Some Clear Thinking About America’s “Downgrade”

Some Clear Thinking About America’s “Downgrade”

Notes From the Field By Simon Black Sovereign Man August 7, 2023

Last week, the credit rating agency Fitch downgraded the US national debt.  Predictably, senior officials like Treasury Secretary Janet Yellen claimed Fitch’s “flawed assessment was based on outdated data” and that the downgrade was “entirely unwarranted.”

What a joke.

Just consider the US government’s surging interest payments on the national debt — This Fiscal Year (which ends on September 30) the Treasury Department expects to spend a whopping $897 billion just to pay interest on the national debt. That’s up SEVENTY PERCENT over the past three years. It’s an unbelievable turn for the worst.

The national debt is already more than $32.6 trillion, and it’s climbing rapidly thanks to unrestrained spending.

Fitch called attention to this reality in citing the government’s “high and widening deficits”. And this doesn’t even factor in looming emergencies like the insolvency of Social Security.

The Social Security Administration itself admits that its key trust funds will run out of money within a decade... forcing the government to either default on the promises they’ve made to millions of retirees, or to engage in the largest bailout in the history of the US government.

Also factoring into Fitch’s US economic outlook is the absolute horrific level of governance in America.

Political institutions have lost the ability to cooperate, compromise, and make sensible decisions for the good of the nation.

Obvious risks are ignored until they balloon into major crises... yet politicians only implement a band-aid fix that kicks the can down the road a few more years.

Bizarrely, socialism is becoming more and more popular even though the federal government has an objectively horrible track record when it comes to spending money wisely.

And yet there is a growing contingent among voters that the answer is more government.

Another key issue denting US credibility is the rapidly deteriorating rule of law.

It’s ironic that a former President has been charged with “conspiracy to defraud the United States” by lying in order to disrupt the lawful function of government.

I’m curious why that standard has not been applied uniformly to other government officials.

It wasn’t that long ago when Senator Chuck Schumer disagreed with a Supreme Court decision and announced (rather menacingly) to Justices Gorsuch and Kavanaugh, “You have released the whirlwind and you will pay the price. You won’t know what hit you if you go forward with these awful decisions.”

Schumer’s words helped spark death threats, protests, and the attempted murder of a Supreme Court Justice. Was this not an attempt to disrupt the lawful function of government?

The same can be said of people like Fauci who told multiple lies and censored scientific debate, thus disrupting the lawful function of government during the pandemic.

Then there was Congressman Adam Schiff, who waged Holy War based on the Russian Collusion false narrative.

The investigation was full of lies and was meant to sway a Presidential election. Was this not an attempt to disrupt the lawful function of government?

This list is truly endless. But it shows more and more that the weaponization of government, from the IRS to federal police agencies, makes people less free.

Ironically, however, it’s a great time to be a criminal in America. Or simply ‘illegal’ in any sense of the word.

The immigration system is a mess, and rather than simply fixing it to make legal immigration more efficient, politicians gaslight anyone who thinks it’s a problem to have millions of people flowing across the border unchecked.

Woke prosecutors are downgrading or refusing to prosecute serious crimes; many have implemented ‘catch and release’ bail policies which immediately put criminals back onto the streets.

Yet they do prosecute good Samaritans who step up to protect themselves and others around them.

The level of lawlessness and overall disregard for basic human decency is just astonishing; we’ve all seen the videos of brazen shoplifters in California, or chaotic mobs on the streets in Philadelphia or Chicago.

Just don’t call it a ‘mob’. After several hundred teenage looters stormed downtown Chicago last weekend, the Mayor berated a reporter and said it’s “not inappropriate” to call it a mob, and insisted they should be called “large gatherings”... just like the “mostly peaceful” protests of 2020.

This level of youth crime is not surprising given that 69% of American 8th graders aren’t proficient readers. 73% don’t know math and science.

But who can blame them given how quickly math and science are being rewritten through the lens of diversity and inclusion.

While individual teachers can be amazing human beings, the same cannot be said about the bosses who control major teachers unions. The last thing these bureaucrats seem to care about is educating young people. They’re far more interested in indoctrination.

And this leads to an extremely polarized society which is hilariously ignorant about their fanatical beliefs.

I recently saw a video of a white kid being threatened because he had ‘culturally appropriated’ his dreadlock hairstyle; little did his accusers know that dreadlocks were worn by Bronze Age civilizations in Europe, and not invented by Bob Marley.

But why let truth get in the way of petty anger.

People are enraged, intolerant, and can’t seem to cope. Shootings, road rage incidents, and general violence are on the rise, and there’s very little sense of national unity.

Even a national emergency like the pandemic didn’t unify the nation; in fact, the irrational government response, nonstop propaganda, and politicization of science made people even more divided.

I’ve been writing about these issues since I started Sovereign Man more than 14 years ago. Back then it was ‘fringe’ to talk about Social Security’s insolvency, bank failures, huge debt problems in America, rising social chaos, decline in freedom, etc.

Today it’s all mainstream.

In downgrading US debt, Fitch’s arguments look like they have been taken directly out of these pages, and they’re echoed in publications like the Wall Street Journal.

All the above said, however, I think it’s also important to see all sides and be intellectually objective. Not everything is negative.

For example, the US still has a highly diversified economy with extensive capital markets, tremendous natural resources, and a deep pool of talent.

It’s curious to me that so many “experts” tend to choose one side or the other. There’s a lot of doom and gloom on the Internet, as well as mainstream voices who obsessively chant “USA #1”.

Warren Buffett is one of America’s most famous cheerleaders. Along with Joe Biden and Treasury Secretary Janet Yellen, Buffett seems dismissive of any problems in the US economy.

So which view is correct? Well, both of them.

For centuries, scientists (led by Isaac Newton) believed that light was a special particle of energy. But eventually Newton’s ‘particle’ theory of light was disproven, and scientists concluded that light was actually a wave.

It was’t until the early 20th century that physicists began to accept that light behaves both as a particle and a wave. Albert Einstein summed this up when he said,

“We are faced with a new kind of difficulty. We have two contradictory pictures of reality; separately neither of them fully explains the phenomena of light, but together they do.”

Similarly, there are two contradictory pictures of America. One is that the nation is still strong. The other is that it is in terminal decline. Just like light, they’re both right.

The ‘America strong’ reality is still valid. In fact I would argue that most of the world would still prefer US leadership over Chinese hegemony.

And despite such debilitating economic problems, I’ve written several times before that these challenges are still solvable.

There’s at least one historical instance we’ve talked about in the past of a superpower (Britain in the 1800s) that was able to grow its way out of terrible economic, social, and national defense challenges.

But I wouldn’t want to bet the house on this happening again. And that’s why it makes so much sense to have a Plan B.

Have another place to go. Take steps to reduce your taxes. Safeguard your retirement. Diversify your savings and investments outside of your home currency. Protect your assets. Etc.

That way, whatever happens, you will be able to respond from a position of strength.

To your freedom,  Simon Black, Founder   Sovereign Man

https://www.sovereignman.com/trends/some-clear-thinking-about-americas-downgrade-148001/

The Five Biggest Things That Confuse Americans About Retirement

The Five Biggest Things That Confuse Americans About Retirement

Retirement: What people say about their readiness

Kerry Hannon   Sun, August 6, 2023

Americans think they'll need to save $1.8 million for a comfortable retirement, according to a new survey. But for many of them, that’s just a shot-in-the-dark guess.  Many have no idea how much they should save or how to invest whatever money they sock away. They’re baffled by many other essential facets of retirement planning, the survey released this week from Charles Schwab showed.

That’s a real problem because what Americans save is supposed to become a major source of income in retirement, and, if they're clueless on the basics, many may under-save and face a shortfall in their old age.

"The workers we surveyed may be 5, 10, 20, or even 30 or more years away from retirement, but the gap between now and the future can make it difficult for savers to nail down specifics about what they imagine their lives will look like in retirement," Marci Stewart, director, communication consulting and participant education for Schwab Workplace Financial Services, told Yahoo Finance.

"That raises the bar on providing access to quality education and professional advice."

Here are the five biggest things that confuse Americans about retirement, according to the Schwab poll.

How much should I save?

More than four in 10 workers (41%) polled said they need help calculating how much money they need to save for retirement. In fact, a recent survey from Transamerica Center for Retirement Studies actually found that 45% of workers said they guessed the amount they need to save for retirement.

"Retirement calculators are widely available online and they are great tools to help people get a sense of whether they are on track," Stewart said. Check out AARP, Bogleheads, Fidelity, Schwab, or Vanguard to start.

Plan on some soul-searching and sleuthing.

"Consider what you need to enjoy the life you want to in retirement,” Liz Davidson, CEO and founder of Financial Finesse and author of "Money Strong: Your Guide to a Life Free of Financial Worries," told Yahoo Finance. "That number may be significantly lower than what you need right now. From there, consider what income sources will be there for you in retirement, like Social Security or even a pension."

If you have a personal my Social Security account, you can get an estimate of your future monthly retirement benefits and see the impact of different retirement age scenarios from retiring right now to your full retirement age or at age 70 based on your actual Social Security earnings record. If you don't have an account yet, you can set one up on the site. You might factor in a scenario where Social Security benefits are reduced 25% compared to your estimated statement to take into account the potential for the 2034-35 estimate for depletion of the Social Security Trust Fund.

One way to boost retirement savings is to check to be sure you are saving enough of your income in your employer-provided plan to score matching funds they contribute, Davidson said.

To continue reading, please go to the original article here:

https://www.yahoo.com/finance/news/the-five-biggest-things-that-confuse-americans-about-retirement-161712022.html

Nobody Told Me

Nobody Told Me

Jonathan Clements  |  February 8, 2020

I HAVE DEVOTED my entire adult life to learning about money. That might sound like cruel-and-unusual punishment, but I’ve mostly enjoyed it. For more than three decades, I’ve spent my days perusing the business pages, reading finance books, scanning academic studies and talking to countless folks about their finances. Yet, despite this intense financial education, it took me a decade or more to learn many of life’s most important money lessons and, indeed, some key insights have only come to me in recent years. Here are 10 things I wish I’d been told in my 20s—or told more loudly, so I actually listened:

1. A small home is the key to a big portfolio. My first wife and I bought a modest house, because we worried that we couldn’t really afford anything bigger. I ended up living in that house for two decades.

Financially, it turned out to be one of the smartest things I’ve ever done, because it allowed me to save great gobs of money. That’s clear to me in retrospect. But I wish I’d known it was a smart move at the time, because I wouldn’t have wasted so many hours wondering whether I should have bought a larger place.

2. Debts are negative bonds. From my first month as a homeowner, I sent in extra money with my mortgage payment, so I could pay off the loan more quickly. But it was only later that I came to view my mortgage as a negative bond—one that was costing me dearly. Indeed, paying off debt almost always garners a higher after-tax return than you can earn by investing in high-quality bonds.

3. Watching the market and your portfolio doesn’t improve performance. This has been another huge time waster. It’s a bad habit I’m belatedly trying to break.

4. Thirty years from now, you’ll wish you’d invested more in stocks. Yes, over five or even 10 years, there’s some chance you’ll lose money in the stock market. But over 30 years? It’s highly likely you’ll notch handsome gains, especially if you’re broadly diversified and regularly adding new money to your portfolio in good times and bad.

Over the past decade, I’ve upped the bond position in my portfolio, so today—at age 57—I’m at 60% stocks and 40% interest-generating investments. (The latter includes the private mortgage I wrote for my daughter.) But long before then, I spent an awful lot of time debating whether to invest more in bonds. It simply wasn’t necessary.

To continue reading, please go to the original article here:

https://humbledollar.com/2020/02/nobody-told-me/

15 Most Important Assets That Will Increase Your Net Worth

15 Most Important Assets That Will Increase Your Net Worth

Jennifer Taylor  Fri, August 4, 2023

Your net worth is more than just the balance in your bank account. It's a measure of your financial health.  To get the answer to "What is my net worth?" subtract your total liabilities from your total assets. If you're trying to figure out which assets are the most valuable or will otherwise give your net worth a boost, here's a rundown of 15 critical assets. Learn how you can start making lucrative investments toward your future.

1. Owning Your Primary Residence

Homeownership ranks among the most common ways people gain a substantial increase in net worth. Instead of choosing the traditional 30-year mortgage, opt for a 15- or 20-year term, so you can pay it off more quickly, which will result in a significant asset and savings on interest. And if you decide to sell after you pay your home off, capital gains are tax-free up to $500,000, as long as your status is married filing jointly.

Renting might make more financial sense than owning in some high-priced urban areas, depending on whether the cost of ownership is reasonable in relation to total living expenses.

2. Second Home

Second homes are a savvy way to earn passive income via short-term rental platforms like HomeAway, VRBO or Airbnb. At first, you can use the extra income to help pay off your mortgage more quickly. Then, once you pay off the mortgage, you'll own a significant asset while still benefitting from the passive income of renting it out if you choose -- both can result in a nice gain in your net worth.

3. Retirement Savings

Retirement might be decades in the future, but saving now can enhance your net worth.

To continue reading, please go to the original article here:

https://finance.yahoo.com/news/15-most-important-assets-increase-133014378.html

Coping With The Guilt Of Losing Money

Coping With The Guilt Of Losing Money

By  THE INVESTOR 

I accept it’s normal to feel frustrated, angry, or even downright stupid when you lose money on your investments.

But what about guilt?   My portfolio’s fall from its peak value in summer 2007 to a low in October 2008 represents a big loss for a 30-something private investor like me: at least a couple of years of after-tax income in cash terms.  More importantly, the losses meant I had fewer options in October 2008 than the year before. I’d originally begun investing to build up a house-buying war chest for when the over-valued housing market corrected itself.

After several years waiting, house prices were finally falling, but my investments had fallen further.  It was my sister who put it simplest and best, when I explained to her my fate:

“Ah, I see. If only you’d sold all your investments and put the money into a savings account! Now you’d have even more money, and you could buy a cheaper house.”

My sister was a 100% right.

Being told what I did wrong by my sister, who takes no real interest in money, might have hurt my pride. But then my emotional state has taken several turns during the bear market. I’ve felt:

Frustrated:  After half a decade of waiting for property prices to fall and saving as much as 50% of my annual after-tax income, I’d thrown away my ticket to the ball.

Angry:  At the world, and at the markets. What were the chances of a once in a hundred year credit crisis coming along just when I was finally getting ready to buy a house?

Foolish:  If I’d thought property prices would fall so far, how could I have missed the connection with the stock market? Wishful thinking, perhaps?

Guilty:  My family background is not a wealthy one, and the money I’d lost was modestly substantial – more than my parents’ life savings. What was I thinking playing roulette with the market and exposing myself to such losses?

Despite these churning emotions, I didn’t sell up in despair. Instead, I kept buying while shares were cheap. I did what history and the likes of Warren Buffett say you should do – hanging in and even buying when others were fearful.

Time will tell if this faith in the stock market simply compounds my losses or leads to a recovery, but I’m glad I’ve stuck to the rational line.

Here some tips that might help you if you’re also feeling guilty or giving in to bear market despair.

1. Don’t take it personally

The stock market doesn’t know or care that I was saving money for a house, or what I’d given up. The world is a billion times bigger than our own investments, and our good or bad decisions. Market declines of 40% will leave anyone’s portfolio battered. A bear market is not your fault.

2. Accept declines are as inevitable as gains

To continue reading, please go to the original article here:

https://monevator.com/coping-with-the-guilt-of-losing-money/

8 Insights Only the Self-Made Super Wealthy Understand

8 Insights Only the Self-Made Super Wealthy Understand

Billionaire Ken Fisher Shares 8 Insights Only the Self-Made Super Wealthy Understand

Wonder what it's really like to strike it rich? Billionaire Ken Fisher explains the perspectives of the self-made wealthy.

 BY KEVIN DAUM  Inc. 500 entrepreneur and best-selling author@KevinJDaum

Not all entrepreneurs are in it for the money, but gaining wealth is certainly among the top motivators for company building. Not surprisingly, having great wealth brings it's own unique responsibilities and circumstances that few get to experience first hand.

I recently had the privilege of interviewing billionaire Ken Fisher, founder, chairman, and CEO of Fisher Investments, best-selling author, Forbes magazine columnist, and No. 225 on the Forbes 400.

 Fisher provided a candid, no-holds-barred look at the perspective of the self-made super wealthy.

Here are his insights.

1. It Isn't Pursuit Of Wealth, But Pursuit Of Passion That Creates Wealth

Focusing on money won't likely get you to the Forbes list like Fisher. He aptly states: "Most people don't get super wealthy by accumulating money. They get super wealthy by following some dream they are passionate about, whether its starting and running a business, or being a rock star musician or a visual entertainer."

He points out that most of the super wealthy overshoot their personal goals, and yet they are still driven by their passion. The super wealthy know that if you pursue your passion, the money will come.

2. After A Certain Monetary Threshold, The Desire Isn't For More Wealth, But More Time

There is very little that the super wealthy cannot buy. As the wealth keeps accumulating, spending becomes less of a joy or ambition. "After a certain point," Fisher explains, "there isn't much more you can think of that you want."

What becomes more desirable is time to enjoy life. "The vacation homes, cars, boats, and wardrobes are just more stuff to deal with." Fisher observes. "All that stuff clutters your time usage, so at a certain point, the wealthier you get the more you covet time."

3. Everyone You've Known Forever (Except Your Spouse) Will Think You've Changed

To continue reading, please go to the original article here:

http://www.inc.com/kevin-daum/billionaire-ken-fisher-shares-8-insights-only-the-super-wealthy-understand.html?cid=sf01002

What You Should — And Shouldn't — Do If You Win The Mega Millions Jackpot

What You Should — And Shouldn't — Do If You Win The Mega Millions Jackpot, According To An Expert

Kate Murphy·Producer  Updated Fri, August 4, 2023

There’s still a chance — 1 in nearly 303 million – for a lucky winner to score the Mega Millions jackpot, which climbed to an estimated $1.25 billion this week. If won, this jackpot would be the fourth largest grand prize won in the game's history, according to the Mega Millions website.

While securing the golden ticket is all a matter of luck, holding onto one’s newfound fortune after such a windfall requires some strategy. In fact, compared to the average American, lottery winners are more likely to declare bankruptcy within three to five years, due to a lack of financial planning.

Yahoo News spoke to Andrew Lokenauth, a personal finance expert and founder of thefinancenewsletter.com, for some tips on what to do, and not to do, if you are the jackpot winner. Some answers have been lightly edited for length and clarity.

Someone Just Won The Lottery Jackpot, What Should They Refrain From Doing?

Andrew Lokenauth: One: Don't sign the ticket, because once people know who claimed it, everyone is going to be rushing after you. I would say put it in a safe place, and depending on the state you're in, you can claim it anonymously (Delaware, Kansas, North Dakota, Ohio, South Carolina or Maryland).

Two: Don't tell anybody. This leads back into the first point because you could become the victim of robbery, or people can try to extort you.

Go private until things get under control. You'd want to delete your social media or make it private until you figure things out. Legally change your address to a P.O. box. And get a new phone number and email address, because it can be easy to find both online.

What Actions Should Lottery Winners Take?

To continue reading, please go to the original article here:

https://news.yahoo.com/what-you-should--and-shouldnt--do-if-you-win-the-mega-millions-jackpot-according-to-an-expert-154711354.html

Why an Accountant Is Worth the Money

Why an Accountant Is Worth the Money

By Max Wong WiseBread

 Anyone who is at all familiar with me knows that my yearly earnings put me squarely in the economic category commonly referred to as the Working Poor. So when I mention that I pay $550 a year for an accountant to help me with my finances, people typically give me that sad look that they reserve for mediocre subway violinists and ugly babies.

And then there's the thick pause in the conversation when the other person decides against asking this question out loud: Um, don't you write about personal finance?

In answer to the silent, questioning looks, and in defense of my financial decisions, there are so many reasons why my accountant is worth the money.

1. An Accountant Is Cheaper Than Therapy

Oh my God. What if I forget something?

I would rather get oral surgery than do my own taxes. My financial life is complicated. I own a rental property. I run two separate businesses out of my home. I got 1099 forms from five different companies last year. I have a grant. I go to school part time. There are so many moving pieces in my life that just organizing my paperwork in preparation for my tax meeting with my accountant stresses me out.

As a reasonably organized person who spends a lot of time thinking about personal finance, I'm in that dicey position of knowing enough to get myself into trouble, but not enough to get myself out. I would rather pay and be sure that my finances are in order than spend hours filing my own taxes and still feel dread.

Additionally, my accountant is available to answer my financial questions all year long. While some accountants bill by the hour, my accountant rolls my calls about health care costs and asset depreciation into that yearly $550 flat fee.

2. They Can Save You Time (and Time Is Money)

I do my taxes once a year. My accountant does taxes all year long and all the livelong day. Guess who's better at doing taxes?

My accountant is a virtuoso with a calculator. She can hit the keys with the speed and precision of a concert pianist. Doing your own taxes isn't rocket science. That said, my father-in-law is actually a rocket scientist and even he uses an accountant! Why? Because it's cheaper for him to outsource his tax chores to a professional, so he can use the time he saves to make money doing something he enjoys.

My accountant also enjoys reading up on the latest changes in the tax code. Reading changes to the tax code is something I am sure that I don't want to do even once, never mind making it a yearly tradition.

Because she stays on top of her game, she is able to help me make the best choices about how and when to spend and save money.

3. They Can Recommend Legal Loopholes to Save You Money

To continue reading, please go to the original article here:

https://www.wisebread.com/14-reasons-why-an-accountant-is-worth-the-money?ref=seealso

Magnitude Matters

Magnitude Matters

Rand Spero  |  HumbleDollar

WHY DON’T WE spend our time and energy on financial issues that have the greatest impact? We’ll drive to a more distant gas station to save 10 cents a gallon, but fail to do all the maintenance needed to extend the life of our car. What lies behind this sort of behavior? The savings from getting the best price per gallon is concrete and immediate, while maintaining our car is long term and abstract. It’s simply easier to focus on the 10 cents. I have a relative who stayed at a $500-a-night luxury hotel in downtown Boston. He emailed me to bring him water when I visited, because the hotel charges $5 per bottle.

Yes, the hotel is pushing the envelope with its water bottle charge, but my relative claiming he won’t pay “on principle” seems like a stretch. Such “injustices” occur when we have concrete price expectations, while we happily tolerate other, much higher costs.

Deciding on a college is a huge investment of time and money. Yet as my family dashed from one campus visit to the next, I wondered if we were being good consumers. Were we prioritizing colleges based on which tour guide captured the interest of our daughter?

Perhaps we needed to slow down and do more extensive research. When my daughter decided to apply early decision to a nearby university, we suggested she visit the school a second time. She spent a full day talking to students and sitting in on classes, and came back enthused. It proved to be a good fit.

The importance of considering the financial magnitude of a decision became apparent when I went house shopping with a friend. He was moving into town for work and wanted to get settled quickly.

As we raced between showings, one desirable property stood out. There was a crowd at the open house and the broker indicated it would move fast.

 All bids would be accepted by Sunday evening and the winner would be announced the next day. My friend got caught up in the frenzy and wanted to know what bid might be needed “to win it.”

It struck me as amusing that we had spent just 45 minutes looking at the desired house for sale. I asked my friend how much time he would spend looking at a high-priced sweater. He proudly indicated that he was a bargain shopper.

My friend added that, if he were going to pay a lot for an item of clothing, it had better be worth it. Yet soon he could be obligated to spend hundreds of thousands of dollars for a house, initiating this decision after spending less than an hour.

Want to make better purchasing decisions? Try asking these five questions:

What dollar amount are you actually spending or saving?

Are you sidetracked by focusing on low-cost items that are more easily understood?

Do you cite “principle” to defend fretting over small expenditures?

On big ticket items, have you established clear criteria before purchasing?

Have you allocated time and energy that’s appropriate, given the financial magnitude of a decision?

To continue reading, please go to the original article here:

https://humbledollar.com/2020/01/magnitude-matters/

Stop Budgeting Like the Middle Class and Do What the Rich Do Instead

Stop Budgeting Like the Middle Class and Do What the Rich Do Instead

Angela Mae Wed, August 2, 2023 

A lot of people believe all they need to do to become wealthy is to earn more money or to save what they do have. This isn’t all that surprising, considering how many people subscribe to the idea that their income directly corresponds to their wealth.

But what many people who are considered “middle class” don’t realize is that earnings are just one part of the bigger picture. The people who achieve true wealth are those who know how to spend and invest the money they earn in ways that will benefit them in the long run.

If you’ve been living with a middle class mindset and want to make a change, you might need to take a moment to consider the behaviors or actions that keep you from becoming rich. Here are some of the most common things people in the middle class tend to do that the rich do not — and things the rich consistently do to maintain their wealth.

The Rich Invest While the Middle Class Do Not

The middle class tend to save their money, while the wealthy invest theirs.

Robert R. Johnson, Ph.D., CFA and professor of finance at Heider College of Business at Creighton University, gave a historical look at the stock market.

“From 1926 through 2022,” he said, “the stock market provided returns that far exceeded treasury bills or treasury bonds. According to data compiled by Ibbotson Associates, large capitalization stocks — think S&P 500 — returned 10.1% compounded annually. Over that same time period, long-term government bonds returned 5.2% annually and T-bills returned 3.2% annually.

“To put it in perspective,” he added, “a dollar invested in the S&P 500 at the start of 1926 would have grown to $11,535 (with all dividends reinvested) by the end of 2022. That same dollar invested in T-bills would only have grown to $22.05. That same dollar invested in long-term government bonds would have only grown to $130.89. It pays to invest and not simply save. And it’s not a close call.”

Justin Albertynas, CEO of RatePunk, added, “Wealthy individuals also prioritize long-term investing strategies. They are more likely to hold onto their investments, benefiting from compound growth over time. According to a study by Spectrem Group, 75% of millionaires in the US attribute their wealth to long-term investing.”

Middle Class Individuals Rarely Have Multiple Income Streams

To continue reading, please go to the original article here:

https://finance.yahoo.com/news/stop-budgeting-middle-class-rich-150019991.html

Rich People Do These 4 Things to Stay Wealthy (& So Can You)

Rich People Do These 4 Things to Stay Wealthy (& So Can You)

Wola Odeniran, CEPF® Thu, August 3, 2023

Advisors often work with high-net-worth clients and are able to understand the expectations wealthy clients have about managing their finances. The good news is that some of those takeaways can be applied to clients who are not high-net-worth individuals.

Read on to understand four lessons advisors can take from high-net-worth clients – and how they can be applied to any client.

Almost Everyone Needs an Estate Plan

Estate-planning practices apply to every client, no matter their tax bracket, says Renee Fry, co-founder and CEO of Gentreo, a company that provides estate-planning document services.

“Financial advisors should take the example of their high-net-worth clients and apply estate-planning principles to all their customers, regardless of income bracket,” Fry says. “Every person has an estate, regardless of their income level, and thus, everyone should have a plan in place to ensure that their assets are distributed according to their wishes.”

Proper planning can help advisors build a bigger client base. “By doing so, advisors can help ensure their client’s financial security, build long-term trust and differentiate themselves from their competitors,” Fry says.

Outside Advice Is Valuable, Even When Clients Are Knowledgeable

Some clients may be titans of business or professional heavyweights, which has helped them benefit financially. “But that doesn’t mean that they know how to budget, how much insurance to have, how to invest or what to do with their wealth in terms of estate and charitable giving,” says Amy Jo Lauber, a certified financial planner and founder of Lauber Financial Planning.

Lauber also says that non-high-net-worth clients, especially those looking to improve their financial situation, often have more financial awareness than those who are wealthy.

To continue reading, please go to the original article here:

https://www.yahoo.com/finance/news/4-lessons-advisors-learn-high-170850089.html