I call it the Illusion of Affluence. 

I saw it at that conference. I see it repeatedly with clients. High earners spending too much, saving too little, or plowing all profits back into their business. Their ample earnings gives them the fantasy, but not the security, of affluence.  

Even if they can easily make a bundle whenever they want, high earners are as vulnerable to hard times and sudden change as anyone else.  

Absolutely, women making big money are to be applauded. But the real measure of success isn’t what comes to you…it’s what stays with you. In other words, your net worth—the sum total of what you own minus the sum total of what you owe.   

Very few high earners I meet have a net worth over a million dollars. Far fewer if the value of their home wasn’t counted. Fewer still could afford to stop working, even years down the road.  

If you’re a successful high earner, or on course to becoming one, ask yourself this question: Isn’t it time my money works as hard for me as I do for it?   

I promise, wealth building doesn’t need to be overwhelming or time consuming if you start following these 3 steps: 

  1. Delegate—find financial professionals to help you create a plan and keep you on track
  2. Automate—every month automatically have a specific sum of money transferred to a savings account and also your brokerage firm.
  3. Educate—everyday, read something about money (peruse the headlines of the business section of the paper or browse through a financial magazine). I call it the Osmosis School of Learning.  

All it takes is a few minutes of daily reading, the support of trusted advisors and the habit of consistent savings to become a truly affluent woman…regardless of how much (or how little) you earn.

Leave a comment below and tell me how you make your money work for you.

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A Simple Truth: Why the Rich Are Different

Written by Barbara Huson

Scott Fitzgerald: “The rich are different than you and me.”

Ernest Hemingway: “Yes. They have more money.”

I often see this exchange between the two authors quoted. I always want to take it one step further:  “But why do the rich have more money than most.”

And my answer would be: “Because the rich think differently.”

And here’s the difference: The Masses think like a Consumer. The Rich think like a Wealth Builder.

There is a major difference between the two.

A Consumer thinks: I want more money so I can buy more clothes, take more trips, eat out more often, and have more fun.

The Wealth Builder thinks: I want more money to save and invest for the long term so that I can have more freedom, more choices, more fun, and more opportunities to give back.

Do you know what separates these two mind-sets? Instant gratification.

It’s the difference between snapping up those Prada shoes—which you simply must have because they go perfectly with that Juicy Couture dress you just bought—or depositing that same sum straight into a savings account, or better yet, a mutual fund.

The decision is yours to make.

I’m not suggesting self-deprivation. There’s a world of difference between denial and discipline.

True, the discipline of saving may require delayed gratification. But think of it this way—you’re giving the money to YOU (not Visa or Starbucks) so that ultimately you can purchase what you please without pressure or worry.

What about you? Do you think like a Consumer or Wealth Builder?

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Meet Barbara Huson

When a devastating financial crisis rocked her world, Barbara Huson knew she had to get smart about money… and she did. Now, she wants to empower every women to take charge of their money and take charge of their lives! She’s doing just that with her best-selling books, life changing retreats and private financial coaching.

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