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).

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

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)

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)

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

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:

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.
Keep any “windfall,” like a home sale or inheritance, in cash “as a psychological cushion against your fear of a crash.”
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.
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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Joint vs Separate Accounts

Written by Barbara Huson

If you’re married, or about to be, I have a question for you. Do you have money in your own name?

Even if you’re blissfully in love with each other, even if (s)he’s filthy rich or a financial genius, it’s critical to have your own economic identity a bank account and credit card in your own name.

In part, it’s a matter of self-protection. If anything happens to your Prince(ss) Charming, you could be in big trouble. Oh, the horror stories I’ve heard from women who couldn’t get credit or had all kinds of legal problems after losing a spouse through death or divorce because everything was listed under their spouse’s name.

Also, since money is the #1 source of marital spats, having separate accounts could minimize arguments. As Stephanie Sarkis pointed out in Psychology Today, “the less you argue about money, the closer you will feel to your partner.”

But there’s also a psychological component. A separate financial identity, even while maintaining shared accounts, makes a major personal statement. It has nothing to do with the relationship. It has everything to do with your self-concept and sense of autonomy.

Putting money in your name is about growing up, becoming an adult, claiming your sovereignty over your own life.

I’d love to hear if money is a source of strife or harmony in your relationship? Leave a comment below.

Are you in search of a safe place to talk money with other women? My brand new virtual community, The Wealth Connection, is that safe place. Click here for more info.

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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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I Really Want To…But I’m So Damn Scared!

Written by Barbara Huson

I dedicate this to the women in my ReWIRE Mentorship Program—and all of you—who are on the verge of taking a big leap.]

Maybe you’re ready to open your own business. Or your gut’s saying ‘slow down, spend time in stillness.’ Or it’s become quite clear—you’ve got to start setting stronger boundaries.

You really want to take the next step. But you can’t. Fear, like a colossal boulder, stands in your way.

Of course you’re afraid. Fear is normal, inevitable, whenever you leave the comfort of the familiar and venture into the unknown.

The goal is not to eliminate fear. Because you can’t. The goal is to act in spite of it.

The best advice I’ve ever read was in an interview with writer Ray Bradbury. “Just jump off the cliff and build your wings on the way down,” he said, later adding, “If you’re too cautious, you’ll miss life.”

There’s no way around it. If you’re going for Greatness, there’s only one path: feel the fear, endure the discomfort, observe the resistance, and go for it anyway. (On the other side of fear you’ll find your power.)

But hear this! You don’t have to do it alone. The best antidote to fear, for us women, is surrounding yourself with a supportive community.

That’s why I’m starting a brand new virtual community for financially aspiring women, The Wealth Connection. (Details coming soon! Get priority notification here.)

As high earner Karen Page once told me:“Success is a social activity. You can’t do it alone. You just can’t.” Amen to that!!!

I’d love to hear your thoughts on how a supportive community (of lack of one) has impacted you. Leave me 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:

Delegate—find financial professionals to help you create a plan and keep you on track
Automate—every month automatically have a specific sum of money transferred to a savings account and also your brokerage firm.
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 Lesson in ReWIRING

Written by Barbara Huson

I have always found myself yearning for more…more money, more success, more sales, more ______ (fill in the blank).

I proudly considered this constant yearning a healthy sign of a robust ambition—until I began studying neuroscience. Then I realized how truly unhealthy this kind of thinking actually is.

Here’s why. We literally sculpt our brain by what we dwell on. The more we think a thought or feel an emotion, the stronger that neuropathway becomes in our brain.

By constantly hungering for more, I was inadvertently telling my brain “I don’t have enough.”

The more I repeated that thought, the stronger the “not enough” neuropathway grew, until I’d unconsciously do things that kept reinforcing my experience of “not enough”.

Slowly it dawned on me. How can I expect more, if I repeatedly focus on what I had not yet attained?

Clearly, I needed to shift my focus to rewire my brain. So I decided to experiment. Every time I felt myself coveting anything, I stopped, took note and shifted into appreciation for what I currently had.

More money? I took a peek at my bank account, and gave thanks for the amount presently there. More success? I gratefully reviewed what I’d achieved up to now. The moment the thought creeps in, “but it’s not where I want to be…” I stop and refocus on how far I’ve come.

I invite you to join me. What if you shifted to gratitude for what you already have, rather than gazing into the future, longing for more?

I’m not asking you to give up your desires. But I am suggesting that you view your desires through the appreciative lens of how they’ve been at least partially fulfilled.

Then watch what happens. If your experience is like mine, you’re in for a few miracles!

Leave a comment below to let me know if practicing gratitude for what you already have creates miracles in your life.

Interested in learning more about reWIRING your brain? Click here for details on my 5-month reWIRE Mentorship group.

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How the Wealthy Think…and You Can Too!

Written by Barbara Huson

Q. How can I SAVE money to create wealth (which means cutting back spending) and still have a feeling of ABUNDANCE, not a mentality of LACK (which means the desire to SPEND).

A. Oh the devious ways we fool ourselves by how we choose to think.

If you think like a Consumer, then cutting back spending to sock away savings will absolutely feel like scarcity or deprivation, while spending offers the pleasurable (but deceptive) pretense of abundance.

When you think like a Wealth Builder, you understand that every cent you put in savings is money you’re giving to YOU (not Starbucks or MasterCard), so that ultimately you can purchase what you please without pressure or worry.

To paraphrase the old saw, a Wealth Builder tells her money where to go. A Consumer wonders where it went.

The difference between the two mindsets is not deprivation but delayed gratification. And it’s easy if you think small and automate. Every month have some money, no matter how small, automatically transferred from your checking to your savings account. You don’t miss what you don’t see.

What if there’s nothing to spare at month’s end? Try giving up something small, like a daily latte, and bank the savings. One woman funded her IRA with lose change from her purse, coins she found in pockets doing laundry, and cash from the coupons she redeemed at the market.

I recommend two types of savings accounts. An Untouchable for emergencies and unexpected expenses. And a Touchable for fun stuff, like a vacation or shoe sale—which keeps you from dipping into your emergency savings, yet not feeling deprived.

Bottom line: Instant gratification is such a cruel illusion. I’ll never forget meeting an elderly woman who lamented: “I always got such joy from shopping. But now that I’m old and I look back on all the money I wasted, I wish to God I had saved more.”

How do you balance feeling abundant with the discipline of spending less and saving more? Leave me a comment below.

Thank you, Tracy Beth & Maria Aum, for the Q.

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Talking to My Man About Money—Oy Vey!

Written by Barbara Huson

I remember when my now-husband & I were about to move in together. We’d been dating for 2 years. And I was struggling. At what point do we have THE TALK about money?

We each knew the other had no credit card debt. Beyond that, we kept tip-toeing around the topic.

It reminded me of a letter to Ann Landers from a woman who wanted to ask her boyfriend to help pay for her birth control, but didn’t feel she knew him well enough to ask!

I laughed when I read that. But here I was—a financial coach—doing the same!!! I just couldn’t bring myself to, as my friend Manisha Thakor titled her terrific book, Get Financially Naked with the man I loved. One day, I happened on an old journal from high school. I’d forgotten how I always wondered if people liked me for me or because my family was rich…how hard I tried to be like everyone else.

No wonder I was scared to expose myself financially. I was sure he’d reject or judge me harshly. With that realization, my resistance subsided.

Later that week, as we were finishing breakfast, without even thinking, I got up, retrieved my latest financial statements, pushed aside the dishes, spread out the papers, and said, “This is what I have.”

He listened, asked a few questions, then explained what was in his accounts. That was it…a non-event. But at the same time, it was clearly a turning point for us. I learned 3 important lessons that day:

The fear of doing is far worse than the actual doing! Afterwards, I wondered, “what was the big deal?”
Resistance dissolves when its root is revealed. The moment I realized my childhood fears were the culprit, those old demons didn’t seem so threatening.
Financial transparency is vital to intimacy and trust. “Otherwise,” as Manisha writes, “like termites eating away at the foundation of your relationship, little nagging doubts or questions about each other’s finances could end up destroying what is currently a beautiful life.”

I’d love to hear your experience talking finances with your partner. Leave me a comment below.

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“Impossible” Simply Means “It’s Not a Priority”

Written by Barbara Huson

She, like so many others, made a decent salary, but could never get ahead.

“I cash my paycheck and before I know it, it’s gone,” she told me, hoping for advice.

“Why don’t you try paying yourself first?” I suggested. “Every time you get paid, right off the bat, put a portion in a savings account. Even a small amount is better than nothing.”

“That’s impossible,“ she said with a sigh of resignation. “I don’t make enough. There’s nothing left to save.”

That conversation occurred years ago. Imagine my surprise when she recently contacted me to let me know she followed my suggestion, never thinking it would actually work.

“I didn’t even wait until the end of the month to see how much was left after paying bills,” she said. “I paid me, then my bills, and anything left, was mine to spend.”

To her amazement, she never missed what she set aside. “Eventually,” she said, “I began putting some of what I would ordinarily spend into the savings account too.”

The act of savings had become a habit…a habit that changed the course of her life.

“Had I not had that kitty when I got divorced, I couldn’t have made it,” she told me. “I would have been in the poorhouse without it.”

Today, she told me proudly, she is quite well off… even though her paycheck still isn’t very big.

“I can’t believe how my savings has grown,” she said in amazement. “I can’t believe how much I have. And how much more in control I feel.”

She’d discovered the most powerful principle of wealth building: You don’t need a lot of money to create wealth. And the time to start saving is before you wish you had…when it feels impossible. The truth is: everything is possible once you make it a priority.

When it comes to money, what is your priority? Be brutally honest…I’d love to hear your answer. Leave me a comment below.

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Women & Wealth

5 Terrific Tips for Investing Wisely

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

Joint vs Separate Accounts

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

I Really Want To…But I’m So Damn Scared!

The Hidden Danger of High Earnings

A Lesson in ReWIRING

How the Wealthy Think…and You Can Too!

Talking to My Man About Money—Oy Vey!

“Impossible” Simply Means “It’s Not a Priority”

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