Monthly Archives: August 2015

Investing is a Long-Term Game

Did anyone panic when they saw the market downturn on Monday? I know I received quite a few panicked texts throughout the day.  A lot of people frantically checked their investment balances and let worry set in. I didn’t even check my balances. When it comes to long-term investing, small corrections and market dips really don’t matter.

Building wealth and financial security is at the forefront of many people’s lives. There are a number of strategies to build net worth over your lifetime, but what I’ve realized is that the most effective strategies take time.

The value of time may be the single most powerful tool in building a healthy investment balance and attaining financial independence.

How many of you have had a friend or colleague explain some new strategy to make money fast; like a multi-level marketing scheme or a new cutting edge stock that was guaranteed to have triple digit returns? I can’t count the number of times that I’ve carried on these conversations, and in each case, the money making endeavor never seems to come to fruition.

When I first started my path to financial independence and began investing in the market, I quickly realized that investing for short-term gains is a losing proposition. I was confident that I’d be an incredible stock picker. But what I found out is that pursuing wealth with a short-term mindset will have the unintended effect of ruining your rate of return and your ability to build net worth.  This is exactly why I invest in index funds for my retirement accounts.

I think Warren Buffet said it best when he stated, “if you aren’t willing to own a stock for ten years, don’t even think about owning it for ten minutes. Put together a portfolio of companies whose aggregate earnings march upward over the years, and so also will the portfolio’s market value.” Continue reading Investing is a Long-Term Game

4 Lessons Learned from Job Loss

I started my first “real” job at a global risk consulting firm in Seattle. I had completed an internship at the firm my senior year of college and was selected for a full-time consultant position following graduation.

I was halfway through the CPA exam and was studying for the last two sections while gaining the experience hours necessary to get my license. I remember my first few projects at the firm. Great clients and fantastic opportunities to develop on the job. At the time, the world was my oyster and I couldn’t have been happier with my new career path.

As you can tell by the title of this post, not everything went to plan. In 2008 the great recession hit. By the middle of 2009, our firm’s consulting contracts started to dry up and we were experiencing company-wide layoffs. The Manager that I was working for at the time was let go in the first round of cuts. It was pretty disappointing since I had spent the past year being mentored and building rapport with him.

I continued to see the office numbers dwindle as I survived the first few rounds of layoffs. But eventually I received that ominous email for a meeting with the Managing Partner of the firm.

I was still at that phase in life where I thought I was fairly invincible, so I was a bit in shock when they let me go. The job loss definitely impacted me. It forced me to reflect on my life, my financial plan and career trajectory. Shortly after being let go (and a couple of nights of debauchery later), I vowed that I wouldn’t let the layoff define me.

Here are four key lessons that I learned from a job loss and how surviving a layoff, reviving my career and dedicating myself to building long-term net worth has propelled me to new heights. Continue reading 4 Lessons Learned from Job Loss

Financial Predictions and Goals for my 30’s

Recently I covered some of the biggest financial mistakes that I made in my 20’s. Looking back at your mistakes and evaluating the progress you’ve made is a great way to ensure that you not only continually improve your financial situation, but improve as a person as well. It’s equally if not more important to look forward. What do you expect to accomplish in the next 1, 5 and 10 years? What type of financial plan do you have in place? I started thinking about the next decade (as I’ll be turning 30 very soon) and trying to envision not only where I’ll be financially but what my career and lifestyle will be in my 30’s.

NET WORTH

The past decade has been a great starting point for me to begin accumulating net worth and benefiting from the long term effect of compound returns. Financial independence was something that I focused on early in my 20’s but it was a slow process. Although I’ve always maintained a healthy savings rate (as a % of income), my salary and investment balances were low. It wasn’t until we started to see some great market upswings starting in 2010 that I began to see the tangible effect of compound returns. By the end of 2014 I realized that saving early and often is the only way to accumulate substantial net worth at a young age. Not counting home equity or other personal assets, our investment and savings accounts have grown well into the six figures. Looking back, there are plenty of things that we could have improved to better position us financially, but I think that we’ve made some great progress toward our goals. So now as I enter my 30’s, I have high expectations for where we will be financially by the end of the decade.

In order to be conservative, I assume a 5% average annual rate of return on our investments over the next 10 years and that our contributions or gross savings will not change (although I plan to increase my income as well as my savings rate). With these assumptions I project that our investments should total approximately $750K – $1M before I enter my 40’s. I think as long as we continue to invest in a balanced and diversified portfolio, we should be able to hit that goal. Ultimately, I truly believe that if we’re diligent during our 30’s, we may be able to amass even more net worth, especially if we take into account home equity and other personal assets.

Goal #1: $1M in investments and liquid accounts before I turn 40. Continue reading Financial Predictions and Goals for my 30’s

Sunshine Blogger Award

I was recently nominated by Erik from A More Successful You for the Sunshine Blogger Award. As a new finance blogger I really appreciate the nomination. I started this blog as a creative outlet to cover topics that I’m passionate about.   It’s been a great experience so far and a perfect outlet for an extroverted finance geek stuck in a structured 9-5.  One thing that I’ve realized is that the personal finance community is an incredible group of extremely helpful and knowledgeable individuals. So, thanks Erik! Glad to participate in this award and as a nominee I’ve been asked to answer a few questions:

1. What is one that thing that you couldn’t go without each day?

I’m going to justify a stereotype of the millennial generation by saying my smartphone. I use my phone on a daily basis for research on the go, managing all of my various email accounts for my 9-5 and side gigs, and maintaining contact with my wife and kids throughout the day.

2. If there was one topic that you wish you were an expert in, what would it be?

Oceanography! In college I took a few oceanography courses and even considered adding a minor in oceanography to my Accounting and Information Systems degree. In the end, I didn’t pursue the field any further but I’ve always been fascinated by marine sciences and the many incredible animals that inhabit the ocean. (After looking at my answer to this question I’m starting to realize that even if I didn’t pursue accounting and finance I’d still be a nerd…no matter what field I chose…)

3. In 3-5 years, where do you want to be in life (could be financially, mentally, physically, etc.)?

Well-balanced. From finances, to career, to family life, to physical wellness; I want to lead a balanced lifestyle. I truly think that’s what it’s all about. I definitely want to excel in each aspect of my life, but not at the sacrifice of the others. I believe that leading a happy and fulfilling life requires a healthy balance in all facets of how you live everyday.

4. Describe your perfect day. What steps are you taking to build towards having that day?

My perfect day would start with waking up to the sunshine coming through my window and not my alarm clock (or my kids jumping on my chest). Having a great cup of coffee and breakfast to get the day started, right before getting in some exercise. Then it would consist of spending a full day with my family doing something awesome. Whether we head into Seattle to go to the zoo or aquarium (oceanography nerd still intact), hit the Olympic national forest for a hike, or just relax poolside with the little ones.  Hopefully, if I stick to my financial plan I will reach financial independence and everyday can look like this.

5. If you could start all over in a new profession, which profession would it be and why?

This is a tough one. I’ve thought about how different things would be if I had pursued law school, computer science, or the marketing field. In the end, I think if I had to start over I’d pursue software development. There are so many great opportunities for developers and there is something satisfying about coding and creating something. Whether you’re troubleshooting bugs or creating your own system, it seems like a very challenging and rewarding profession.

I’d like to nominate DC at Young Adult Money and John at Frugal Rules. Nominees are encouraged to answer the questions below, nominate some additional bloggers and provide five more questions for those bloggers to answer. Thanks!

  1. What is one of your biggest failures or mistakes that you’ve made when it comes to personal finance?
  2. What is one of your biggest successes that you’ve experienced when it comes to personal finance?
  3. If you had to compare yourself to one animal, which would it be and why?
  4. What is the best piece of advice you’ve ever received?
  5. If you could wake up in the body of someone else, who would you pick and what would you do?

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Photo cred: Captain Chim