- Take advantage of your employer’s 401(k), 403(b), 457 plans at work. You never miss what you never see! Contribute up to at least the amount of the company match (if they match). For example, if they match up to 5%, it’s like automatically losing a guaranteed 5% return on your money if don’t participate. Since this is pretax contributions, more money goes to you and less will be paid to the government. Take advantage, don’t allow FREE money stay left on the table!
- Do not make extra mortgage payments. This is always controversial! Instead of paying extra money to your mortgage company, you could be saving and investing it for yourself. Yes, I know the mortgage lender’s job is to inform us to pay extra payments to knock off the accumulated interest and payoff the home in a shorter period of years. Sounds good, right! Well, how about you saving/investing that money for yourself – just like the mortgage lender will be doing with your extra payments. Of course, they will never suggest to you to do that!
- Set up an automatic investment plan. Direct deposit is one way of ensuring you get your money safely into your account without worry. You can arrange to have as little as $50 a month deducted from your bank’s savings/checking/money market account and deposited into an account to buy mutual funds or stocks. This is an excellent way to build a small fortune over time.
- Pretend you didn’t get a raise or a tax return. I know this may sound a bit far fetched but can you imagine you opened an investment account and it automatically increased because you’ve included the exact percentage of a raise. How about deciding to also plop in your past 5 years of tax return payments into that same account without ever putting your hands on it. Can you imagine what that account may look like in 2, 5, 10 years? Think about it!
- Brown bag-it! You will be somewhat surprise how much money you can save by bringing in your lunch to work. It is not only cheaper, but healthier. I’m not saying you have to do this everyday but try possibly 2 days a week and see how it goes.
These are 5 simple ways to pay yourself first without dipping into your savings.
Nobody has probably told you this but there is actually two ways to get rich and profit from owning stocks and mutual funds. One way in which stock ownership pays a return is through capital gains. When buying a stock, an investor is typically hoping that the perceived value of the company will rise, producing a capital gain when the shares are sold later at a higher price. For example, let’s say we bought 100 shares of McDonalds in June 2005 at $27.75 per share and sold it 10 years later at $95.00 per share. Avoiding all dividends and potential stock splits, our capital gains would be $6,725. The objective is to buy low and sell, right? Of course! That goes without saying on just about any sort of investment.
Now, the other way to profit from purchasing stocks are from those companies that pay out dividends – the portion of a corporation’s earnings that is paid to stockholders. Many common stocks and preferred stocks pay dividends usually on a quarterly basis. To give you a clearer picture on the way this works, we’re going to put our McDonalds Corporation stock in play again, surprise? I thought you wouldn’t be! As of July 24, 2015, McDonald’s stock closed at $96.10 and pays an annual dividend of $3.50 per share. So, let’s say you currently own 1,000 shares of McDonald’s stock. Eliminating any capital gains at this time, we will generate approximately $3,500 for the year, or $875 quarterly, or a little more than $290 per month. Again, not too shabby! In fact, McDonald’s has raised its dividend each and every yearsince paying its first dividend in 1976.
In conclusion, betting on the rise and fall of stock prices can be quite exhilarating, especially when your share prices soar. But while we wait, there is certainly nothing wrong with receiving a steady flow of passive income (dividends), which you can choose to spend or reinvest. Now, can you see that it’s actually two ways you can strike it rich by owning stocks and mutual funds!
Companies exist to make money. Their profits are expressed as earnings on a per-share basis. For explanatory purposes, let’s go back to our “chosen” company, McDonalds. I know that there are many people who just loves McDonalds and especially kids. Ask any kid where would they care to eat at if you gave them a choice and I’ll bet you most of them will say McDonalds. Try it! The point here is that McDonalds makes a tremendous amount of money annually in sales and for those reasons they have terrific annual earnings. Someone or should I say, many bodies are out there tearing up those big macs! So, the company’s share price would rise as earnings increase. Do you see how this works? If a company makes more and more money, then theoretically the stock value goes up and up. The stock market symbol for McDonalds is “MCD”. Let’s see what their price performances looks like over the last 30 years:
June 1985 = $3.81/share June 1985 = $19.56 June 2005 = $27.75 June 2015 = $95.64
Wow, it looks like they haven’t been doing too bad! Remember though, past price performance does not guarantee future results.
Eventually, just about every company needs to raise money whether to hire employees, build a new factory, or purchase machinery. They have two choices: 1) borrow money from a bank or 2) raise it from investors by selling them a stake (issuing shares of stock) in the company.
Most companies in which a client might consider buying stock are listed on a major exchange such as the New York Stock Exchange (NYSE), the NASDAQ or the American Stock Exchange. In the past, most investors’ choice to authorize trades were through using a stockbroker, but today most trading is executed electronically. Meaning you can simply log onto your computer that’s sitting on the desk in your bedroom, place a trade tonight, and you’ll possibly know the result of your sell or purchase by trading time the next business morning. Simply marvelous!
What are the indices or indexes like the S&P 500 or the Dow Jones Industrial Average? There are more than 5,000 listed companies in the U.S. that are actively traded. But you need to understand that companies come and go. Baskets of companies are assembled and tracked as a group called an index. For example, the Dow Jones Industrial Average (DJIA) has 30 companies. The Stand & Poor’s 500 (S&P 500) has – you guessed it – 500. Following a basket of shares is easier than following every listed company. Purchasing individual stocks can be quite risky and expensive if one does not know what they are doing. It is a good idea to have at least some knowledge and experience before purchasing large amounts of shares. In some cases, it may be an ideal decision to look into purchasing an index like an S&P 500 fund or Dow Jones 30 fund. In this situation, it is like owning all of the 500 companies of the S&P 500 or the 30 companies in the Dow Jones. In most cases, this is less risky and potentially less expensive. Look into indexes!
Our next few blogs are going to answer some of your questions about stocks, such as: what are they, how to buy them, why you need to understand them, and why you should own them.
What is a stock? When you go out and purchase or buy stock, you actually own a slice of the company. It may just be a small piece of the company but you are still considered having ownership. You can purchase stock through a financial advisor (broker) or open an account with an online brokerage firm and do it yourself. It is actually fun, easy, and quite powerful! By the way, stocks are also referred to as shares or equities.
You as an investor, primarily receives the opportunity to earn (or lose) money based on the share value at the time they choose to sell the stock. Over time, the reason for buying any company’s stock is the hope that its revenues grow and the value of your shares increase in the process. To help us truly understand how this works, we are going to use McDonalds Corporation in our next 5 blogs as a guide and pretend we own 100 shares and we purchased it at $95.00 per share. So, the total cost of our purchase is $9,500. With me so far?
I am going to try to make this so easy to understand and make those who don’t own stocks wonder why they aren’t in the game! Send in any questions or comments that you have.
Obviously, most people hate to talk about illness, aging, and death. Even as a financial advisor, it can be quite difficult at times but it is extremely important to talk about and prepare ourselves and just get over it. From some research and personal experiences, here are the top 5 regrets that people on their death-beds faithfully regret:
- I wish I expressed myself and shown my true happiness. It is a personal choice to choose to be sad, miserable, evil, or happy. Yes, life can be tough and you will encounter challenges along the way, but it’s up to you whether you’re going to go about it with a smile or some other way. Many of them wished that they could have showed the silly-side of their personality and had more laugher in their lives. They realize now that it was not too hard to smile and be happy.
- I wish I had stayed in touch and made more friends. Most of them did not realize the benefits of old friends and making new ones until their dying days. Although it may have been hard to track them down, if they had to do it all over again they would had not let them slip away so easily. Many had become so caught up in their own lives and did not give themselves any time to making new friends and mistakenly letting go of golden friendships. Everyone misses their friends when they are dying.
- I wish I had the courage to express my true feelings. Many people kept so much anxiety, harsh feelings, jealousy, and emotions embedded inside of them to keep peace with others. They settled to be average human beings and never became who they were truly capable of. In the end, many developed illnesses relating to the bitterness and resentment they carried as a result.
- I wish I had not spent so much time working. Some of the women but the majority of the men fit this description. Many of them have missed their children’s youth and the companionship with their spouse. Men from the older generation spoke about the importance of taking care of their families and to be sure that bread was always on the table. But they regrettably wish they had not spent so much time away from their family.
- I wish I had the courage to live my ideal life. This was the most common regret of all. When people look back on their life and realize that it is almost over, it is so sad to see the number of dreams that had gone unfulfilled. A powerful quote states, “the best ideals are in the grave.” Most people had not honored their dreams and will unfortunately take them to the grave with them due to choices they had made, or not made.
Live your ideal life NOW to the fullest. Have no regrets. Call your old buddy from elementary school you’ve been dying to talk to. Say hello to your neighbor whom you had a small disagreement with about two years ago. Write that “I miss you dearly” letter to a personal dear friend who you think about all the time. Tell your mother that you love her. So, when it’s time for your departure from earth with your family and friends surrounding you, leave with a peaceful heart, love, dignity, a smile on your face, and no regrets.
1. You Are What You Think All Day Long
You have the power to choose. Think good and good follows. Think evil and evil follows. Choose happiness and abundance. The law of life is the law of belief. Greatness is only attained by the constant thinking of great thoughts. No amount of education, reading, or study can make you great without thought; but thought can make you great with very little study.
2. Your Desire to Be Rich
God put us all on this earth to something special. Do the thing you love to do, for the joy and thrill, and you will be rich. Of all the many powerful inspirational books that I have read about money, wealth, and stories how the rich became wealthy, “do what you love” was always their number one answer. “Time” is life’s most important commodity, so the more time and effort you spend during what you love can significantly increase the chances of your providing a new product or service that enhances society.
3. The More You Give the More You Will Receive
This is a hard one for most people to digest. We now live in a society where instant gratification is of the essence. Most of you will pleasantly surprise to know that the secret of success is usually awarded to people who give more than they are looking to receive. We are not just talking about giving money. You can give your time, volunteer, intern, usher in church, babysit, etc. You get the idea. You can have it all if you give more of yourself!
4. Change Your Mindset
The rich thinks differently than other groups. We should study and learn as much as we can in what they do. Distinctively, the very poor tend to think day-to-day; the poor tend to think week-to-week; the middle-class tend to think month-to-month; the rich tend to think year-to-year; and the very rich tend to think decade-to-decade. The primary goal of the very poor and poor is survival; the primary goal of the middle-class is comfort; and the primary goal of the rich and very rich is freedom. Your attitude does determine your altitude. You can have it all if you just change your mindset!
5. Increase your Financial Knowledge
Those of us in the African American communities across this land spend well over 90% of our disposable income in communities other than our own. Our buying power is over $1 trillion. But where is it? It surely isn’t in our communities. We should look to acquire as much financial knowledge and wealth building strategies as we can. Enroll in a financial literacy class, attend financial seminars, read financial magazines/newspapers. There are probably classes in your neighborhood. Take advantage of them. You can have it all if you increase your financial knowledge.
The stock market has been on a tear for the past few years soon after The Great Recession of 2008. In 2013, The Dow Jones was up 26%, the S&P500 surged over 29%, and the Nasdaq closed up nearly 40% for the year. Very impressive returns! However, many people are still getting over and recuperating from the days of easy credit, using home equity as an ATM machine, and buying on borrowed monies. Saving and investing was put on the back burner because discretionary spending and living off of credit cards presented the illusion of making it in America. The Great Recession put that non-sense back into perspective. Investing in stocks and mutual funds should always be a priority in any situation. About 52% of all Americans own stocks, either directly or indirectly. In fact, from a Pew Research Center survey, more than 55% of Whites are invested in stocks, compared with 28% of Blacks and 17% of Hispanics. Among other things, to build future financial independence, prepare for a comfortable retirement, develop generational wealth transfer strategies, and combat poverty, African Americans have to embrace the stock market and here are 5 reasons why most should own stocks and mutual funds NOW:
1. Over time, you can become wealthy by investing in stocks and mutual funds. Read more
As the annual February recognition of Black History Month of 2014 comes to an end – for as long as we live – Americans should celebrate and view every single month as Black History Month. Well, at least Black Americans should. Many Black people fought and were willing to die and gave up their lives so that we all can have a better life. This country was built on the backs of Black Americans and we shall never forget all of the blood, sweat, and tears they endured. We have come a long ways but we still have so much catching up to do.
To celebrate this year’s Black History Month, I thought it would be appropriate to look back at one of the most significant times in the history of Black Business. In Tulsa, Oklahoma in the golden door of the Black business community in America back in the 1900s was best known as “Black Wall Street”. This was one of the most influential all-Black communities, ever, in America. Because of the “Jim Crow” laws, segregation, racism, jealousy, prejudice, and no other options for survival other than relying on one another, produced:
- The state of Oklahoma was set aside to be a Black and Indian state in the late 1800s – early 1900s
- Blacks owned and controlled 36 square blocks of homes and businesses
- There were over 600 successful businesses in the community
- There were 21 restaurants, 21 churches, 30 grocery stores, 2 movie theaters
- There were law & doctor offices, a bank, a post office, a hospital, a half dozen private airplanes, a number of libraries & schools, and farmland
- A Black doctor generated $500 per day by owning and operating a bus system
- Many of them became millionaires
- The dollar circulated 36 to 100 times, at times taking a year for currency to leave that community
- The children were always well-dressed and eager to learn as education was the mainstay of the community
There are some things we can learn from Black Wall Street to improve the financial conditions in the Black communities of America.
- Black businesses need to congregate and build relationships and partnerships in their own communities that will help them grow and prosper. Other cultures such as the Jews and Asians are perfect examples of groups that help one another and in return control, operate, expand, and profit in communities where the people do not look like them.
- Blacks need to create entrepreneurial opportunities for themselves to serve and employ people in their own communities. The black unemployment rate will drop drastically if Blacks operate and run their own small businesses.
- Businesses and communities excel when the dollar circulates and exchange hands multiple times with those in the community. Ghettos form and properties deteriorates because there is no dollar exchange to help build the community. The money vastly leaves the community and spent elsewhere that’ll help all others who are non-Black.
- Integration can be a good thing but Black Wall Street proved that culturally segregation increased the financial power and net worth of the business owners. Blacks have to understand that the power is in the network. If you have a network of skilled business owners in a variety of professions, everyone can obtain wealth as the dollar circulates amongst the group because everyone needs one another.
- Today, many Black business owners do not take advantage and don’t visualize the opportunity they have in promoting, building, and selling products to those in their exclusive niche market. There are over 42 million Blacks in America and we are simply at fault for not cultivating our own demographics.
- Education is extremely important and a conventional way to seek employment. But entrepreneurship gives us the greatest opportunity to create jobs and possibly live like no other in the process. We should be educating our children to becoming entrepreneurs, not just employees.
- We need to do away with the “crabs-in-the-barrel” mentality and take on the minds of the people who lived in the Black Wall Street community. The secret of their success was survival (or die) and the only choice was to work with their own people (or die) and possibly becoming a millionaire along the way.
Almost 100 years has past since the incredible days of Black Wall Street. There have been serious attempts to duplicate or mirror the heroics of those days in Tulsa, Oklahoma all across major cities in the U.S., but there has never been anything quite like Black Wall Street. The lessons we can learn from the great people of that time are profound and we should be incorporating much of their strategies in our sales and marketing plans today. Just remember, your ideal client could be sitting right there in your own backyard.
In closing, you probably want to know what actually happened to Black Wall Street and why doesn’t it exist today. Unfortunately, Black Wall Street was burned down and totally destroyed by the Ku Klux Klan and other nonmilitary Americans on June 1, 1921 our of envy, jealousy, and bigotry. Between 1500-3000 innocent Black people were killed in the massacre.
Thank you for giving me the opportunity to share this great Black History moment with you.