My Best Stocks and Crypto Investments in 2020

When investing it is of the highest importance to look at trends and determine how things are likely to pan out. In this article I will not get political, rather I will discuss things as a matter of fact from a policy perspective.

Generally speaking, Trump’s policies favor corporations with the 21% tax rate instead of the former administration’s 28% tax rate. While I thought the likelihood of a Trump second term was a strong possibility, with my investment portfolio I never put all my eggs in one basket (and good thing that I didn’t).

It is well known the Trump cut ties with the Paris Climate Accord a few years back, and what this meant for the progress of EV’s, alternative energy funding, and sustainability is that it took a few steps back from the investment growth in this area for a couple of years. Knowing that democratic candidates tend to favor policies that are for sustainability and green in nature, while also looking at the current state of the world from a sustainability perspective before the election I took a sizeable investment in the following stocks, and have yielded excellent results.

My Best Investments are NIO, XPENG, LI, PLUG, and Cryptocurrencies.

To get kicked off with what these stocks are, I will give a high-level overview. NIO, XPENG, and LI are essentially EV startups in China. With progressive policies under the new administration and the yearning of individuals and companies to be more conscious when it comes to their ecological footprint, I am confident these stocks will continue to grow over the next decade and beyond. I’ve seen countless videos of China where the smog is so thick you couldn’t see several buildings over, even though it was completely sunny out. A dirty musty fog is caused by internal combustion vehicles. My average returns on these stocks are 60%+, because of Biden’s stance on the EV market, and the need to transition to a more environmentally sustainable future. I saw when Trump losing this taking off much more and hedging my portfolio in my direction wouldn’t only mitigate losses in my “Trump” stocks per se but would bring tremendous gains as this industry is young, evolving, and is gaining visibility from some of the most important companies in the world.

On a side note, some may ask why I am an oil shareholder when the best possible answer is to transition to alternative energy? Why don’t I put my money where my mouth is with my oil money? It is not necessarily a black and white answer, and it is the obligation of the oil companies to adopt and progress on the energy transition to be carbon neutral. Should they go out of business? No. There is still a need for oil and gas until the population completely transfers to a more environmentally friendly alternative, that being EV, Hydrogen, or something else.

Gary Gensler, Biden’s new pick for the Commodity Futures Trading Commission (alongside expected inflation under a Biden administration), has brought neck-snapping returns to my portfolio this year. Specifically, my holdings constitute around 5% of my net worth in chronological order and are the following by amount. 1)Bitcoin, 2) Ethereum, 3) Tezos, 4Litecoin, 5) Cosmos, 6) Chainlink, 7) Band, 8) Stellar 9) Compound 10) EOS. I also have some XRP which is a decent crypto asset for transacting, but I am hesitant to mention it here because of its centralization.

My advice to those trying to make a lot of money in this space is to be patient and invest in projects you believe in, that have great growth prospects. There are entire books written on addressing the project fundamentals of these projects. Will any of the projects that I invested in go defunct? Maybe. Does it matter? No – because it is worth the upside risk, and I am diversified.  

Administration and policy investing are so important when it comes to investing. Investing is not just about looking at the current health of a company, rather the entire picture – and beyond. Historical track records can mean a lot. Have you heard the saying I do not have a crystal ball? Looking at a team’s talent, vision, product-market fit, and use case viability is another way of assessing the potential and whether to invest.

If I can leave any parting advice to you today it is this. My best investments this year were based on assessing what is likely going to happen in the future, through hedging bets and taking a risk. Green policies (EV Stocks) and Inflation (Crypto Assets).

What do you think is going to happen in the future and how will you position yourself?

Have you ever said, “I wish I could have gotten into TSLA/AMZN/GOOG/FB/Bitcoin/Ethereum when it was under $100 a share/coin”?

There are other opportunities as ripe as those were, now you can… Think Ahead.

The Two Most Popular Cryptocurrencies This Month by Market Cap

In this article, we are going to look at the two largest cryptocurrencies by market cap, and discuss both the factors at play as to why, but also the importance of relying on additional metrics to make a purchasing decision in this space.

An important metric to determine when purchasing cryptocurrency is the market capitalization (or cap). While this factor is important, please note, when purchasing in this asset class to consider other important investment factors. At a minimum, some factors to include with one’s decision is to analyze the volume, technical trends, previous price, use cases, and non-circulating supply.

You can determine the market cap with an easy to remember calculation. To find this, take the current price and multiply this by the number of coins in circulation (Market Capitalization = Current Price x Circulating Supply).

Over the previous ten years, several hundred billion dollars have entered the cryptocurrency space. Per a popular source for Crypto research, CoinMarketCap[1], there is $430.34 Billion in the crypto asset class, with 7,600 cryptocurrencies.[2]

Before we get started, it will be beneficial to address non-circulating supply, because this is such an important factor when understanding market cap. Many cryptocurrencies have large amounts of crypto that have not been mined yet or released from the early adopters/founders. This can dramatically impact the price of the currency downward once the crypto is released on the exchanges.

It is important to know how much circulating, non-circulating supply there is at a specific point in time, but also long term whether there is a hard-coded finite supply or an infinite supply.

Forehand Financial

Below, please see the top two most popular cryptocurrencies by market cap!

  1. Bitcoin (BTC) – Since Bitcoin was launched at the beginning of 2019, it has been the most widely used with the largest market cap.

The supply of Bitcoin is finite.

With the circulating supply being $18,536,750 and the current price being $14,908.68, this has a market cap of $276B which is 5.57X higher than the second coin by market cap. There are many reasons behind this price point, and a major reason for this high market cap is because of the limited total supply.

What are the major factors at play in driving up the price? Plain and simple, the primary factor is scarcity. As mentioned, currently there are ~18.5M BTC in circulation. The total available supply is 21M. Something important to note is that these remaining 2.5M Bitcoins are becoming progressively harder to mine.

The way one could look at it would be digging into the earth with a shovel. At first, it is easy to dig into the soft moist ground, as you dig deeper the earth gets harder and colder which makes it makes one much slower at digging. Eventually, around a thousand meters deep, you hit bedrock which is extremely thick and next to impossible to dig through. With Bitcoin, approximately every two weeks, the mining difficulty increases to ensure the stability of the verified blocks in the blockchain, thus fewer rewards per week, and eventually, Bitcoin mining will not be profitable anymore from a production standpoint.

Besides just scarcity, there is quite impressive liquidity, an ever-growing acceptance of it as a payment method, privacy, and independence from any central agency. While this is not every factor, most of these factors help drive up bitcoins value.

Bitcoin is a haven asset for countries experiencing hyperinflation.

While we know Bitcoin historically has had many dramatic swings, and many critics don’t look at it as a store of value, relatively it is stable, many countries such as Zimbabwe, Venezuela, or South Sudan stand to benefit significantly from the adoption of Bitcoin.[3] Each of these countries has experienced significant hyperinflation. Even with 20-50% swings in bitcoins value, these countries stand to benefit from the adoption of Bitcoin because you cannot just print more bitcoin, but central governments can always print more fiat currency.

From inception to present, Bitcoin has remained at the top in popularity by market cap. Entire books, articles, and research papers have been written on the countless use cases of bitcoin, and many calling it the digital form of gold. But unlike gold, the market cap for Bitcoin can be potentially more volatile, like we saw in the crash of December 2017 shedding hundreds of billions of dollars of value.

Debates can be made on both sides on the future of Bitcoin’s use as an everyday currency, but at this time, and the foreseeable future it will be the leader from a market cap perspective because of its current market price, wider vendor acceptance, and scarcity of coins available.

2) Ethereum (ETH)

In February 2016, Ethereum (ETH) took the second-place token by the Market cap.

Foremost, how scarce is ETH (the token sitting on top of Ethereum)? This is important to note because many often confuse the difference from the platform Ethereum versus the cryptocurrency ETH. We commonly understand it that there are 21M Bitcoins that will be or are in existence, but how much ETH is there, or will there be?

At this time, the supply of ETH is not finite, but this can change with further iterations of the protocol.

ETH never set an upper limit on the total coin supply to be mined. What this means is inflation might occur at points in the future, and the asset is not as scarce as Bitcoin. This is an important point to bring up from a market cap perspective because more supply can be rolled out through mining. If more supply gets rolled out, and there is not as much demand, it will harm the price thus lowering the market cap.

Looking at the current price and circulating supply we have 113,332,093 ETH circulating at $437.46 per coin. The total market cap of Ethereum is $49.577B.

With an impressive market cap, what gave ETH the trajectory to achieve second on our list in terms of most popular cryptocurrencies by market cap? What drove larger-scale adoption to the usage of Ethereum?

Ethereum’s protocol has numerous use cases and adoption amongst many important stakeholders. 

Ethereum was built to address many of the things that Bitcoin could not do or was not programmed for. The most widely known and well-accepted uses of Ethereum would be the use of Smart Contracts and dApps(decentralized application). Having this functionality has helped propel Ethereum in popularity because it increases the use cases several times over. Use cases involve everything from market predictions, legal contracts, financial contracts, crowdfunding, web hosting, and more. With all these use cases, large banks, developers, individuals, and institutions alike are using the protocol’s technology to drive the adoption of the Ethereum network, which drives the price up higher.

The secondary function of Ethereum is the use of the cryptocurrency ETH, but since it is not as widely accepted across vendors, this is not the primary use case. Unlike Bitcoin, it can be a challenge trying to find those who accept the ETH currency. A route many holders of ETH take would be to convert ETH into BTC to make a purchase or to just move into cash.

Ethereum also has adoption through diversification, correlation trading, and retail investors.

Something that is not as investigated with Ethereum is the spillover from Bitcoin by retail investors. This plays into increasing the market cap because if investors see the price of Bitcoin go up, correlated assets are another way to capture upside potential. The correlation between BTC and ETH remains positive averaging 50% over a year’s time frame (correlation coefficient). While the correlation can swing dramatically, on average, the prices have a generally positive correlation in the long run.

Also, with the rise in the adoption of cryptocurrencies, many individuals purchase altcoins to diversify and speculate on different products that may take off. Since Ethereum is listed at the top of many exchanges, and it has the power of network effects, without doing ample research, many individuals drive up the price and market cap just through speculation.

Nevertheless, it is without a doubt that Ethereum has earned its place as the second-largest crypto by market cap. With the adoption of smart contracts/dApps, with countless use cases, adoption, and use by larger institutions, this protocol will be here to stay and even evolve into further iterations such as Ethereum 2.0.

My call to action to everyone today is to look at market cap as an important investment criterion, but it needs to be analyzed through several other factors concurrently.

Forehand Financial

When trading stocks, one will not base a decision solely on the price, it is important to understand how all the factors work together. There are currencies out there with very large market caps but under $1,000 trading volume a day. By just looking at the market cap, one may think a coin has a strong foothold in the cryptocurrency space, but often you do not want to trade coins with such low volume because liquidating can be very challenging, but also, these projects have the potential to be scams.

While Bitcoin and ETH reign at the top of cryptocurrencies by market cap, only time will tell if they hold the top two positions well into the future. While these coins are not without their flaws, the network effects are critical when it comes to the mass adoption of a new currency to replace or coexist with fiat money. The cryptocurrency space is still young and evolving, and with the underlying technologies and unique characteristics of these two coins, many are confident they will hold their dominance for years to come.

Key Points

When looking at the market cap, please try to remember the points below:

  1. Market Capitalization = Current Price x Circulating Supply (MC= CP x CS)
  2. Bitcoin & Ethereum Market Cap = Bitcoin has the second-largest Market Cap at $276.35B, and Ethereum has the second-largest Market Cap at 49.577B
  3. Supply = Identify both circulating and non-circulating supply, and long term whether there is a hard-coded finite supply or an infinite supply
  4. Price = Realize the factors that drive up the price on the cryptocurrency being analyzed
  5. Interconnected Factors = Know how each factor plays into each other (Price, Market Cap, Supply, Volume, Etc.)
  6. Unique Crypto Characteristics = Each cryptocurrency has unique characteristics that give it unique qualities, do your best to understand the protocol and what sets one apart from another

Do you think Bitcoin and Ethereum will stay at the top in the popularity of cryptocurrencies by market cap? Please feel free to let us know in the comment section below.

Resources


[1] https://www.coinmarketcap.com/

[2] Data Pulled as of September November 7th

[3] https://news.bitcoin.com/venezuela-bitcoin-use-hyperinflation-crypto-adoption/#:~:text=The%20firm%20elaborated%3A-,The%20country%20has%20reached%20one%20of%20the%20highest%20rates%20of,preserve%20their%20savings%20against%20hyperinflation.


Disclaimer:
Nothing stated in this article is a recommendation from Forehand Financial to buy or sell a particular security or asset class. You should wisely consider your tolerance for risk, time horizon, and financial goals before making an investment. With investing, you run the risk of losing money, always read an investment prospectus and make an informed decision before allocating capital to a particular investment. 

Eirin Holmeide – Wealth Coach

Eirin Holmeide

Paul: In your journey through finance, what is a common misconception you initially had when it came to money?

Eirin: To be honest, I can’t remember having any misconceptions about money. I started working on my wealth-building journey quite early. I was 18 years old and knew I didn’t want to depend on one salary and trade my time for money to live my life. What I do remember hearing growing up at home is that you have to work hard in life to earn money and live well. I didn’t fully agree with it though as I had influence from other people in my life who had built their wealth outside of a traditional job. They had started their own businesses and invested in the stock market and in property. When I look back at my life now I realise how important the saying “You are the average of the 5 people you surround yourself with” truly is. I think having a positive influence from others and seeing what’s possible for you is key. Then it’s up to you to plan and make it happen!

Paul: What practices do you try and implement in your life to achieve your (financial or non-financial) goals faster?

Eirin: One of the most profound practices that I created and implemented in my life is a daily morning routine. I love waking up really early before the rest of the world wakes up and noticing the peace and quiet. I do my workout first thing in the morning. I follow this with journaling and mindset work. Our mindset is at the core of everything we do. I work on my mindset so that it always matches my aspirations in life. I also write at least 5 things I’m grateful for every day. Then I set my top priorities for the day and write out what would make my day a success.⁠ My morning routine is a practice where I dedicate time for myself. I don’t put a time limit. I just let myself flow. I have no stress to get to a job or to be somewhere else. This is something that I’m constantly so grateful for. I’ve created a life where I choose what to do with my time. I’m usually ready to work between 9:00 and 9:30 am feeling motivated and with so much positive energy.⁠


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​I also recognise that sometimes life gets in the way and it’s not about doing everything perfectly. If I miss a day or two, it’s not the end of the world. The most important thing is to be consistent with your habits and come back to it quickly if you fall out of it.

Other practices I implement to achieve my goals is to hold myself accountable. No one will care more about your success than you. I like to think of it as a game and I make it fun to work towards my desires. I track and review how I’m doing consistently and at a minimum once a month. Lastly, I think celebrating your progress is part of what makes the process and journey enjoyable. I like to recognise the efforts I am making by celebrating my small and big wins.

Paul: After a long day of work, what do you like to do to destress, wind the day down and reach a relaxed mood to be fresh to take on the next day?

Eirin: I prioritise self-care as much as work. I believe that in order to be productive it’s just as important to rest and slow down. I like to switch off completely when I’m finished with work although it’s hard to always follow through with this, especially since I have my own wealth coaching business. When I do switch off I like to spend quality time with my fiance, friends, or family. I enjoy slow evenings with a good glass of wine and good food. I really enjoy cooking, baking, or any kind of creating in the kitchen. It feels like meditation for me. I also like to spend time reading a good book or watching a show or movie with my fiance. Finally, I love going for walks in nature but the only thing I’m missing is having a dog that I can bring with me. 

Paul: If you were to recommend one movie, show or book that has changed you for the better what would it be and why?

Eirin: I always find it so hard to just mention one so I’m going to share two books and one documentary that have impacted me. 

1) One of the first books I ever read on personal finance was Rich Dad, Poor Dad by Robert Kiyosaki. My parents knew I had an interest in business and learning how money works in the world so they gifted it to me when I was 18. This is also around the time I started working on my building my wealth and it definitely shaped my financial independence journey. The biggest takeaway I took from this book was about the difference your mindset makes in your life.

2) Your money or your life by Vicki Robin: This book is different from other personal finance books because it guides you through the inner work needed to transform your relationship with money. To achieve true change in your life you must first change your beliefs about money and bring consciousness to the way you spend and earn your money. It’s not really about money but about what you are trading your life energy for. I love it because it truly highlights the difference between making a living and making a life.

3) Minimalism: A Documentary About The Important Things. I am not a minimalist although I am closer to practicing some form of minimalism than the consumerist lifestyle of modern society. I really resonate with the idea of finding freedom by living with less. Through my own wealth-building journey I have learned to live life more intentionally, aligned with my values, and following what truly matters to me. I really enjoyed seeing how other people in the documentary have made changes in their lives to prioritize happiness over external and superficial measures. It focuses on the virtues of downsizing your life and understanding the true meaning of “enough” which also Vicki Robin writes about in her book Your Money or Your Life. The documentary really inspired me to embrace minimalism even more although I can’t say I am even close to the authors Joshua and Ryan’s way of living.

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Paul: Ten years ago, have you expected to be where you are now? What financial advice would you tell your younger self or someone in their teens or twenties?

Eirin: Yes, I had no doubt that I would be well on my way to financial independence. I also think that this strong self-belief that I had in myself is what made it possible for me. I started working on my wealth-building journey when I was 18 (over 13 years ago now) and I set myself savings goals and investing goals every year to get closer to my ultimate goal of financial independence. I think the best financial advice I can give to someone else is to get financially educated. The biggest risk in life is not to understand how money works and how you can use it as a tool to build your dream life or create a safe future for yourself. I would also recommend women to start talking more openly about money between each other. It’s definitely something I would tell my younger self to do. I felt quite alone in my wealth-building journey and would have loved to have a community of other women to speak to about this. That’s also one of the main reasons why I decided to build one myself through my business.

Finance Questions

Paul: What advice would you give to someone who has trouble sticking to a budget? Any strategies to help them stay the path?

Eirin: Budgeting has such a bad reputation and often makes people think and feel that they have to restrict or deprive themselves. Nobody enjoys this so I would start by changing the perspective. A budget is supposed to feel expansive. It gives you the freedom to spend on the things that matter to you. Start with your why and set yourself a goal. Why do you want to create a budget? Is it to get out of debt? To break the paycheck to paycheck cycle? To start saving more money? To invest for your long-term goals? One of the reasons that budgeting may be difficult is because there are so many emotions tied to the way that you spend your money. It is important to address your emotions when it comes to your budget. I always advise my clients to start tracking their money first, before they create a budget. Tracking your inflow and outflow of money is a great way to become aware of your money habits and the emotions tied to your spending. When you’ve been tracking your money for a few months you can really start to analyse your spending. You will probably notice certain trends and patterns. From here you can start to be forward-thinking and make decisions about what you want to allow yourself to spend in each category and how much you allocate to your savings. This is the perfect time to make a budget! Make sure you set aside fun money each month that you can spend guilt-free. 

For additional strategies to set yourself up for success: Schedule a review with yourself at the end of the month (or as often as you like) to check-in, see how you did, learn from your results, and make adjustments as needed. Make it a fun experience. What do you enjoy doing? Make it a special occasion and something you look forward to doing. For the biggest chances of success, find yourself an accountability partner or invest in a wealth coach that can support you and hold you to your highest potential.

Paul: If you were to give advice specifically to women on things, they can do to maintain their lifestyle, while concurrently achieving their financial goals what would they be? Is there anything that you or other women may have experienced when it came to money?

Eirin: I think my biggest advice to women is to get financially educated. It is especially important for women to take control of their finances and to build their own financial independence.

We are aware of the gender pay gap, that women take more career breaks to care for children/elderly, we pay a premium on most products our entire financial lives, and we live on average 5 years longer than men. Research shows that women end up with around 70% less money than men in their retirement!! The huge wealth gender gap that women experience is a result of systemic issues and a lifetime of income and workplace inequality which is why it’s so important for women to start building their own wealth.

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I would advise women to start by understanding themselves and their own relationship with money so they can choose to live authentically and maximize the time they spend working towards their desires. I always advise my clients to identify their “why” for wanting to achieve their financial goals. You will constantly be challenged and there will be things tempting you every day. That means that you have a choice presented to you in every single situation. Coming back to your “why” will help you when you need to make a choice between something now or your goal later. Additionally, learning to identify what you value and what you love spending money on will help you maintain your lifestyle and make it easier to say no to things that don’t matter so much to you. 

Paul: If someone were in bad debt, what advice would you give to them regarding getting out of it?

Eirin: It can be tough to face up to your financial situation but it is such an important first step.  
I think the most important thing to remember is to look at it with no judgment. Remember that your debt does not define you and it does not determine your worth. It can also feel like a lonely journey but there are so many others who are experiencing the same. Speak to someone you trust who can support you. Start by creating a list of all your debts (credit cards, overdrafts, loan and mortgage, personal loans, etc.). Then check how much you owe on each one, the interest rate on each debt, the minimum payment on each debt, and the payment due date on each debt. After you’ve listed it all out, prioritise what you want to pay off first. Look at your budget to see how much you have left after your expenses are covered. How much can you afford to put down toward your debt payment each month? The most important is to not overpay as you need to make sure you have enough for your monthly expenses so you don’t end up taking on more debt. Once you start eliminating expensive debt and can afford to pay down more, you can start adjusting the amount. Eliminating debt can end up taking a long time so celebrate your progress along the way. Create a reward system and be specific about how you will celebrate each small win. 

Paul:  What investments have you found the most rewarding both from an impact perspective (ESG or supporting other local causes), but also a strong rate of return?

Eirin: I’ve always been conscious of our impact on the environment and I try to look for ways where I can live my life more sustainably. I started looking into this with my investments and specifically how we can use renewable energy to combat climate change. In 2015, in my stock picking research, I came across a company in the green hydrogen industry. I started reading more about how excess solar and wind power can create operability challenges. I learned about how the excess wind and solar power could be converted to hydrogen and used elsewhere or even to produce electricity which made me realise that hydrogen would play a key role in transitioning towards green energy. I opened a long position in a growth stock in this industry in 2015. It’s definitely been my best investment to date as well as one that is in full alignment with my values too. I got in early and I have a 620% return so far. The best part is that this stock is just in the early stages of its growth journey. I’m planning to hold it for many years. 

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Paul: What traits do you see in most successful people financially? Can these be learned, and if so, how would you recommend adopting them into one’s life? 

Eirin: I believe successful people have common traits which come from a desire or purpose to achieve a bigger vision for themselves in life. They have a long-term mindset and a strong belief in themselves. They also have a strong commitment to follow their dreams. They use this for direction and implement consistent daily habits and discipline to work towards their goals. However, I think it’s also important not to put successful people on a pedestal. They also have their own insecurities and moments of self-doubt. They can also have bad habits and have gaps in their knowledge too. The difference is, they know, that all of these things are perfectly normal. The goal is not perfection, it’s to take imperfect action towards your desires. Lastly, and maybe most importantly, successful people have a genuine desire and willingness to learn. So yes, I believe anything can be learned. Start by identifying one new habit that you want to implement in your life. Set yourself up for success by doing it first thing in the morning or at a time you know you are most likely to follow through. If you have too many things that you are trying to change at the same time you will probably get distracted and not be fully focused on them. By just focusing on one at a time you can place all your energy on implementing it and you will have a higher chance of success.


Thanks everyone for reading this thoughtful and actionable content! To stay and touch with Eirin, please be sure to follow and support @eirin.holmeide on Instagram! 

-Published 7/28/2020


Disclaimer:
Nothing stated in this article is a recommendation from Forehand Financial to buy or sell a particular security or asset class. You should wisely consider your tolerance for risk, time horizon, and financial goals before making an investment. With investing, you run the risk of losing money, always read an investment prospectus and make an informed decision before allocating capital to a particular investment.  

Marco Carreira – Founder of Carreira Finance

“Marco Carreira is the founder of Carreira Finance. He’s a financial coach who teaches people how to make better financial decisions. His goal is to help them make more out of their money and reach financial independence.”

Personal Questions

Paul: What is the most exciting thing you have encountered on your journey so far blogging, coaching, and educating?

Marco: Without hesitation, for coaching and educating, it has been the interaction with my clients.

I love my clients’ reactions when they achieve their financial goals like becoming debt-free.

For the blog, I would say that the most exciting part was when I launched it. I worked so many hours to develop my website that when it went online, it was an achievement.

Paul: What hurdles have you had to overcome in your journey so far? What hurdles lie ahead that you are starting to work on?

Marco: I think the biggest hurdle I had to overcome was my impatience. It takes a lot of time and patience to start a business from scratch. 

However, I tend to get excited when I have a new idea. At the beginning, I was a bit frustrated to see only a few people reading my articles because my goal is to help as many people as possible.

The next hurdle I need to overcome is growing my client base. It has been difficult to find new clients. I don’t have a big budget to spend on advertising so it takes more time to get new clients.

Paul: When it comes to developing your skills, what areas do you want to focus on that will bring the most value to your personal life and career?

Marco: I would say communication, organizational, and analytical skills are the three most important skills I need to improve continuously.

My job is to understand my clients’ financial situation and help them in their path to financial freedom.

  • Communication – I’m constantly interacting with my clients
  • Organizational – I need to make time in my schedule to grow my business the way I want it to
  • Analytical – I need to understand my clients’ needs to give them the best advice for their financial situation

Paul: Any sports or healthy activities that you embark on to help reduce stress or keep a level head?

Marco: Sports play a big part in my life. I played a few team sports like soccer, volleyball, and handball when I was in college. And I still play soccer as much as I can here in California.
Another activity that helps me reduce stress is meditation.

Paul: What is the best non-finance book you have read in the past year and why?

Marco: I’ll say The Power Of Now by Eckhart Tolle. This book is eye-opening for me.
Before reading it, I tried meditation a few times, but I hated it. I didn’t understand how it worked and my mind was not open to it.

Now, it’s the first thing I do when I wake up in the morning. It changed my life! 

                                                                        Finance Questions

Paul: What are some of the most challenging topics in finance that you must explain? How do you break it down for your audience?

Marco: In personal finance, the most challenging topics are the ones that trigger emotional reactions like debt or budget.

Debt is a tricky one because it’s a touchy subject. People get in debt for multiple reasons, but it’s not because they want to. As a financial coach, you need to understand the reason behind it, so you can find the best solution for each situation.

Most debt relief businesses offer plans for their clients to follow in order to pay down their debt, but it’s not enough.

Let’s take the water leak analogy to illustrate my point. Your ceiling is leaking water. Are you going to dry it out and move on with your life or are you going to find out the reason of the leak so you can fix it properly?

To learn about the 7 step plan to become debt-free, you can read this article

Paul: As a financial coach, how would you encourage people who are living paycheck to paycheck during these times to get by, that was recently furloughed or laid off?

Marco: The first thing I would tell them is to keep calm. Taking financial decisions when stressed or letting emotions control your finances is not a great idea. Keep in mind that every situation has a solution.

The next step is to assess their financial situation. Before trying to make things better, they need to understand how bad it is. Most people know that their financial situation is not in the best shape, but they don’t know how bad it is until they look at the numbers.

Then, they can find a solution to get out of this paycheck to paycheck cycle. If they can’t save money on their salary, they are living above their means. Creating a budget is a great way for them to take control over their finances.

Paul: Do you have any pet peeves regarding the topic of money and poor stewardship of it?

Marco:

I could probably write an entire article on inconsistent behaviors around the topic of money. But here are a few of them.

  • Buying items you can’t afford
  • Predicting the next bull or bear market
  • Paying bank fees for free services

Also, here are a few financial myths you may have heard of.

  • “Only rich people can invest their money”
  • “Buying a house is always better than renting one”
  • “You need to work until retirement age”

Paul: For someone in their 20’s or 30’s, what advice would you give them to not fall into a debt trap?

Marco: The best advice I can give millennials and generation Z is to only buy what you can afford. In Jay-Z’s words: “you can’t afford something unless you can buy it twice.“

Other advice I give my clients is to use their credit cards as debit cards. That way, they can pay off their credit cards every month on time and not pay high interests.

Paul: Through coaching individuals financially, what methods have you found the most effective at seeing positive changes in their spending or debt tempting habits?

Marco: I don’t think there is a universal method that can work for everyone. We all have different life experiences, backgrounds, and things we love to do in life. So it really depends on each individual.
However, the most effective way to improve your finances is the willingness to change. For example, if someone wants to improve their household finances, but only one person in the household is willing to make changes, it won’t work.

Thanks, Forehand Financial for inviting me to do this blogcast. If any of you are interested in financial freedom, I started a new program that aims to help you in your pursuit of financial freedom.

-Published 5/19/2020


Disclaimer:
Nothing stated in this article is a recommendation from Forehand Financial to buy or sell a particular security or asset class. You should wisely consider your tolerance for risk, time horizon, and financial goals before making an investment. With investing, you run the risk of losing money, always read an investment prospectus and make an informed decision before allocating capital to a particular investment.  

Brendan Dale – Founder of Take Charge of Your Money

Personal Questions: 

Paul:What about your blog and financial education drives you to wake up every day and continue working on your successful blog? Have you had any epiphanies in the past decade or so knowing that this is what you wanted to do and where you wanted to be?

Brendan: Wow, this is a tough one. I don’t always wake up feeling motivated to continue working on my blog and sometimes feel a little despondent about it. I’m really motivated by emails that I receive from readers, often sharing personal stories about how they have managed to change their finances by implementing some of the things I’ve written about. I also love reading stories of how people have managed to pay off debt and not only change their financial position, but their relationship with money too. It’s these stories that keep me motivated and feeling that I am helping people. 

I’ve only been blogging for 3 years now and I see this as a great way to escape the “rat race” as I can literally blog from anywhere in the world, at whatever time suits me. That’s quite a motivating factor as I am keen to travel more and will be able to fund my travels through writing.

Paul: What do you do to stay current on industry trends in the finance space, do you happen to subscribe to any publications, online courses, or mastermind groups?

Brendan: I get most of my information from the finance section of newspapers as well as the many finance folk I follow on Twitter. I also read finance books on investing and try to keep up with some of the FIRE community although there really is just too much information out there that one has to limit oneself.

Paul: What are some of the biggest obstacles you have had to overcome building up your successful blog? Did you ever have any doubts?

Brendan: I started my blog as an experiment to learn about blogging, social media, SEO and all the rest that goes with a blog. I certainly didn’t imagine that my blog would become what it has and that I would get radio interviews or be working on marketing campaigns with some of the largest banks in the country. My first year was definitely the hardest as I had incredibly low readership numbers and really struggled to get a Twitter following. I enjoyed writing though and decided to just keep going as long as I had interesting topics to write about.

I got into the habit of writing at least one blog post a week and set up a weekly email newsletter to force me to keep it up. The popularity of the blog has grown exponentially and my advice to any new blogger is to just keep going. Do something on your blog every day, no matter how small.

Paul: After a long day at work, what do you do to de-stress or wind down effectively? Do you partake in any healthy habits that keep you energized throughout the day?

Brendan: I don’t have a particularly stressful job but my usual day starts at 6 AM with a yoga session. I practice the Mysore style which is a self practice under the guidance of a teacher. You simply memorise the full sequence over time and do the same sequence each day. It’s a form of meditation and can be incredibly hard, especially on cold winter mornings or on those days that you simply cannot get out of bed. After yoga it’s usually a race to the office to continue the day. 

My wind down is usually an episode or two of something on Netflix, followed by some mindless social media or reading. My partner and I often joke that we’re the most boring people in the world as we live a simple life and are content with our routine and lifestyle. Early to bed and early to rise.

The past few weeks of lock down have been a change of pace as I’ve been working at home and can wake up a little later and enjoy the peace and quiet of my garden during breaks.

Paul: Do you have a favorite quote, and if so, what is it?

Brendan: “If you don’t like where you are, move! You’re not a tree” – Jim Rohn

Finance Questions:

Paul: 
What advice would you give to someone who’s trying to pursue higher education, but does not want to take on any debt?

Brendan: It’s tricky as higher education is expensive and student loans are almost inevitable. I’d suggest to start by applying for all bursaries or financial assistance programs that are available (and for which you qualify). You may find that you’re selected for a program from which you can benefit tremendously. Many would suggest taking up a part-time job to fund your studies. This is certainly an option but could lead to burn-out if you’re working too hard and trying to keep up with studies. If you’re spending time and money to gain an education then that should really be your focus so that you can get the most out of it and get the best value for your money. 

Crowd funding is another great way to fund studies as friends and family (and even strangers) can contribute to your future. There are probably more people willing to assist than one would think, they just don’t know how. 

Paul: What are the best investments that you have made(both financial and non-financial)? With financial investments, what process do you typically go through to evaluate the viability of a prospective opportunity?

Brendan: I’ve invested in many interesting things from standard investment products to property, art and antique coins. One of my best investments was a series of courses on property investments and how to use various legal entities, gearing, managing the risk and ultimately building wealth. The courses were quite expensive but have been well worth it as I learnt so much and have been able to put it into practice.

The first property that I bought (long before attending any courses) also happened to be my best financial investment as I bought and sold at just the “right time” to more than double my money in a 3 year period. This was just luck though and had I known better I would actually not have sold and would still be sitting with a great investment. 

I also have a piece of art which has increased in value by around 11% per year. It’s not necessarily the best growth, but I do happen to love the painting and it’s a tangible investment which means I can see something real for my money. I don’t necessarily recommend art as an investment, that’s something I should blog about.

Paul: What negative financial habits have you seen people bring into their lives and do you have advice on how those with bad financial habits can get out (in addition to following your wonderful and informational blog )?

Brendan: The worst financial habit I see is consumerism. Simply buying for the sake of it. 

I have friends who shop online daily simply because of the special offers available. They literally have a garage full of boxes of “stuff”. As they buy new things each day the older ones get stored. And as the house and garage get full, they opt for more storage.

It’s hard, if not impossible, to tell people what to do with their money. That is why I blog about everyday situations, basic financial decisions and how to track your money. People unfortunately need to recognize that they have a problem for themselves and then seek help. Hopefully they find me or any of the other great finance blogs out there.

I am also always excited to talk about money and how I feel about certain situations. So whenever I get asked about finances, I’m happy to share.

Brendan: What is the biggest lesson you have learned from money and what would you say to yourself to your younger self to have avoided this misstep?

Paul: My absolute worst money mistake was to cancel insurance on my car. I was young, had gotten into debt to buy the car, and couldn’t afford the insurance anymore. I must have the worst luck in the world as my car was stolen within weeks of cancelling the insurance and I ended up having to pay the car off over the next 2 years even though I didn’t have it. I couldn’t afford another car and had to walk and cycle everywhere. It was a terrible event and one which I’ll never forget!

Advice to younger self “Take out insurance!”

Paul: Some people use leverage(debt) in a way that brings a larger investment upside and a stream of cash flow (Robert Kiyosaki, GrantCardone, Graham Stephan to name a few). What are your thoughts on the utilization of debt to attempt to achieve higher returns?

Brendan: I use this concept myself in property investments. It really works. I would however caution anyone considering this to attend courses, read books and really be sure that you understand the risks and are able to carry yourself through the tough times. You need to have a good buffer fund in place and be able to analyse your investment strategy to know whether it is working or not.

If it’s a guessing game and you’re hoping for the best then I’d be worried.

Paul: With all that is happening right now in the world with the pandemic, are there any specific finance or investments tips you would encourage readers to consider getting through the other side in a fruitful manner?
Brendan: Everyone’s situation is so different that I would hate to offer some kind of “one size fits all” advice. I’d simply say that we don’t know how long this will last, what the effects on the economy will be, and what our families job situations will be like. Be cautious with your money now. Don’t make rash decisions and try (as far as possible) to avoid increasing your debt.

Paul: Thanks for your time Brendan! I appreciate your wisdom on all things money and finance. Let’s stay in touch! 

Please visit Brendan’s website for more information on taking control of your money! Link is below. 
https://takechargeofyourmoney.blog/

-Published 5/9/2020


Disclaimer:
Nothing stated in this article is a recommendation from Forehand Financial to buy or sell a particular security or asset class. You should wisely consider your tolerance for risk, time horizon, and financial goals before making an investment. With investing, you run the risk of losing money, always read an investment prospectus and make an informed decision before allocating capital to a particular investment.  

Derek Sall – Founder of Life and My Finances

Derek Sall

Personal Questions:

Paul:
 In your journey through finance, what books have you read that really have helped you grow? What books do you recommend people just starting out in finance read?

Derek: The book/course that most impacted me was Financial Peace University, by Dave Ramsey. I used the tools in this book to get out of consumer debt, build up an emergency fund, invest in the market, and pay off my house! Today, I enjoy a peaceful life (even among the turmoil all around us) with plenty of funds to live on for years. I’m so glad I’m not like the 67 million Americans today that are worried about making their next credit card payment. 

Other books that have impacted me over the years:

  • The Richest Man in Babylon
  • Rich Dad, Poor Dad – Robert Kiyosaki
  • The Automatic Millionaire – David Bach
  • The Millionaire Next Door
  • The Index Card

Paul: How did you balance working a full-time job, doing a “hustle”, maintaining relationships, social lives, physical shape, etc. while also performing optimally? Is there anything you had to sacrifice?

Derek: Ha, it’s not always easy!! With wife and kids, a full time job, and a blog… For a while there, I was thinking about selling the site because it was simply taking up too much time! Thankfully, I didn’t get the 6-figure offer I wanted and decided to keep it…with a little bit of hired help. I now have a virtual assistant that handles my advertising and emails, and I also have 3-4 staff writers at any given time. 
I’ve come to realize that I’d rather spend 5 hours a week on my blog and earn $2,000 a month than 20 hours a week and earn $3,000. It’s a wayyyyy better scenario!
Also, I’ve cut way back on screen time (used to be video games and TV). It’s just not that important to me. I’d rather use the time to play with the kiddos, work out a bit here and there, and continue to learn by reading!

Paul: Over the past couple of years, what is the biggest lesson you have learned through your finance blog, and what suggestions would you give to beginners?

Derek: Oh man, a big one sticks out in my mind… I was running the blog, working Corporate America, trying to be a great husband and dad, but also to propel us ahead financially. My wife and I already had one rental house and saved up a good chunk of change for another. It took a few months of searching, but I finally found that diamond in the rough! Or so I thought…
It was going to be great! We’d fix it up, I’d blog about the process and increase my following, and then we’d rent it out for $1,300 a month, which would double our rental income. I was in love!
And then we got into month 6 or 7 of the “fix-up” stage…
This house was a disaster. It smelled like cat, dog, smoke, you name it. We had to tear down drywall, pull up sub-floor, remove ceiling tiles. It was a HUGE project! I still wasn’t overly concerned, but my wife was fed up with me working mornings, nights, weekends… It nearly broke our marriage to be honest. I still found time for the kids, but had no time for the wife. NOT SMART!
Once we were finally done, she could barely even look at that house. We had to sell it to get rid of the reminder of that awful time. We still made $27,000…but it truly wasn’t worth the sacrifice of those 8 grueling months…
Yes, money is important and we all need to have it, but there is such a thing as ‘enough’ money. Relationships, exercise, our spiritual walk…there are so many other things that are important as well. It’s all about the balance of everything, not the domination of one.


Paul: To unwind and relax, what activities do you take part in that gives you a second wind, so you can start fresh the next day? 

Derek: 

     (1) Getting outside. My favorite way to do this is go golfing. If there’s not enough time for that, I’ll just go for a walk or a run through the woods!
   (2) Talking with people. I always learn something and grow a bit more, just by chatting with someone else.
   (3) Exercise. Lifting weights, swimming, and running – those are my staples. They get my heart pumping, my mind cruising, and they distract me from my day-to-day work.

Paul: Do you have a favorite quote, and if so, what is it?

Derek: “We buy things we don’t need with money we don’t have to impress people we don’t like.” — many have claimed to be the originator of this quote…
The point is, stop living your life for someone else. Live it wisely, and live it for you.

Finance Questions:

Paul: During volatile times, what measures do you take to protect from downside risk, while concurrently maintaining upside potential?

Derek: After sifting through dozens of articles and thousands of data points, I’ve come to the realization that investing with the market (ie. Index funds) makes way more sense than trying to time the market or pay someone else to try to time the market (ie. active mutual funds). So, I put a good portion of my retirement investments into Vanguard index funds.
Besides this, I’m a huge fan of real estate investments. I have one rental house now that’s a complete cash cow and my wife and I plan to buy a couple more in the upcoming years.
And, a solid chunk of cash is never a terrible thing. We all need a safe-guard against job loss and unfortunate accidents.

Paul: What type of investor are you (income investor, growth investor, combination, speculative, etc.)?

Derek: I’m more about growth. I never got that big into dividend investing – the concept makes sense but too many people end up investing heavily in a company purely for a 6% dividend…while growth stocks can average 10%+. Sure, it’s more volatile, but on average it’s the absolute truth!
And…like I said before, I just chunk my money into Index Funds modeling the S&P 500. Unless you have a ton of money and a lot of time on your hands to learn the ins and outs of the market, betting your funds of single stocks here and there just isn’t worth it. You might have some big winners, but you’ll also lose many times as well.

Paul: What advice would you give someone who has a partner who is bad with finances and is simply uneducated in the world of finance?

Derek: Ugh, this one is tough…and it’s more or less why my first marriage failed. She saw no reason in having more than $1 in our bank account. I wanted millions in investments. Needless to say, it was tough to find a middle ground. So, the first point of advice is,

“Find a partner that shares your spending habits, your religious beliefs, and your exercise habits” — or at least, comes close.

If you’ve already chosen a partner and didn’t quite get the saver you wished you had now, it will never be easy, but the best thing to do is set some common goals.
– Where do you want to be in 5 years? 10 years? 20 years?
– What do you have to do with your money today to get you there?
Even the biggest spender should realize that money needs to be saved if you want to travel the world in retirement or buy that cottage on the water.
Also — be willing to compromise. You’re not fully right and neither is your partner. Learn to meet in the middle. 

Paul: What is the best investment you have ever made (You don’t need to name the specific company if you don’t want), and what research led you to this investment?

Derek:

1st – my best investment was in me – my education. I’ll earn millions more than the average person because of my college degree, my MBA, and most importantly, what I’ve learned through both of those programs (ie. the application of what I’ve learned is probably more important than the piece of paper I earned).
2nd – my spouse that I’m on the same page with. I put tons of time into wooing my current spouse. 7 years later and I still say the investment was totally worth it. We’re on the same page with money, with our kids, and with our future selves!
3rd – my Roth 401k at work. I get a match, an additional 4% from my company, and I don’t have to pay taxes on the money in retirement! And of course, I invest largely in index funds. 🙂

Worst investment? When I was broke and bought 5 shares of Coach. The stock went up and earned me $60, but I spent $20 on transaction fees and another $60 to file the additional tax schedules to record my earnings… Therefore, I lost $20 and had to pay taxes on my “earnings”. 
When you’re broke, pay off debt. It’s the best investment you can make. 

Paul: What is the biggest mistake you have made investing or doing personal finance?

Derek: Ha, I guess I jumped the gun on this question! Refer to the above…
Oh, also, I invested $2,000 in silver a few years ago. The stock market soared and my silver tanked. Pretty sure I sold that investment for $1,400… Not worth it! 

My investments today are real estate, index funds, and cash. It’s simple, but good enough for me!

Paul:  Any general finance rules of thumbs you would like to share with my audience? 

Derek: Absolutely!!
– Never take out a mortgage that’s more than 2X your yearly income.
– If you have consumer debt, do everything you can to pay if off quickly!
– Once you have consumer debt paid off, keep living frugally – preferrably on 50% of your take-home pay. Invest the rest. It’s amazing what a pile of money will allow you to do — take a different job, start working for yourself, retire extremely early, give money away to those in need… Having money is way better than not having money, so why not just work at having the latter!

Derek Sall is a lover and writer of all things personal finance. And, there’s nothing he’d love more than to see you succeed!! Follow him on his site at https://lifeandmyfinances.com

-BlogCast on 3/22/2020

Derek SallPersonal Questions:

Paul:
 In your journey through finance, what books have you read that really have helped you grow? What books do you recommend people just starting out in finance read?

Derek: The book/course that most impacted me was Financial Peace University, by Dave Ramsey. I used the tools in this book to get out of consumer debt, build up an emergency fund, invest in the market, and pay off my house! Today, I enjoy a peaceful life (even among the turmoil all around us) with plenty of funds to live on for years. I’m so glad I’m not like the 67 million Americans today that are worried about making their next credit card payment. 

Other books that have impacted me over the years:

  • The Richest Man in Babylon
  • Rich Dad, Poor Dad – Robert Kiyosaki
  • The Automatic Millionaire – David Bach
  • The Millionaire Next Door
  • The Index Card

Paul: How did you balance working a full-time job, doing a “hustle”, maintaining relationships, social lives, physical shape, etc. while also performing optimally? Is there anything you had to sacrifice?

Derek: Ha, it’s not always easy!! With wife and kids, a full time job, and a blog… For a while there, I was thinking about selling the site because it was simply taking up too much time! Thankfully, I didn’t get the 6-figure offer I wanted and decided to keep it…with a little bit of hired help. I now have a virtual assistant that handles my advertising and emails, and I also have 3-4 staff writers at any given time. 
I’ve come to realize that I’d rather spend 5 hours a week on my blog and earn $2,000 a month than 20 hours a week and earn $3,000. It’s a wayyyyy better scenario!
Also, I’ve cut way back on screen time (used to be video games and TV). It’s just not that important to me. I’d rather use the time to play with the kiddos, work out a bit here and there, and continue to learn by reading!

Paul: Over the past couple of years, what is the biggest lesson you have learned through your finance blog, and what suggestions would you give to beginners?

Derek: Oh man, a big one sticks out in my mind… I was running the blog, working Corporate America, trying to be a great husband and dad, but also to propel us ahead financially. My wife and I already had one rental house and saved up a good chunk of change for another. It took a few months of searching, but I finally found that diamond in the rough! Or so I thought…
It was going to be great! We’d fix it up, I’d blog about the process and increase my following, and then we’d rent it out for $1,300 a month, which would double our rental income. I was in love!
And then we got into month 6 or 7 of the “fix-up” stage…
This house was a disaster. It smelled like cat, dog, smoke, you name it. We had to tear down drywall, pull up sub-floor, remove ceiling tiles. It was a HUGE project! I still wasn’t overly concerned, but my wife was fed up with me working mornings, nights, weekends… It nearly broke our marriage to be honest. I still found time for the kids, but had no time for the wife. NOT SMART!
Once we were finally done, she could barely even look at that house. We had to sell it to get rid of the reminder of that awful time. We still made $27,000…but it truly wasn’t worth the sacrifice of those 8 grueling months…
Yes, money is important and we all need to have it, but there is such a thing as ‘enough’ money. Relationships, exercise, our spiritual walk…there are so many other things that are important as well. It’s all about the balance of everything, not the domination of one.


Paul: To unwind and relax, what activities do you take part in that gives you a second wind, so you can start fresh the next day? 

Derek: 

     (1) Getting outside. My favorite way to do this is go golfing. If there’s not enough time for that, I’ll just go for a walk or a run through the woods!
   (2) Talking with people. I always learn something and grow a bit more, just by chatting with someone else.
   (3) Exercise. Lifting weights, swimming, and running – those are my staples. They get my heart pumping, my mind cruising, and they distract me from my day-to-day work.

Paul: Do you have a favorite quote, and if so, what is it?

Derek: “We buy things we don’t need with money we don’t have to impress people we don’t like.” — many have claimed to be the originator of this quote…
The point is, stop living your life for someone else. Live it wisely, and live it for you.

Finance Questions:

Paul: During volatile times, what measures do you take to protect from downside risk, while concurrently maintaining upside potential?

Derek: After sifting through dozens of articles and thousands of data points, I’ve come to the realization that investing with the market (ie. Index funds) makes way more sense than trying to time the market or pay someone else to try to time the market (ie. active mutual funds). So, I put a good portion of my retirement investments into Vanguard index funds.
Besides this, I’m a huge fan of real estate investments. I have one rental house now that’s a complete cash cow and my wife and I plan to buy a couple more in the upcoming years.
And, a solid chunk of cash is never a terrible thing. We all need a safe-guard against job loss and unfortunate accidents.

Paul: What type of investor are you (income investor, growth investor, combination, speculative, etc.)?

Derek: I’m more about growth. I never got that big into dividend investing – the concept makes sense but too many people end up investing heavily in a company purely for a 6% dividend…while growth stocks can average 10%+. Sure, it’s more volatile, but on average it’s the absolute truth!
And…like I said before, I just chunk my money into Index Funds modeling the S&P 500. Unless you have a ton of money and a lot of time on your hands to learn the ins and outs of the market, betting your funds of single stocks here and there just isn’t worth it. You might have some big winners, but you’ll also lose many times as well.

Paul: What advice would you give someone who has a partner who is bad with finances and is simply uneducated in the world of finance?

Derek: Ugh, this one is tough…and it’s more or less why my first marriage failed. She saw no reason in having more than $1 in our bank account. I wanted millions in investments. Needless to say, it was tough to find a middle ground. So, the first point of advice is,

“Find a partner that shares your spending habits, your religious beliefs, and your exercise habits” — or at least, comes close.

If you’ve already chosen a partner and didn’t quite get the saver you wished you had now, it will never be easy, but the best thing to do is set some common goals.
– Where do you want to be in 5 years? 10 years? 20 years?
– What do you have to do with your money today to get you there?
Even the biggest spender should realize that money needs to be saved if you want to travel the world in retirement or buy that cottage on the water.
Also — be willing to compromise. You’re not fully right and neither is your partner. Learn to meet in the middle. 

Paul: What is the best investment you have ever made (You don’t need to name the specific company if you don’t want), and what research led you to this investment?

Derek:

1st – my best investment was in me – my education. I’ll earn millions more than the average person because of my college degree, my MBA, and most importantly, what I’ve learned through both of those programs (ie. the application of what I’ve learned is probably more important than the piece of paper I earned).
2nd – my spouse that I’m on the same page with. I put tons of time into wooing my current spouse. 7 years later and I still say the investment was totally worth it. We’re on the same page with money, with our kids, and with our future selves!
3rd – my Roth 401k at work. I get a match, an additional 4% from my company, and I don’t have to pay taxes on the money in retirement! And of course, I invest largely in index funds. 🙂

Worst investment? When I was broke and bought 5 shares of Coach. The stock went up and earned me $60, but I spent $20 on transaction fees and another $60 to file the additional tax schedules to record my earnings… Therefore, I lost $20 and had to pay taxes on my “earnings”. 
When you’re broke, pay off debt. It’s the best investment you can make. 

Paul: What is the biggest mistake you have made investing or doing personal finance?

Derek: Ha, I guess I jumped the gun on this question! Refer to the above…
Oh, also, I invested $2,000 in silver a few years ago. The stock market soared and my silver tanked. Pretty sure I sold that investment for $1,400… Not worth it! 

My investments today are real estate, index funds, and cash. It’s simple, but good enough for me!

Paul:  Any general finance rules of thumbs you would like to share with my audience? 

Derek: Absolutely!!
– Never take out a mortgage that’s more than 2X your yearly income.
– If you have consumer debt, do everything you can to pay if off quickly!
– Once you have consumer debt paid off, keep living frugally – preferrably on 50% of your take-home pay. Invest the rest. It’s amazing what a pile of money will allow you to do — take a different job, start working for yourself, retire extremely early, give money away to those in need… Having money is way better than not having money, so why not just work at having the latter!

Derek Sall is a lover and writer of all things personal finance. And, there’s nothing he’d love more than to see you succeed!! Follow him on his site at https://lifeandmyfinances.com

-Published 3/22/2020


Disclaimer:
Nothing stated in this article is a recommendation from Forehand Financial to buy or sell a particular security or asset class. You should wisely consider your tolerance for risk, time horizon, and financial goals before making an investment. With investing, you run the risk of losing money, always read an investment prospectus and make an informed decision before allocating capital to a particular investment.  

A take on the Social Score

One television show that I am a major fan of is a show called Black Mirror. Specifically, there is one episode called NoseDive that I am a major fan of. One of the reasons I enjoy this episode so much is because of the number of similarities I see between this episode and our society today. Each of the citizens in this apparent Utopian society receives a score based on how well they behave. If they smile, hold the door open for others and put hang out with certain groups of individuals their social score increases. If they partake in activities that are full of vice their social score will decrease (smoking, aggregation or hurting others physically). This has fascinated me because often the people with the higher social score received numerous benefits such as larger and more beautiful homes, well-developed networks and other various perks.

This system is likely to become a reality in China according to many articles I have read on the subject. With this new social credit system smoking in a smoke-free zone or idling one’s car for extended periods of times could lead to a reduced social score. One of the big differences from the episode of NoseDive was that it only records negative behaviors and everyone starts off with a perfect score. Anyways, the consequences of having a lower social score could mean fewer discounts from internet providers, the slower application process to travel to other countries or more difficult getting into certain educational programs.

Like in Nosedive, the lead women found it quite difficult to navigate through day to day life with a lower social credit score. She couldn’t get into certain events, access the home of her dreams, or get a ticket to travel to the destination. She was treated as a sub-class citizen because of the negative behaviors she took on. This is going to roll out next year in China and I believe it is important to look at the benefits and disadvantages of this system.

I personally am not a fan of the system, and while it does aim to have good intentions I believe eventually people in power can abuse the different regulations. Corruption always finds a way to seep into the government. One concern that I have for this system is if it were to branch into the inability to go to certain national parks in the country, obtain certain gym memberships or even not allow one to own a pet. I also think it is important to consider challenging the system and to see if there are more effective ways to approach good behavior rather than having a score. Naturally, if one treats others well and behave well one will get treated well in exchange. The same is for the opposite. I don’t think it should be up to a government or a system to dictate whether we are good citizens or not. If there is illegal behavior, then that crosses the line and the individual should be given an adequate trial and sentence.

While China is an authoritarian country, I think it is important that we look and do our best to look into and advocate against this system that will be implemented over the coming year. Having a limit on freedom restrains creative thinking and dampers the ability to innovate. While I do understand why the Chinese government would like to roll this out, in the long run, I am confident it will cause needless tension between the citizens and the government which wastes both time and energy.

-Published 3/31/2019


Disclaimer:
Nothing stated in this article is a recommendation from Forehand Financial to buy or sell a particular security or asset class. You should wisely consider your tolerance for risk, time horizon, and financial goals before making an investment. With investing, you run the risk of losing money, always read an investment prospectus and make an informed decision before allocating capital to a particular investment. 

Avoid the Pileup, Race out of Debt

Ever since I was a young child I have been in love with cars and I’ll never forget telling my dad when I grow up, I want a yellow Corvette with a NASCAR motor. Today more than ever, like many Americans my passion and love of cars is still strong. It is important to remain resilient and understand that cars depreciate, and for many, these vehicles would be considered a liability. A record number of Americans in the United States have auto loans currently and today’s piece is to discuss what this means for the overall state of our economy, how this affects individual’s investments and why taking out a loan or leasing a car isn’t necessarily the best option.

It is well known that wages haven’t increased significantly over the past decade, while the prices of many products have increased several times over the same period.  Cars specifically have been the weak spot for many Americans and currently, we have over one hundred million Americans with auto loans.  What does it say when a country is approaching nearly a third of its population having to make monthly payments to get from point A to point B? Are they trying to leverage debt and take advantage of low-interest rates (average auto loan interest rate stands around 4.2%), or are they squeezed financially to the point where they are unable to pay cash for a car? I think it is a combination of both with more emphasis on Americans being squeezed financially. It is written on the wall right now on why we have a record amount of loans. Unemployment is hovering around the lowest it has been in the past decade; the stock market is currently at an all-time high and the market is simply euphoric with near all-time low-interest rates. People feel comfortable taking these loans because they are the ones on the party bus, it is going fast and these people don’t want to see that good times eventually do taper off.

The average U.S. citizen pays roughly $550 per month for their auto loan as of 2019. If individuals were to simply put this amount plus the initial investment of $5,000 into an S&P 500 index fund over forty years monthly at a rate of return of 8%, they would have $1,880,216 tax-deferred. Do you love your car that much?! Come on everyone! Even if you were to reduce the average monthly payment in half to $225 per month you would still come ahead with $833,365 extra in retirement. This is just something pivotal to consider if you are falling behind on your investments or if you want to live a very nice lifestyle in retirement these are things to consider. Remember, just because the smiling car dealer with remarkable teeth and a comforting personality tells you everyone is doing this, does not mean you need to also. Go against the grain if you want to have a heightened level of freedom and a wonderful life. Short term pleasures? No. Long term results? Yes.

I will discuss leasing in a future article, but essentially leasing a vehicle is being left with nothing at the end of the term. Leasing would be considered the worst rate of return, but it can be argued that it is the most convenient. I will write a future post on leasing versus buying, but anything with a return of 0% should be avoided at all costs! The main problem with financing is that many buyers are then in the cycle of always making payments for the rest of their lives. Once when the five years are up, the car doesn’t have the latest features and the consumer then typically rolls over the residual value into a new and more expensive loan, and the cycle starts again. The next problem is on average, most cars can lose anywhere between 40-70% of value in the first three years. If the hard times hit and one were to lose their job, they would be underwater on their loan and would either default and get the car repossessed or roll it into another higher rate loan. Both are horrible options. How can one break out of the middle or lower class if one is always paying someone else?

Cars are almost a necessity in the modern world, but if you live in an area where you can take public transit or ride your bike take advantage of this! Honestly, riding a bike or a scooter is much more fun anyways 😊. If you must buy a car, it doesn’t have to be new. Plenty of reliable Japanese makes produce reliable cars at a fraction of the cost that can last 250,000 miles +. In summary, we have a record number of individuals in auto loan debt today, it is sacrificing many people’s retirements and therein introduces unneeded risk into people’s lives. Avoid the pileup and race out of debt. You AUTO know better! Give me a BRAKE!

-Published 11/25/2019


Disclaimer:
Nothing stated in this article is a recommendation from Forehand Financial to buy or sell a particular security or asset class. You should wisely consider your tolerance for risk, time horizon, and financial goals before making an investment. With investing, you run the risk of losing money, always read an investment prospectus and make an informed decision before allocating capital to a particular investment.  

Preparing for a Potential 2020 Economic Downturn

There are countless financial doomsters out there who are always selling fear through the fact that we are facing an impending downturn next year. Sometimes, I find amusement looking at these videos several years later when an economic downturn never actually occurred. I write this article to spread awareness on the fact that we are long in the tooth in this aged bull-market and I want to provide possible triggers that could spark a downturn. I took a poll a few days back and approximately 75% of the voters thought a 2020 recession is going to occur. This post is in response to that. Please note I am not trying to get my audience to go into full panic mode by selling all their equities for cash, doomsday bunkers, precious metals, ammo, and canned food. I want to provide practical insight to the average individual and investor on how to ride out a 2020 recession.  

Historically recessions occur about every ten years and the last one we had was in 2008. On March 22nd of 2019 this year we had an inverted yield curve which has predicted many financial crises within one to two years of it happening. Additionally, the FED is pumping more than $100 billion a month into the economy which is essentially propping up asset prices and sustaining growth. The FED additionally has lowered interest rates on 7/31/19 and 9/18/19 to improve consumer spending and borrowing. These are two pillars that help economic growth, so I wonder if the FED did this being at the helm of the ship to avoid unpleasant waters. What caused the 2008 recession is likely not to cause a 2020 recession because many regulations, policies, and lending standards have been stiffened up to ensure borrowers can service their debts adequately. Two primary things that are likely to ignite the long-overdue recession would be slow in trade between the U.S. and China and the 2020 election. Now, many other things may cause a 2020 downturn, but these are two primary unknowns that can jolt the market significantly depending on politics and policy. There is a slow in trade between the U.S. and China since the 25% tariffs on imported goods to the U.S, and I don’t see any benefit for having this in place from a financial perspective since we are essentially reducing our volume of purchases with higher cost goods from China. In concern of the election, investors and companies are likely to demonstrate more restrictions due to certain programs that could negatively impact the economy. This silence is essentially the calm before the storm.

What can individuals do to prepare for an impending recession? Smile, because you are getting a jump-start and are being proactive with your situation! Now is the time to plan and stress tests, not when we are in the midst of the recession. I won’t bore anybody with repetitive content but as a reminder please ensure all high-interest debt is paid off and an emergency fund is fully underwritten. If a recession is coming, it’s just like being a farmer preparing for a long drought or famine. You need to prepare by cutting costs and doing what it takes to make it through the long winter. This is a great opportunity to work on a side business, get a promotion by taking on more work or taking a part-time job. I think it would be relatively risky to change employers and industries right now, but if you have low overhead go for it as long as you have discretionary income and an emergency fund. This is the best time to take advantage of all company perks because you don’t know if you will be impacted if layoffs occur (squeeze those benefits dry)!

What can investors do to prepare for a recession? Be prepared and start fortifying now! Something significant is bound to happen soon. S&P growth is expected to grow in 2020, but not as much as in 2019 (same with GDP growth). I remember in February of 2017 when the market dropped more than 15%, I panicked and sold some of my investments. To date, this was my biggest investing mistake and the key lesson to learn is to keep emotions out of investing. When you see the market sliding down 3,4 or even 5% look at it as a sale, not a loss. Can those emotions and think logically, unrealized losses are exactly that. Unrealized. When you add to your position at a time like this, you will obtain a much larger upside, while concurrently dampening any losses. When investing, try to look at historical data to see what investments withheld the 2008 recession (recession-proof high dividend-paying stocks with low payout ratios). Another thing that should be done is to re-balance and further diversify your investment portfolio and in doing so you will reduce risk. Purchase high-quality bonds rated (AAA) and stocks with low debt and high dividends to ensure income. This will help significantly offset volatility. You should be in cash but try not to be over deployed in this area. Try to always be aware of what brings the highest returns. In this case, the highest yielding savings accounts bring about 1.8% APY whereas inflation is about 2% YOY, so you are losing .02% which can be many Starbucks trips every year depending on your account balance. 😊  

-Published 12/15/2019


Disclaimer:
Nothing stated in this article is a recommendation from Forehand Financial to buy or sell a particular security or asset class. You should wisely consider your tolerance for risk, time horizon, and financial goals before making an investment. With investing, you run the risk of losing money, always read an investment prospectus and make an informed decision before allocating capital to a particular investment.  

Equity Crowdfunding – A New Way to Invest

I am confident many people have watched the show Shark Tank where a couple of individuals go into a room and pitch their business idea to several angel investors. I find it so fascinating that through a fifteen to thirty-minute pitch, business owners can bring an entirely new set of lifeblood and capital into the business. As an investor and a business owner, there are countless benefits of going this route, but often it can be extremely challenging to connect the Angel Investors with the Business owners and vice versa. So, who fills this gap? How can I get optimal returns on business, increase my risk and reward instead of waiting for an initial public offering half a decade away? Why do I need to be an accredited investor to take advantage of opportunities (Makeover $200,000 per year, or have a net worth of $1,000,000) when I believe in the mission, vision and have assessed the financials as I would with any other investment? I want to capture the upside financially, but also support ambitious and thoughtful entrepreneurs!​

I remember a few years back there was this craze of the crowdfunding platform GoFundMe. We all are familiar with the concept where essentially anybody can create a campaign and raise funds for a given cause. Traditionally, it would be very hard to reach fundraising goals, and if the goals were hit, thousands of dollars of administrative and advertising spend would have had to be blown through. With crowdfunding, millions of people can be reached to help support a given cause. Crowdfunding has now hit the investing space and the opportunities and excitement behind it are endless.

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Let us first discuss some of the primary risks of equity crowdfunding, afterwards we will discuss some of the major benefits of equity crowdfunding. When we buy shares of any major company such as Twitter, Verizon, Facebook, or Apple we can see a return or loss quickly. The brokerage companies (Fidelity, Schwab, Robinhood) will give you the updated price in near real-time. This is great because one can take a capital gain or sell a loss relatively quickly if they met their investment objective or wanted to protect themselves from the downside. This is not the case in equity crowdfunding. It can take several years to see a return (if any) with these types of investments, and one’s shares may not even increase in value. Additionally, if you did find a buyer, it would be harder to sell these respective securities due to the price being stagnant. This tends to steer many investors away, as we often live in a culture of instant gratification and reward. The shares are illiquid and there is not a well-known secondary market, which means you cannot sell until it makes it on a public exchange (if it ever does).​

For large established blue-chip companies (AT&T or BP), we tend to receive payment (dividends) for holding the company. This is seldom when investing in startups, primarily because of the profit they do make, they are focused purely on reinvesting in the growth of the business. The reason the blue-chip companies can pay fantastic dividends is that they are established players that are not as focused on growth anymore, rather they are focused on value. The opposite is true for startup investing, everything must be piled back into the business so the company can see optimal growth, and not just please the shareholders. Also, to reduce risk in these investments, invest in several startups as not all may make it to market. Lastly, as we see with larger companies alike, share dilution is a large risk of investing in startups. These companies are trying to raise as much capital as possible to hit business goals and invest in projects. When the company initiates more shares, your percentage holding is reduced. When investing, try your best to make sure clauses protect you against this in their financial filings.

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Now that I went over the potential risks, there are so many fantastic benefits of equity crowdfunding. First and foremost, you are supporting entrepreneurs that have spent countless hours, made tremendous sacrifices to make their products, services, and dreams to market. 

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​This is so rewarding because you saw an opportunity when a large bank or financial institution did not. You gave the opportunity a chance when nobody else would. It is rewarding from both a support and seeing them grow standpoint, but also if they do make it to public market you will likely see well above 20% returns. This is the risk-reward that you have earned for tying up your money and taking a chance on somebody. Over Sunday afternoon football, or at a bar you always hear one of your friends saying, “oh I should have invested in Apple or Tesla at pre-IPO I would be so wealthy”. Well, now you can invest in companies pre-IPO so missed opportunities are a thing of the past.

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There are many perks that the companies will provide you when it comes to equity crowdfunding, but certain governments will even provide one with tax incentives to offset the risk of early-stage investing. It is something that governments can and should incentivize as it encourages job growth, competitive products, and filling product/service gaps in our market.

Overall, I strongly urge everyone to put at least a few hundred dollars into a startup that they believe in. The risks outweigh the rewards when you look at it from an entrepreneurial standpoint. While there may be some owners that don’t grow the business in the best manner, there are countless entrepreneurs out there that want to bring their vision to the world and they cannot do it without you or me. I urge everyone to learn about the benefits and risks of equity crowdfunding and support entrepreneurship.

-Published 9/6/2020


Disclaimer:
Nothing stated in this article is a recommendation from Forehand Financial to buy or sell a particular security or asset class. You should wisely consider your tolerance for risk, time horizon, and financial goals before making an investment. With investing, you run the risk of losing money, always read an investment prospectus and make an informed decision before allocating capital to a particular investment.