Investing for first-time investors can be pretty overwhelming. There are so many variables out there and they can be pretty confusing. There are different retirement accounts, investment accounts, some account let you invest in different things, etc. But perhaps the most overlooked item is not knowing what your tolerance for risk is. And not only that, making sure your investments actually reflect how much risk you are willing to take on.
When it comes to your own personal finances there are no dumb questions; however, many people are intimidated by the industry jargon, or things they don’t know much about, and thus are very self-conscious to not ask questions for the fear they may come off as unintelligent. I’ve made it my mission to make my company as inviting as possible because I understand how complicated many of these topics can be. So, today’s post is about one of the fundamental building blocks for personal finance. To make this as simple as possible, this post is part dictionary, part examples. The concept is the difference between a stock and a bond.
The purchase of your home could easily be one of the largest transactions you will make in your life. Buying a home can be an emotional process-- one where you are tempted to think more about what you want right now and therefore lose sight of what is best for you and your family in the long run. The decision to choose a 15 year mortgage or a 30 year mortgage may end up affecting your personal finances more than any other decision you'll make. Unfortunately, many people don’t look much further than the larger monthly payment of the 15 year mortgage, so they instinctively choose the 30-year mortgage. This is a decision that can cost them hundreds of thousands of dollars.
One of the easiest things to overlook during changing of employers is what to do with your old 401(k). And sometimes you get another 401(k) when your company is acquired or merged with another company. And in today’s job market, it’s likely at some point in your working years you are going to have more than a single 401(k). It’s rare an employee spends their entire career at a single company anymore.
One of the questions we often get is “What does a financial plan look like”? Without actually seeing one, it can be difficult to wrap one’s head around. So look no further than this sample financial plan I completed for Jim and Pam Halpert (of “The Office” fame). While they lived in Pennsylvania for the show, in this plan they are living in Tennessee.