Where to Find Low Risk, High Return Investments

The volatility of the stock market has left some people wondering about where and how to invest their funds.

Many people would like to invest, but are dissatisfied with the offered return. Others are concerned about the safety of their investments.

It can be a balancing act that requires knowledge, skill, and finesse. High rates of return usually come with a large risk. Safer investments tend to offer little - or no return, once fees have been deducted.

While it is true that no investment is without risk, there are ways to invest and get a good return.

Where to Find Low Risk, High Return Investments

There are several investment options that are low risk. In turn, they offer low returns. As the risk rises, typically so does the return.

Here is a list of investment models from relatively low to higher risk.

1. Certificates of Deposit (CDs)

Certificates of Deposit (CDs) are savings certificates with a fixed maturity date, specified fixed interest rate and can be issued in any denomination aside from minimum investment requirements. They are available through your bank, your credit union or even your investment broker.

CDs are generally issued by commercial banks and are insured by the FDIC up to $250,000 per individual. The investor is guaranteed to get the principal back as long as the total deposits with that lender are less than $250,000. The government guarantees that you cannot have a loss, and the financial institution gives you interest.

In return, the investor gets a set interest rate for that period regardless as to whether rates go up or down during the specified period. The funds are locked in until maturity of the specified term length. It is possible to withdraw the CD early for a penalty that is usually equal to three months’ worth of interest.

Interest earned is dependent on the length of the CD term and interest rates in the economy. Current rates are about 2%

2. Treasury Inflation Protected Securities (TIPS)

The U.S. Treasury offers several types of bond investments. The one with the lowest risk is called a Treasury Inflation Protection Security or TIPS.

Treasury inflation protected securities (TIPS) are a treasury security that is indexed for inflation in order to protect investors from the negative effects of inflation. TIPS are considered an extremely low-risk investment because they are backed by the U.S. government and because the par value rises with inflation, as measured by the Consumer Price Index, while the interest rate remains fixed. This can be advantageous because the principle is indexed.

As an example, an investor invests in a TIPS today that only comes with a 0.35% interest rate. Compared to a CD or even basic online savings account, this doesn’t seem very enticing. However, if inflation grows a 2% per year for the length of the bond, then the investment value increases with that inflation, and gives a much higher return on investment.

Other advantages are that the Interest on TIPS is paid semiannually.

TIPS can be purchased directly from the government through the TreasuryDirect system, in $100 increments with a minimum investment of $100, and are available with 5-, 10-, and 30-year maturities.

3. Gold

Of all the precious metals, gold is the most popular as an investment. Investors generally buy gold as a way of diversifying risk.

While gold is subject to speculation and volatility as are other markets, gold preserves wealth in an economic environment where investors are faced with a declining U.S. dollar and rising inflation. Historically, gold has served as a hedge against both of these scenarios. Much like the TIPS, with rising inflation, gold typically appreciates.

4. Money Market Funds

A money market fund is an open-ended mutual fund that invests in short-term debt securities such as T-bills; certificates of deposit (CDs); and corporate commercial paper. The fund usually pays out a little bit of interest with the main goal of maintaining a net asset value (NAV) of $1 per share. A downside of money market funds is they are not covered by federal deposit insurance.

5. Municipal Bonds

Municipal bonds (munis for short) are debt securities issued by states, cities, counties and other governmental entities to fund day-to-day obligations and to finance capital projects such as building schools, highways or sewer systems. These bonds are exempt from federal income tax and most states and local municipalities also exempt income tax on munis for issuers in the state. Discuss this with your accountant before making any decisions.

These municipal bonds are fairly safe because the likelihood of the borrower defaulting is very low. Governments can always raise taxes or issue new debt to pay off old debt, which makes holding a municipal bond a pretty safe investment.

The average yield is tied to the tax bracket exemption. For someone in the 28% federal tax bracket, that is equivalent to a 2.5% taxable bond.

6. U.S. Savings Bonds

U.S. savings bonds are debt securities issued by the U.S. Department of the Treasury to help pay for the U.S. government's borrowing needs. U.S. savings bonds are considered one of the safest investments because they are backed by the U.S. government.

U.S. Savings Bonds come in eight specific values: $50, $75, $100, $200, $500, $1,000, $5,000, and $10,000. While these bonds do not earn much interest, they do offer a less volatile source of income. They offer a way to save for the future, as they cannot be cashed until at least six months after purchase. The time it takes for a bond to mature varies, but it is often somewhere between 15 to 30 years.

These bonds cannot be easily transferred and are non-negotiable. In order to purchase or redeem a U.S. savings bond, you must be an American citizen.

7. Annuities

An annuity is a contractual financial product sold by financial institutions that is designed to accept and grow funds from an individual and then, upon annuitization, pay out a stream of payments to the individual at a later point in time. They are most commonly used to generate retirement income.

The insurance company takes a lump sum of funds from you and in return they give you a stated rate of guaranteed return. Sometimes that return is fixed (with a fixed annuity), sometimes that return is variable (with a variable annuity) and sometimes your return is dictated in part by the stock market performance with a guaranteed basic level that gives you downside protection (with an equity indexed annuity).

8. Cash Value Life Insurance

Cash-value life insurance is a type of life insurance policy that pays out upon the policyholder's death, and also accumulates value during the policyholder's lifetime. The policyholder can use the cash value as a tax-sheltered investment, as a fund from which to borrow and as a means to pay policy premiums later in life. It is also a clever way to pass some value onto heirs without either side getting hit with income tax.

9. Dividend Mutual Funds

Dividend mutual funds are stock mutual funds that primarily invest in companies that pay dividends, which are profits that companies share with stock shareholders. Dividends can be received as a source of income or they can be used to buy more shares of the mutual fund.

Return rates are often less predictable.

10. Preferred Stock

A preferred stock is a class of ownership in a corporation that has a higher claim on its assets and earnings than common stock.

Preferred and common stocks are different in two key aspects. First, preferred stockholders have a greater claim to a company's assets and earnings. Second, the dividends of preferred stocks are different from and generally greater than those of common stock. Preferred shares generally have a dividend that must be paid out before dividends to common shareholders, and the shares usually do not carry voting rights.

This is a type of stock has both an equity (stock) portion and a debt portion (bond). Preferred stock is not traded nearly as heavily as common stock, but do have less risk than the common stock. In the credit hierarchy, governing which investors get paid first during a bankruptcy, preferred stock sits between bond payments, which come first, and common stock dividends, which come last.

Return rates are often less predictable.

11. Peer to Peer Lending

Peer to Peer Lending (P2P) is a completely different type of investment. P2P is a method of debt financing that enables individuals to borrow and lend money to other individuals, entrepreneurs or businesses.

P2P lending removes the traditional financial institution from the process. It is often direct lending without an intermediary. This can involve more time, effort and risk to the investor. 

The method is not without its disadvantages as the lender has very little assurance that the borrower, who traditional financial intermediaries may have rejected due to a high likelihood of defaults, will repay their loan. 

Often the borrower has little collateral to offer apart from some equipment necessary to start a business, as in a restaurant's kitchen.

In some circles, such as Real Estate Investing it can also be referred to as Private Money. In this type of investing, the investor lends money for the purchase and/or improvement of real estate or land. The loan is secured by real property, usually in the name of the investor, until the loan and interest are fully paid. 

Typically, the investor funding a real estate project with private money can earn between 5% to 15% return on a safe and secure investment.



With the rising inflation, it is imperative that every opportunity is used to generate the highest yielding return on investment. These investment models outline the risks and benefits of the different investing options.

What is important is to begin investing at the level where the risks and returns are acceptable to the individual as soon as possible. It is the best path to financial freedom!

Knowledge is power and updated knowledge is the most powerful of all.


It takes discipline, but living within one’s means is key to accumulating wealth. Being financially responsible in the present is a good way to ensure a comfortable future.


These steps are good places to start a more conscious and directed route to achieving your financial freedom. Read, reflect and take what will work for you.

Bottom line is that there is no blanket strategy. Each person must evaluate their own circumstances, needs, and desires. Get the help you need to achieve financial freedom.

If you don't design your own life plan, chances are you'll fall into someone else's plan. And guess what they have planned for you? Not much.

-Jim Rohn

Above all, believe in yourself and believe that you will achieve your goal!
_________________________________________
Sources:

Lynda at Sonoran Sun | Private Equity Investments 

Investopedia

Is Your GPS Set For Wealth?

Most people would not consider going on a trip without a map – or GPS. It is a great way to stay on target and measure progress. 

Is Your GPS Set For Wealth?

Yet many people do not have a map for their own financial future.

This is surprising because everyone will eventually age and hope to retire. We all have heard that Social Security will not be able to help us all in the way it was intended. Planning one’s future finances has never been more important.

There are three key parts to any plan. Learn how they can send you down the right road to wealth:

Good Habits

Are Your Bad Habits Keeping You Down?

Most people know in order to build wealth, negative habits need to be replaced with positive ones. But this alone isn’t enough. From grade school math, we know an equal amount of positive and negative will always equal zero. 

To build wealth, the majority of your habits must be positive. You can’t start building wealth or keep it, without letting go of most negative thoughts, environments, habits, and behaviors. Learn to avoid using credit – especially if you carry a balance. 

Be satisfied with what you already have and avoid the temptation of the latest shiny gadget. Modify your lifestyle to avoid any unnecessary costs. Prepare your own meals and don’t purchase extras as a habit. Think of how much you could save if you take yourself off auto-pilot when it comes to your local coffee shop. If you are getting a coffee every day on your way to work, you are probably spending well over a thousand dollars a year. Are you really enjoying it that much, or is it just a comfortable habit?

New positive habits, environments, thoughts, and behaviors will go a long way to help you on your road to wealth. Aim for your higher and better self.

Lifestyles of the Rich and Famous

Look around you at those who have money. 

Look beyond the conspicuous consumption pushed on the media. A very small percent of the wealthy live extravagant lives. Most live in upscale – but not opulent – neighborhoods and have learned that more is not always better. Change your perspective on wealth and how millionaires live. 

What are the habits you need to emulate for success?

People

Your friends and family are a huge influence on you. Your environment and sphere of influence will most often match the person who you are or want to be.

You are the average of the five people we spend the most time with. 

– Jim Rohn

It is simple to say you should avoid negative people, but eliminating them without a plan for improvement just leaves you in a vacuum. Look for ways to expand your circle with “like-minded” individuals who will be a positive influence on you. 

What does that mean?

Seek out individuals – and organizations where people who are also trying to better themselves meet. If there are investor meetings, evening courses on financial planning, or clubs in your neighborhood, that is a great way to meet new people. These people will not only have similar thoughts and objective to you, they could have a positive impact on your future.

If you enact positive change in the type of people you associate with, this circle will cheer you on and even help you. 

Strategy

What’s Your Plan To Achieve Wealth?

Most people dream of winning the lottery, but this wishful thinking rarely materializes. Powerball is an unlikely solution!

Yet many people have an unreal expectation about their future. Thinking that you will earn more money later in your career and save it then is not reasonable. One can never know what the future holds and the best way to prepare for it is to start saving money NOW.

It can be a little overwhelming for some to think about how much money they might need in 25 or 50 years.

It can be a good idea to start with a 1, 3, 5, and 10-year financial plan. 

Start by thinking what you want later in life. Do you want a family? What does that entail?

You may wish to ensure your family is well provided for and that your children have a good start in life.

Create a document to break this down. How much is your household expense annually? Include things like housing payments, insurance, utilities grocery and medical expenses. 

Do you have or plan to have children? Do you plan to give them financial help for college? How about their children? 
Figure out how you plan to address that and write down the numbers.

When do you want to retire? Where?

Use the values you know and have now and don’t get stuck trying to figure out what these amounts will be in the future. Inflation can’t be fully predicted, so just get it done! Ballpark.

Each goal should be 

• Specific
• Measurable
• Attainable
• Realistic
• Time defined

There will always be modifications to this plan, but it is a lot easier to modify an existing plan than to forge ahead without one at all!

Use this information to set up or augment your savings plan.

If you don’t have a savings plan, you will never attain wealth without one. Start NOW. Don’t be fooled into thinking you will just contribute more later. Even with today’s low interest rates, compound interest, started early will contribute a sizable amount to your financial goal.

Protect what you have

Most people have home and auto insurance, but it can be surprising how many income earners don’t have life insurance. Some people think this is just inviting misfortune. Having home insurance is not inviting a disaster at your house. Having life insurance is no different!

In addition, secure insurance for all assets as your portfolio grows.

Give your family peace of mind. Dealing with emotional loss following an untimely death is difficult enough. You would not want your family to struggle financially on top of everything else they must deal with.

Knowledge is power and updated knowledge is the most powerful of all.

It takes discipline, but living within one’s means is key to accumulating wealth. Being financially responsible in the present is a good way to ensure a comfortable future.

These steps are good places to start a more conscious and directed route to achieving your financial freedom. Read, reflect and take what will work for you.

Bottom line is that there is no blanket strategy. Each person must evaluate their own circumstances, needs, and desires. Get the help you need to achieve financial freedom.

If you don't design your own life plan, chances are you'll fall into someone else's plan. And guess what they have planned for you? Not much.


-Jim Rohn


Above all, believe in yourself and believe that you will achieve your goal!

_________________________________________
Sources:

Lynda at Sonoran Sun | Private Equity Investments 

Are You Determined To Be Rich?

The United States of America is the Land of Opportunity, where independence is valued, The American Dream is attainable, and everyone can succeed with hard work and determination.

But not everyone seizes the opportunity.

Are You Determined To Be Rich?

If you are determined to be wealthy, you must get on the right path to riches. Consider these top 3 habits to increase wealth.

Dream Big, Plan Better, and Implement Ferociously

One of the most tragic fates in life is that a person believes getting rich is out of their reach. They may see their parent’s struggle and believe that is their own future. Regardless of your family history or current financial situation, believing you can become wealthy is crucial to achieving it!

Being rich is not a privilege awarded only to a select few. Especially in America, anyone can be rich if they are willing to pursue it. Part of that process is seeing it, and believing it so hard you can taste it! To do that, you need to lay it out clearly.

Vision, planning, and execution are among the most important traits of the wealthy. These people are not satisfied with the status quo and develop, plan and implement ways of increasing their wealth. It requires a certain level of risk but living outside of one’s comfort zone may be the best way to improve your own future.

If you don’t pursue your own goals, you will end up working on someone else’s!

Having dreams is the best starting point. Feeling free to imagine the possibilities is an important exercise. Do you want a big house, many cars or to retire early and travel abroad on a regular basis?

Whatever you desire in life, it is important to make notes. From there, you can objectively set out a timeline to realistically achieve these dreams. This is the initial planning phase.

Dreams are great, but if you don’t set a time frame and the method to achieve them, dreams will remain nebulous wishes. It is important to turn each dream into actionable goals.

Consider what is required to achieve each of these goals and break them down into necessary, actionable steps. Once you have created a detailed, workable plan, include any training, and support you may require to achieve your goals. Will you need to go back to school or work with a financial planner? Research and find the best professionals to help you on your way. Will you need time or money to achieve a certain step? Write down ways to accomplish this.

Once you have the lifetime vision and the year to year plan, it is time to break it down to quarterly or monthly goals so you can measure your achievements and stay on track or revise your objectives. Don’t wait for the new year, a season, or any other excuse to begin.

Now it is always the best time to implement your plan!

Live Within Your Means

Most people know that maintaining a lifestyle that is affordable is the best way to be financially stable and become financially independent. It is also one of the initial keys to wealth.

Spend Smart

Saving is crucial to building wealth, but it is important not to focus so much on saving that you start neglecting earning income.

Mark Cuban wrote:

Save your money. Save as much money as you possibly can. Every penny you can. Instead of coffee, drink water. Instead of going to McDonald’s, eat Mac and Cheese. Cut up your credit cards. If you use a credit card, you don’t want to be rich. The first step to getting rich, requires discipline. If you really want to be rich, you need to find the discipline, can you?

This is a great perspective, yet taken to the extreme, the mentality of living frugally by clipping coupons and shopping sales can be so time intensive that a person may miss great opportunities to increase wealth. Put another way, is it worth spending an extra hour to drive and shop to save five dollars? Consider your current hourly income and also the income level you desire before taking on these seemingly worthwhile pursuits. Always ask yourself: Would your time be better spent working towards increasing your income?

Stop worrying about saving pennies and running out of money and invest your time in make more income.

Do eliminate all credit card debt as quickly as possible and once that is achieved, only use credit to buy goods and services you can pay off fully each billing cycle to avoid paying any interest or penalties. Credit card interest can cost up to 25% extra on your purchases. What would you rather use 25% of your money for in your life?

Be Grateful

Being grateful is about enjoying what you have and not feeling deprived of anything in life.

Don’t covet or buy things you can't afford. If you are in debt, stick to buying only the items you really need. Even if you increase your income, don't use that as justification to give yourself a lifestyle raise until you are debt free. If you live above your means, you won't ever become wealthy.

Pay Yourself

Saving is integral to becoming wealthy. Most people have heard the expression:

If you want to get rich, pay yourself first.

It is easy to believe that if you pay all your expenses like housing and credit card bills on time that you are financially responsible. All that is to take care of other people – probably complete strangers. They should take second place to you and your family. It is essential that you pay yourself first.

As little as ten percent of your income set aside every pay period in a high-interest account will ensure that your money will grow exponentially with compound interest. Once this has grown to a more considerable sum, such as a thousand dollars, consult your financial advisor for even better ways to invest those funds. Above all, start NOW.

Work Smart, Not Hard

Most people have heard that hard work will get them ahead in life. A lot of people have realized that this is not entirely true. Working hard is like being on a hamster wheel. A person just keeps going and going without ever getting anywhere.

Don’t be content with a steady paycheck. The average person chooses to get paid based on time — whether on a salary or hourly rate. Wealthy people choose to get paid based on results and are often entrepreneurs.

To ensure future wealth, you must work smart. Regardless of your profession, use your money to earn money. Invest in a financial model where your money earns money with little or no risk.

"On average, millionaires invest 20% of their household income each year," Ramit Sethi wrote in his New York Times best-seller, "I Will Teach You to Be Rich." "Their wealth isn't measured by the amount they make each year, but by how they've saved and invested over time."

The earlier you start, the better.

This is more than just speculating on the stock market and hoping for a big return. It is finding shrewd investments, such as real estate, where your investment remains tangible in a physical property and you can receive monthly passive income through rent.

Some people are intimidated at the prospect of owning real estate rentals. It is possible to do this without taking a huge amount of risk and without a lot of time or effort. Partnering with experienced professionals is a great way to get returns without a lot of knowledge or time invested.

A common thread among millionaires is that they develop multiple streams of income and adopt smart savings habits. They have a vision and the will to see their plan through to the end. Many live more modestly than they can afford. Most have accrued some portion of their wealth through real estate investments.

The best way to join this circle is to think of the future you desire and to implement your plan to achieve it as soon as possible. Get on the road to wealth today!

Knowledge is power and updated knowledge is the most powerful of all.

It takes discipline, but living within one’s means is key to accumulating wealth. Being financially responsible in the present is a good way to ensure a comfortable future.

These steps are good places to start a more conscious and directed route to achieving your financial freedom. Read, reflect and take what will work for you.

Bottom line is that there is no blanket strategy. Each person must evaluate their own circumstances, needs, and desires. Get the help you need to achieve financial freedom.

If you don't design your own life plan, chances are you'll fall into someone else's plan. And guess what they have planned for you? Not much. 

-Jim Rohn


Above all, believe in yourself and believe that you will achieve your goal!

_________________________________________
Sources:

Lynda at Sonoran Sun | Private Equity Investments 

Mark Cuban On How To Get Rich

10 signs you'll never be rich

How to Become a Successful Millionaire in 7 Easy Steps

Have you ever wondered how some people become millionaires - and others don’t?

Or why some make it to the top, only to lose their fortunes?

This may have something to do with what is called a millionaire’s mindset. There are certain strategies to maintain wealth. Some of these people may just not have practiced the seven habits of highly successful millionaires.

Whether you are trying to grow your wealth to become a millionaire, or maintain your net worth, the following habits are key to success.

Whatever may be your reason for wanting to become a millionaire, you should develop the following mindsets:

1. Be Positive And Think Positive

The importance of having a positive attitude towards life cannot be understated. Positivity attracts positivity. Thinking positively will put you on the same page for thought processes as these successful people. 

Stated another way, success attracts success. In order to achieve success, it is important to be surrounded by successful people. The benefit of like-minded individuals should not be underestimated.

2. Go Above And Beyond

People will always prefer to do business with someone who always delivers more than what is expected. The willingness to do more than what you are expected to do has replaced the old attitude of “it’s not in my job description.”

A person who consistently exceeds expectations will always find plenty of business opportunities since being resourceful and reliable are highly valued.

3. Be Original

This does not mean doing something extraordinary, or being quirky. It means trusting your own instincts and daring to excel.

Richard Branson is a great example of this. Branson has dyslexia and had poor academic performance. His headmaster at Stowe School believed he would either end up in prison or become a millionaire. 

Branson started Virgin Records in his early twenties and continued to build his empire. He later founded the Virgin Group, which now controls more than 400 companies.

Branson followed his vision. He is a shining example of why it is important to follow your own path if you intend to be a successful millionaire.

4. It Takes Effort And Sacrifice

Some people have the idea that they are deserving of these fortunes without any effort. They are unwilling to put in the required effort or make personal sacrifices. We would all love to be wealthy and still spend hours on leisure activities until we succeed. Success of any kind can never be achieved without the element of sacrifice. 

Sacrifice and effort are the prices of success. The level of success required to be a millionaire is in direct proportion to the effort and the sacrifices made.

It is important to understand that making great sacrifices is part of the road to success.

5. Focus On Quality

People are attracted to quality. This is more than a desire to have premium brands. It is the recognition that a well-made item possesses durability and value. Adopt the habit of offering quality products and services to create value for your customers. 

Zig Ziglar said it best:

“You will get all you want in life, if you help enough other people get what they want.”

6. Always Improve

Innovation is highly valued in our society and has given rise not only to many millionaires, but to many billionaires as well. Google developed from the desire to organize information on the Internet and help users easily find the information they were looking for. As big as it is, Google is constantly updating, innovating, and offering new features.

To be successful, make it your business to constantly improve and get rewarded in return.

7. Save

A person will never become a millionaire if they are always broke. Having sufficient savings is not only a safety net and great insurance against failure, it can also be a lifeboat in difficult times.

Maintaining reasonable reserves is prudent for many reasons. It will help your business survive during lean times. It enables you to take advantage of unforeseen opportunities. The successful individual can take early advantage of investments or developments when others are still gathering up their resources. This habit will be indispensable in their quest to become a millionaire.

These are key habits shared by successful millionaires. Their beliefs and attitudes can guide you towards your million-dollar lifestyle. It may also help people who have acquired millionaire status and would like to know how to safeguard their wealth. Adopt these habits and you may find yourself on the road to riches.

Knowledge is power and updated knowledge is the most powerful of all.

It takes discipline, but living within one’s means is key to accumulating wealth. Being financially responsible in the present is a good way to ensure a comfortable future.

These steps are good places to start a more conscious and directed route to achieving your financial freedom. Read, reflect and take what will work for you.

Bottom line is that there is no blanket strategy. Each person must evaluate their own circumstances, needs, and desires. Get the help you need to achieve financial freedom.

If you don't design your own life plan, chances are you'll fall into someone else's plan. And guess what they have planned for you? Not much. 

-Jim Rohn


Above all, believe in yourself and believe that you will achieve your goal!

_________________________________________
Sources:

Lynda at Sonoran Sun | Private Equity Investments 

Richard Branson - From Wikipedia, the free encyclopedia

Do You Recognize the 3 Myths of Financial Planning?

Most people have been given investing advice at some point or other in their lives. This advice is most often a well-meaning attempt to offer a solution. It can be repeated from person to person or generation to generation. In some cases, the advice being passed on is sound, but for others no matter how many times it may be repeated, it just simply is not true.

Vladimir Lenin said:

A lie told often enough becomes the truth.

So how is a person to know if the advice they are receiving is true or not?

With the changing times, strategies come and go. Sometimes ideas that worked for our parents are no longer valid. Can you easily recognize what still holds up and what has become a myth?

Here is a review of three concepts that need to be reevaluated for today’s investing needs:

Save 10 Percent Of Income For Retirement

This may have worked decades ago when our parents were working. That was a time when employees tended to stay with a company for life, received salary increases, pensions and had shorter life expectancies. The smart investor should now save at least 15 percent of their gross income beginning early on in their career in order to maintain their lifestyle in retirement.

If a person doesn’t start saving in their twenties or thirties, they will need to contribute a higher percentage. Starting to save in their fifties, a person would need to contribute much more of their income to make up for lost time. This can be thirty-five percent or more, depending on how late a person starts saving.

The myth here is that Social Security will be enough to meet expenses in retirement. This simply no longer holds true for most people. By the time a person is ready for retirement, they should have 10 to 12 times the amount of their final salary in savings. Annual income in retirement should be 70 to 80 percent of preretirement gross income to maintain the existing lifestyle. For most people, this amount is workable as fifteen to twenty percent stops being channeled into retirement savings. In addition, work-related expenses are no longer part of the budget and the family home is usually paid off by this time.

Of course, more than that may be required if there is a plan for additional travel or unusually high hobby expenses.

If Social Security is still available, it should be considered as a supplement to savings.

Have Three Months' Of Living Expenses For Emergencies

Long gone are the days when someone in their twenties starts at a company and works for the same organization their entire life. In today’s society, we have become familiar with frequent job and even career changes and the possibility of becoming unemployed much more often. It may be an unfortunate myth to have only three months of emergency savings.

It is prudent to have savings enough to tide a person over during longer periods of unemployment. Whether this is due to job loss or for health reasons, a person should have at least three to six months of savings to cover living for any emergency or more. If a person is in a specialized field where it may take longer to find a suitable position, that range needs to be adjusted higher – perhaps up to a year – with the amount in savings adjusted accordingly.

These funds are best kept in a balanced mutual fund which will have a higher return than a savings account but not much additional risk.

Invest In The Stock Market To Leverage Your Nest Egg

With all the manipulation and meltdowns of the stock market, there are people who still believe in gambling their future on stocks is a prudent investment. This myth is surprising. When a stock crashes, all the stockholder is left with is a worthless certificate.

For this very reason, investment in real estate is much more advantageous to gain wealth and cash flow.

A lot of people have become uneasy about in investing in real estate due to the economic recession that was triggered by the housing decline in 2006. This recession is often attributed to the housing bubble and subprime mortgages that preceded the meltdown. Interestingly, when the stock market crashes and people lose fortunes, these same people are just willing to chalk it up to the risk of the market and are willing to say goodbye to their hard-earned funds.

Real estate investment purchases offer a future income stream from property and are quite undeserving of all the negativity to this investment’s reputation. One reason real estate is a great investment is that no matter what happens, the property will still be there. The property will be there and people will always need a place to live, conduct business or for storage. “What if the property is destroyed?” you may ask. Well, property insurance will usually give you a bigger, better, and updated property in its place. What stock has ever offered that feature?

Real estate offers collateral, in the form of a building. The price may go up or down, but the building will stand and be a tangible and marketable structure. It can offer income in the form of appreciation which is the increasing value of a property over time. This means the owner will have income through lump sum cash gains from the eventual sale of property. The asset may also be used for cash flow, or rent, which tends to be much more advantageous as this cash flow tends to remain constant no matter what the value of the property. The smart real estate investor can profit from the sale of the property or cash flow from rentals, or both. It also offers tax advantages that the stock market cannot match.

There are many different types of real estate investments a person might consider for inclusion in a portfolio.

How Well Did You Score?

Were you able to recognize the myth straight off?

As Lenin said, hearing something often does not make it true. Financial myths are no different. Repeatedly listening to outdated or incorrect advice can be financially devastating.

While saving 10 percent of income for retirement may have been great advice in the fifties or even seventies, it no longer holds true as a prudent amount of annual savings for retirement.

In our modern society, job hopping and layoffs are commonplace. Having a mere three months' worth of living expenses for emergencies is very tight. In an economy where replacing a lost job can take anywhere from three months to over a year, having sufficient savings will alleviate the stress of getting through a period without income.

The stock market can be glamorous and offers the illusion of an unlimited gain. This seductive quality can draw in investors without any foundation as a “paper” investment. Real estate is an investment that can offer rich rewards over a long period of time. It offers tangible assets, return on investment in the form of lump sum gain, cash flow or both. It also offers tax benefits.

Knowledge is power and updated knowledge is the most powerful of all.

It takes discipline, but living within one’s means is key to accumulating wealth. Being financially responsible in the present is a good way to ensure a comfortable future.

These steps are good places to start a more conscious and directed route to achieving your financial freedom. Read, reflect and take what will work for you.

Bottom line is that there is no blanket strategy. Each person must evaluate their own circumstances, needs, and desires. Get the help you need to achieve financial freedom.

If you don't design your own life plan, chances are you'll fall into someone else's plan. And guess what they have planned for you? Not much. 

-Jim Rohn


Above all, believe in yourself and believe that you will achieve your goal!


_________________________________________
Sources:


Lynda at Sonoran Sun | Private Equity Investments 

3 Steps To Financial Freedom

The Tightrope To Retirement