There are a bunch of personal finance websites and blogs out there, and many that focus on women. I think this is great; the more information we have access to, the better choices we can make for managing our money. But with so many choices out there, why check out Money Moxie? Here are 5 reasons to stay on top of your personal finances with Money Moxie–and tell your friends!
1. We won’t tell you to ‘lean in.’ Actually do whatever you want.
With due respect to Sheryl Sandberg and successful women everywhere, we all follow a different path. Some of us are children of immigrants, some have worked our way through college and business school (even against our parents’ wishes who preferred that we just settle down and get married), some of us never went to college but managed to build a successful business anyway. There is no one recipe of success. Sure, for some women, it’s a gradual rise to the top, from private school to Ivy League to management consulting to big corporation to start-up sensation. For others it’s a sloppier zig-zag of good luck, dumb mistakes, stupid risk-taking and amazing success. But somehow we ‘did it’ or we’re in the process of ‘doing it’ and we all have a distinct story of our own to share.
2. Saving money is not about foregoing the ‘mocha skim latte.’ Personally I don’t remember the last time I went to Starbucks; it’s not because of the cost, it’s that I feel like my stomach lining keeps getting thinner and more porous every time I get a coffee there. But the point is, saving money isn’t about saving $4.00 a day. It’s about knowing ourselves and what’s important to us.
Does money= financial freedom and home ownership?
Does money= the opportunity to make more money?
Does money= the freedom we need to ‘find ourselves’?
Those are the questions we should be asking ourselves and once we know the answer, the rest is easy.
3. We love ‘shot-callers.’ Every entrepreneur, business owner, freelancer, artist or professional woman has a unique story and experience– how she made it, how she spends her money, how she prioritized to get herself up the ladder. We love meeting these courageous, smart women, and sharing their inspiring stories.
4. We talk about the economy, the deficit, taxes and the election. While these topics may cause some droopy, glazed-over eyes, they’re important. The decisions made in Washington directly impact our wallets. On the other hand, who wants to spend hours watching C-Span when we could/should be watching “Orange is the New Black?” We comb through the WSJ so you don’t have to (unless you want to!)
5. We are a website for hustlers. Sometimes when you break free from the pack and start your own project-whether it’s a new business, a film production company, a freelance lifestyle — sacrifices have to be made. We work several jobs at a time, we work on our passion while we’re ‘working’ at our day job, we’re constantly talking up or about our project. But that also means that money, time and resources have to be managed wisely. We often say ‘no’ to nights out with friends so we can stay home and work on our business plan. Sometimes we say ‘yes’ to nights out with friends so we DON’T have to spend another night working on our business plan. Either way, been there done that. And we wouldn’t trade the experience and the lessons for the world.
By Lena Rizkallah, Money Moxie
My teen-aged nieces came to visit me in New York a few weeks ago. Besides spending 3 hours agonizing over what color “cheeksters” to buy at Pink, waiting another 45 minutes for them to stand in line to try on ONE tank top at H&M, and then rounding out the rest of the day with more, um, shopping (ie. THEM going through racks of midriff-baring tops and teeny ‘distressed’ jean shorts, ME sitting in a chair boyfriend-style playing Fruit Ninja), we also spent some quality time taking Instagram pictures of each other and watching YouTube on our Iphones. In addition to finding out which stores in Soho have the most comfortable chairs (Uniglo and Arsizia tied for first place, Mango came in dead last), I SURE learned a lot that weekend.
For example, I had heard of but never exactly knew what ‘twerking’ was until my niece pulled up about a dozen examples of little 13-year old girls jiggling their behinds, sometimes against a wall, backed up to their BFF or upside-down. But now I know, so thanks D and K!
I had also never watched the show “Orange is the New Black” until D and K told me how awesome it is and stayed up all night watching back-to-back episodes. But everyone can calm down because now I know what it is and as soon as I join Netflix and watch all the episodes of “Arrested Development,” I’m on it.
My nieces also introduced me to the wild and crazy world of “selfies.” I’ve never really had a problem taking a picture of myself in different poses, as long as I could edit, delete or Photoshop them until absolutely perfect. But with a selfie, you take the picture and then post it all over the place, like on Twitter, Instagram, Facebook, Snapchat, etc. All weekend, I watched my nieces photograph different variations of “duckface” or close-up selfies with each other, or with my dog, or in a Pink push-up bra showing off cleavage, and I was amazed at their bravado and lack of self-consciousness. They didn’t care if the picture didn’t show them in their best light or the photo revealed some flaws–not that they have any. But they put their selfies out there for the world to see, and they kept them coming!
Savings Through The Years
The idea of a selfie got me thinking about how honest we are with ourselves when it comes to saving, or whether we ‘edit’ some of the truth behind our savings habits. Up until the mid-1980’s Americans saved a significant amount of their earnings. When employer saving plans like 401k plans were introduced in the 1980’s, the savings rate started to decrease because most Americans were encouraged to sock money away in these tax-deferred plans. In addition, as interest rates declined, Americans were less incentivized to put extra money in savings accounts, and instead invested in real estate and equities for better returns. The upside to this was, well, the possibility of better returns. The downside was poor returns and liquidity challenges.
However, as Americans began to rely more on credit to afford a certain lifestyle, the savings rate declined even further so that by 2005, Americans were saving less than 1% a year. Compare that with an average saving rate of 10% per person in Europe. Since the recession started, however, and as many people lost their jobs, credit became more difficult to come by and salaries stagnated, Americans got better at living within our means and putting more money away. At the height of the recession the personal savings rate reached 5.5% but has since decreased to about 2.5% in early 2013.
Why does this matter? Think about the past few years of the downturn and whether you’ve had to make some lifestyle changes as a result. Would things have been different if you had a bigger cushion to lean on during tough times? And it’s not only in case of tough economic times; establishing solid saving habits is crucial not just for the immediate term but also for retirement. As Americans live longer lives and as the promise of Social Security payments and employer-based pensions begin to diminish and in some cases disappear, we are ultimately responsible for funding our retirement.
Say NO To Retirement Drama
Retirement probably seems a long way off for many of us, but it’s important to start saving as soon as we start earning. Here are some tips:
– If your employer offers a 401k plan, you may already be automatically enrolled. Check!
– Make sure you are enrolled and then make sure you’re saving more than the minimum if you can afford it. Remember, this money comes directly out of your paycheck before it’s taxed. So you never see it long enough to miss it. And in the meantime, the money is invested and growing tax-deferred until retirement.
– Plus, if your company offers a matching contribution, all the more reason to sock away that moulah!
Emergency Fund Fun
But first things first. If there’s one thing many of us have learned from the recent weak economy it’s the importance of an emergency fund. Here are some tips:
– Your emergency fund should be able to cover at least six months of expenses in case you lose a job or life gets rough. If you’re up-to-date on your bills, an emergency fund is the next goal to tackle.
– Every month, once you’ve tackled your budget and paid rent, bills, etc. then pay yourself. That is, put 5-10% of your earnings away in your emergency fund.
– Do it consistently and on months that you can afford to save more, do it.
– Once you’ve reached the magic number for your fund, start saving for your next goal whether for an investing account, a home, a dream vacation etc.
Are you saving enough? Take this savings selfie:
– How much money do you put in your savings account on a monthly and annual basis?
– Are you aware of your monthly “necessary” expenses? How much would you need to save for your emergency fund?
– Based on your current monthly budget including bills/debt and current income, how long will it take for you to save for a six month emergency fund if you save 5-10% or more of monthly income?
– If you’re not saving enough, what steps can you take to start (ie. avoid the middle of the night online shopping-scapade, dinners out, etc).
While shopping with my nieces I even learned a big lesson on shopping and saving. Before the trip, they had saved up their summer job money and also got some shopping money from Big Daddy. But instead of impulsive spending at every store, they shopped carefully, made their selections thoughtfully and really considered the value of some of the items they were trying on. In the end, they came away with some great pieces they could share–and both went home with most of their savings still in their wallets!
I don’t have to look at the calendar to know that it’s already August. All I have to do is notice that people waiting on the subway platform have a look of despair that comes only after giving up the hope of showing up for work wrinkle- and sweat-free. These days, my dog doesn’t linger on her walks and gets her business done in .0004 seconds. And if people aren’t already on vacation, they’ll show up for work in August–sure– but get nothing done. I mean, why hustle to get something on the boss’ desk when she won’t look at it until September 4?
August also reminds me that the year is passing quickly. It seems like not so long ago since the American Taxpayer Relief Act (“the tax bill”) was passed (back in January). Remember how everyone was worried that the moment January 1, 2013 came around, taxes would go up, estate exemptions would decrease and many credits and middle class benefits would disappear? And then good ol’ Congress swooped in with a last-minute bill that kept taxes low for many Americans and increased the tax rate for the “wealthy.” And other stuff. For a refresher on all the fun details of the tax bill, see https://moneymoxie.wordpress.com/2013/01/03/new-year-new-deal/
So what’s changed and what can we expect when Congress returns from summer break in September?
While the tax bill kept taxes at their low rate for most Americans, it allowed income and capital gains rates to go up for individuals/families who earn $400,000 and more. It also limited certain exemptions for higher earners (Pease and PEP exemptions), let some middle class benefits expire like the payroll tax holiday, and made permanent the AMT exemption. In addition, 2013 is the first year that an additional 3.8% tax will be applied on investment income earned by higher income individuals, thanks to a provision in the healthcare act.
2. The Deficit
Since the downturn began, politicians and economists alike were alarmed at the drastic increase in the federal deficit; not since the 1940s was our deficit at such dangerously high levels. Under normal circumstances, the deficit to GDP (gross domestic product–ie. national economic output) ratio hovers at around 3%. In the past few years, however, the deficit reached beyond $1.3 trillion in 2010 and about 10% of GDP, causing the US debt level to increase to historic levels.
The good news is that the Office of Management and Budget announced in July that it expects the deficit to fall to $759 billion for year ending 2013, or 4.7% of GDP, its lowest in five years. The improvement in the deficit is a result of the economy picking up speed as well as an increase in tax collections and the savings from the automatic spending cuts known as the sequester (for a refresher on the sequester, take a gander at https://moneymoxie.wordpress.com/2013/02/21/the-sequeezter-how-the-coming-budget-cuts-may-affect-you/ .)
3. The Economy
Since the beginning of the year, there’s been a marked improvement in the economy. Last week, it was reported that the economy grew by 1.7% in the second quarter which was an improvement over the 1.1% growth achieved in the first quarter of 2013. The unemployment rate also decreased to 7.4%, its lowest level in five years, although the increase in jobs was a result of discouraged unemployed workers leaving the workforce. Going forward, many economists are optimistic that companies across most industries will continue to expand, boosting employment and growth into 2014.
4. The Stock Market
Despite some gloomy reports about US markets in the beginning of the year, as well as the continued downturn in Europe and slowing economies of emerging markets, the US stock market has been on a roll! Recently, the S & P surpassed 1700 in intraday trading and has been consistently closing above 1500 for months. The market is up over 20% to date, and up near 12% from its pre-recession high.
What to expect after summer break…
1. Debt Ceiling Debate
Just when we thought the sunnier economic outlook would result in a more harmonious Congress, BAM! The debt ceiling debate comes along! While this winter, we mostly avoided a repeat of the summer of 2010 debt ceiling fights that caused Standard & Poor to lower the credit rating of the US–mainly because the automatic spending cuts were instituted in February which helped to reduce the deficit anyway—get your popcorn ready for another round of debates in September. While many Republicans and small business owners want the President to roll back the tax increases instituted by the tax bill, the President has called for a decrease in the corporate tax rate from 35% to 28% as long as Republicans will agree to additional spending on infrastructure and development projects. There are also calls for additional savings by limiting or doing away with tax write-offs of municipal bond interest, real estate interest and charitable contributions.
2. The Stock Market And The Fed
While the market has been on a high this year, many investors fear a pullback if not an all-out crash later this year. One huge factor in whether the market will continue to boil or bust is if or when the Fed will decide to slow its $85 billion in monthly purchases of bonds known as quantitative easing (QE3). The fear is that once the Fed bond purchases slow or stop, interest rates will go up which could have a drastic effect on investments and wealth. The good news is the Fed reported earlier this year that it would not begin to slow these purchases until 2014, but could change its mind sooner if the economy continues to improve.
What should you do to prepare for stormy weather?
– Make an appointment to speak with your financial advisor to discuss coming events in Washington and Wall Street and how they may affect your investment portfolio. Don’t wait for your advisor to call you; be proactive. After all, it’s your money!
– If you don’t already have an advisor, find out who is near you and who you click with. http://www.napfa.org/
– Consider low-cost investments that mirror a specific exchange or index like an Exchange Traded Fund (ETF) that can offer strong returns and an alternative to owning stocks or mutual funds.
– To hedge against rising inflation, consider adding TIPS, commodity funds and real estate trusts (REITs) to your overall portfolio.
– If you’re in the higher tax brackets, make sure to include tax efficient investments in your portfolio like separately managed accounts.
– Pay attention to how you invest your retirement account vs. your investment portfolio. It may be more advantageous to include taxable investments in your retirement account since those will be tax-deferred until retirement, and keep tax efficient or tax-free investments in your taxable investment portfolio.
But first–enjoy the rest of the summer!
By Lena Rizkallah, Money Moxie
Almost everyone has a bucket list. Whether your dream is to learn how to pilot an airplane, spend six months hiking in South America, teach English in India or ride elephants in Cambodia, a bucket list is personal and often includes a dose of adventure and travel. I recently met with two entrepreneurs who are capitalizing on planning, packaging and helping women check off some of their once-in-a-lifetime dreams through their new company, WHOA Travel (that’s: Women High On Adventure).
Meet the Founders of WHOA
Allison Fleece and Danielle Thornton met only last March when they were part of a group that hiked Mount Kilimanjaro. From that life-changing trip, WHOA Travel was born and the two women found their new friendship blossoming into a partnership. Coming from the international education industry, Allison had always enjoyed travel but thrived in more adventurous trips, experiences where she could push herself but also give back a little. Danielle, who is an associate creative director at an advertizing company, confesses that she’s always felt a never-ending hunger for travel and change, and that “I always knew I was going to leave Texas since I was a little girl!” (No offense, Texas!)
WHOA’s (www.WHOAtravel.com) mission is to organize trips for women that are fun, challenging and inspiring, and that allows the group to also give back. As Allison puts it, the purpose of WHOA is “to provide a transformative experience for women through travel; at the heart of every adventure is an advocacy project that gives back to women and local communities.”
For example, although last March’s Mt. Kili trip wasn’t an official WHOA adventure, Allison arranged for the group to volunteer at Give A Heart To Africa, a nonprofit based in Tanzania that helps provide women with skills and training they need to learn English and make a living.
WHOA’s Adventure Trips
Although WHOA is only a few months old, things are already full-steam ahead! For the 2013/2014 season, WHOA is organizing three adventure trips and is currently taking reservations. The first is a trip to the Alps and Bavaria in September where the group will bike, hike and paraglide through the Alps, with a pit stop at Oktoberfest, and ending with yoga in the park in Munich. All proceeds from yoga will go towards Give A Heart To Africa.
In March, the group will head back to Mt. Kilimanjaro for a seven-day trek with plans to summit on International Women’s Day, March 8, 2014, followed by another volunteer day and safari or resort options. Finally next summer 2014, the group plans to hike the Inca Trail. In addition to the three flagship trips, WHOA can also custom organize a special trip for individuals or groups who want to do something different.
This August, both women plan to leave their jobs and embark on a 7 week trip to Africa, Europe and South America in preparation for next year’s trips. They will be meeting with contacts for each adventure, make new connections and spend time with the community organizations. The passion and enthusiasm that Allison and Danielle have for their business is inspiring and contagious–I have a feeling they can persuade the most fearful traveler to hike Mt. Kilimanjaro!
The Early Days of WHOA
Although the energy and optimism at the new company is high, the ladies had to put some work into their partnership. Early on, they realized that they both approach work differently and also have different–but complementary–skill sets. Allison is the talker of the two, engaging and persuasive, while Danielle is in charge of branding and the creative aspects of the company. While their start was bumpy at times, since holding a “come to Jesus” meeting in which they were both painfully honest with each other about their goals and expectations, the business has run much more smoothly. They collaborate on everything and both agree that even their website reflects both personalities.
Is Entrepreneurship Right For You?
The ladies offer simple advice when it comes to starting a business. If you’re ready for a change and have an idea in mind, “put it out in the universe,” says Danielle. “I knew I wanted to do something different and I was open about it.” Allison agrees, adding, “You’ll never regret the risks you take, only those you don’t.”
Both Allison and Danielle agree that when it comes to picking a business partner, it’s important to respect one another and be brutally honest (but kind) with each other. Working with a business partner is like a balancing act, and as Danielle points out, “It’s harder to find the right business partner than a husband!”
And since they are both leaving their corporate jobs, both women have cut back on spending. Both are much more aware of their expenses, have stopped buying frivolous things and know that soon those regular paychecks will vanish so they have set and following their own strict budgets. Allison admits that since she’s eating in more, she’s actually eating healthier!
Go Tell It On The Mountain!
While Allison and Danielle are very aware of the risks of starting their own business, they are certain that there is a need and a demand for a company like WHOA. After all, many of us desire unique experiences and challenges, we dream of coming home from a foreign land with bragging rights, and we want to show our gratitude by giving back in some way. WHOA combines all three by offering unique once-in-a-lifetime trips for women around the world. As Danielle puts it, by taking on challenging trips like those that WHOA organizes, “you can change yourself, you can change the way you look at yourself and you can even change the world a little bit at the same time.”
Please don’t judge me.
Listen, I’m not ashamed to admit that I am a reality TV connoisseur. True, I am a nerd through-and-through (and not the cool-yet-awkward, tech-savvy, Lena Dunham kind). I get excited discussing the value of credit shelter trusts or whether the AMT should be repealed for Pete’s sake! But on the other hand, I will get super passionate and opinionated when debating whether it was cool for “Housewives of the OC” ladies Tamra, Vicki and Lydia to ditch Gretchen and Heather after dinner on their recent trip to Cabo San Lucas. (By the way, it was. Gretchen and Heather are just a couple of sticks-in-the-mud with veneers.)
I also watch “Keeping Up With the Kardashians” on E. It’s not because I like watching rich people lay in bed all day in fluffy white robes talking about how stressed out they are, or go on long extravagant family vacations to foreign lands where they lay around in bed all day in fluffy white robes. And while I am fascinated (and confused) by the imagination of Bruce Jenner’s plastic surgeon, no, I don’t tune in to the show just to get a glimpse of Bruce’s Farrah Fawcett hair and high cheekbones. And maybe others are but I am not watching for cracks in the relationship between Kourtney and baby-daddy Scott Disick.
I guess I watch the show because it serves its purpose. Once in a while I want to relax and settle in for completely mindless, unuseful, brain-cell murdering entertainment–and I’m never disappointed!
Well this week was a big week for the Kardashians because Kim and Kanye who’ve been dating since early last year, finally had their baby. The baby girl came a few weeks early, and while reporters had hovered around Kim throughout her pregnancy and reported her every outfit flub, extra pound gained and every Kim outing sans Kanye, since the birth of Baby K, the family has been very private.
Since I follow the media-hungry Kardashians, I know the eery silence is intentional, even strategic. Both Kim and Kanye know how to make a ton of money by being in the limelight. Kim is worth about $40 million while Kanye’s net worth is estimated at $90 million. Between the two of them, they have been paid millions for sex tapes, law suits, clothing and fragrance lines, appearances and more. If anyone knows how to turn the birth of a baby into millions of dollah-bills, it’s Kimye.
So while Baby North or Kaedance or Kris, Jr. is still only about 6 days old, we know she’ll be well taken care of and will likely be financially savvy and earning her first millions before age 5. Here are some investment lessons we can learn from the newest edition to America’s Royal Family:
1. Timing is everything
Baby K arrived five weeks early but right before Kanye’s new album Yeezus dropped (ugh). As a result she secured the time and attention of both mommy and daddy. If she’d been born around her due date in July, Kanye would’ve been on tour and may have missed the birth and corresponding media circus. Not to mention Baby K beat out the arrival of a real Royal (Prince William and Kate’s) Baby.
Similarly when investing in the market, it’s important to know when to get in and when to sell. While a typical buy-and-hold strategy (investing in a mix of assets for a long period of time) can be smart over the long-term, there is value in watching specific companies or sectors for the right time to buy in or cash out. Most of us are not financial professionals so it’s wise to team up with a trusted advisor who does watch the market, and can guide you in reaching your goals. And make it a point to learn about investing yourself. The more familiar you are with the market, the more equipped you’ll be to take advantage of market movements.
2. Sell High
Has anyone seen a picture of Baby K? No? Seems odd, doesn’t it, that a family that makes millions from having cameramen documenting their every move (weddings, births, fights, drunken escapades) hasn’t yet thrown open the doors of the NICU to let the cameras in. Obviously, Kimye–or more likely momager Kris–is shopping around exclusive photos of baby K to the highest bidder–and will likely get millions!
This rule of thumb seems like a no-brainer when investing in equities but it’s hard to determine when the market has peaked and when is a good time to sell off certain positions. Many investors learned this the hard way back in March 2000 when the tech bubble burst and tech stocks that plummeted. A similar thing happened when the housing market collapsed in the fall of 2008, leaving stocks, property values and retirement plans at historic lows. Yet all along, many experts had warned about the markets collapsing–as the market was skyrocketing– but the general consensus was that the market will only go higher, culminating in what former Fed Chief Alan Greenspan warned was dangerous and “irrational exuberance.”
To take advantage of market highs but minimize risk, consider investing in an ETFs (exchange traded funds) which combine a group of stocks in a specific sector to mimic a particular index. An ETF can be a low-cost strategy that gives you exposure to a particular area of the market. It offers diversification so if one position loses value, the value of the ETF doesn’t necessarily plummet. In addition to ETFs, many investors appreciate the simplicity and diversification of a traditional balanced mutual fund that leverages equity exposure for higher returns along with consistent returns from government bonds and cash.
3. Acquire an entourage
Have you ever seen photos of Kim or Kanye walking to their car or through the security line at the airport? True, they are usually mobbed by the paparazzi but look closely and you’ll see a gaggle of handlers behind them. Baby K is sure to have her share of men-and-ladies in waiting to handle her every whims–and when it comes to investing, so should you!
A financial entourage can include anyone from a financial advisor to an investment club that meets every month, to an online community, a group of friends or an investment buddy, to a collection of trusted websites and television shows that helps you keep up on the markets and the economy. To find a fee-only financial advisor, try http://www.napfa.org to find someone in your area. For advisors who work on commission, check out http://www.fpanet.org. Many websites are available to help you learn about and undertsand the markets like http://www.bloomberg.com,www.Wealthwatch.com, http://www.yahoofinance.com and more.
4. Don’t be afraid to go international
I’ve read that when Kim went into labor, Kanye was just stepping off a plane from Switzerland. In fact, many credible sources (ummm…US Magazine) reported that Kanye was abroad during much of Kim’s pregnancy, and that after the birth of the baby the couple plan to move to France. Whether for more privacy or for the fine wine and decent coffee, the couple may decide that living in Europe provides a better lifestyle for their family.
While world markets have all experienced their share of ups and downs over the past few years, many investors have seen strong returns by diversifying their portfolio and including international and emerging market funds. Countries like Brazil, India, China and Russia have seen positive earnings in their markets, and emerging markets like Indonesia, the Middle East and Chile are also benefiting from cheap labor and strong demand. While an overall portfolio of international and emerging market stocks may not be wise, consider adding exposure to overseas funds as a way to increase returns. Most of the top fund companies like Vanguard, Fidelity, Franklin Templeton, etc. offer international and emerging market funds so check out how the funds rate on http://www.morningstar.com before investing.
5. Don’t always believe what you hear
It goes without saying that Kanye West talks a big game. In recent interviews and song lyrics, he has compared himself to God, Andy Warhol and Steve Jobs, among others and made references to his superior artistic and leadership abilities. The guy is anything but humble and whether his proclamations are accurate, that’s up for debate. That’s why, as Baby K grows up, she must use good judgement and scrutiny when taking advice from everyone around her. While her father may announce that he is the king of rap or whatever, and her mother brightly responds with, “That’s AMAZING!” Baby K would be wise to keep critical eyes and ears open and continue searching for the truth.
As investors, we’re inundated on a daily basis with information, facts, opinions, analyses and rhetoric on the market, how it’s doing and where it’s going. At the office water cooler, there’s always that guy that goes on about his friend’s “genius” start-up. Turn on the TV at dinnertime and you have red-faced Jim Cramer hollering at a caller from Long Island about why he thinks Home Depot stock is sinking. Turn to MSNBC and you’ll watch a White House spokesperson clumsily attempting to explain the benefits of the health care legislation. Change to FOX News and you’ll likely hear a doomsday scenario of where the market –and basically the world–is headed.
All this information can have negative effects on investing if you let it. On the other hand, tuning into these shows once in a while can provide perspective as long as you continue to work with a financial advisor, pay attention to investment accounts and how they’re moving, maintain a daily routine of reading about the markets (like reading a financial article per day) and discussing your thoughts with your advisor or trusted investment buddy. It’s important not to give in to the confusion and make investing decisions based on that.
Welcome to the world, Baby K! May your future–and ours– be filled with bling!
By Lena Rizkallah, Money Moxie
Like many adults with time and a little money on their hands, I have a gym membership. I discovered the gym back in college–and over the years, I have tried almost everything, from step aerobics to jazzercise, cardio machines and free weights, to yoga and “barre burn”–but I’m not naturally athletic. When I was younger, my hard-working immigrant parents had the best intentions for me, but instead of enrolling me in soccer or volleyball where I could practice drills and build stamina, improve my social skills and maybe stop eating lunch by myself, they thought hours practicing the piano, flute and French in complete solitude would prepare me for life. The end result was an awkward childhood. So when it comes to sports, I have no skills, grace or eye-hand coordination. I was reminded of this most recently when my temperamental Argentinian tennis coach stopped calling me back to schedule our lessons.
Thus, the gym has been the place for me to get some exercise, as long as I don’t have to serve, kick or dribble a ball.
For a long time, the one area of the gym that I felt was off-limits to me was the weight room, the area designated for free weights; this is the space that usually takes up an entire mirrored wall in the gym and is lined with weights from five to 500 pounds with benches facing the wall. I’d always avoided that area because I thought I didn’t belong there. For one thing, it was all men that hung out there, most of them with muscles up to their ears. For another thing, the noises coming from the weight room would scare away Dexter Morgan. Grown men stood in front of the mirrors or lay on benches, lifting huge weights. Loud grunts, shouts and moans could often be heard, usually followed by someone dramatically dropping the weights to the floor. I wanted no part of that action.
But eventually I joined a gym that kept all the free weights in the weight room, even my measly 7.5 pound hand weights, so I was forced to meander over to the weight area to retrieve them. At first, I was pretty intimidated by the meaty crowd at the weights. I apologized a lot, thanked the men working out there, would move to the furthest bench to give them room. Once someone dropped a towel and I scampered over to get it like the Hunchback of Notre Dame, handing the murky wet towel to a bald, tattooed, pierced ‘roid-head. “You dropped your towel, sir.”
Soon, however, I noticed other women using the weight area, standing in front of the mirrors doing their reps, and they seemed right at home. It gave me more confidence to stick around and do my reps, and it dawned on me how different men and women can be when we work out. I’m not saying all men holler like they’re being waterboarded when they lift weights, but I’ve witnessed a lot of veins popping, red faces and childbirth grunts over there (and not from the women!). On the other hand, most women lifting weights handle the stress quietly; I guess some of us think that if you’re grunting and straining from lifting weights, maybe it’s time to check your ego and lighten your weights.
Over time I’ve become a lot more comfortable in the weight room. Nowadays, I stand my ground when someone eyes the bench I’m using, and I stake out my space in front of the mirrors. Who cares if I’m just lifting 7 pounds next to a guy lifting 150?? And the weight-lifting screams? I rarely hear them anymore.
This experience got me thinking about the differences between men and women in investing. For years, men have dominated finance and investing, presumably because they were the major breadwinners, they spent the most time in the workplace and were more likely to be socialized to be responsible for managing the family finances. Over the past few decades, however, as more women entered the workplace and climbed the corporate ladder, there has been a shift. Nowadays, most women are as likely to invest as men, and are often better savers than men.
How Do We Invest?
– When it comes to investing, women tend to be conservative investors and prefer a buy-and-hold strategy rather than taking a more active approach to their portfolios. Women will invest in a carefully selected portfolio of investments based on their saving and investing goals, and then make minor changes going forward. Men, on the other hand, have a stronger stomach for risk and are more likely to move in and out of various stock positions; thus they are more likely than women to buy at market highs and sell low, often miscalculating the market. In fact, a recent Vanguard study showed that men that make frequent changes to their portfolios will miss out and often see returns almost 1% less than their female counterparts.
– Men tend to trade more, while women prefer to sit tight–but there are many factors for this and it’s not just about knowledge or confidence in the markets. Experts believe that the investing tendencies of men and women are partially biological. A study by John Coates, a former Wall Street trader, revealed that what triggers risk-taking behavior in men is not more knowledge or skill in investing but actually high levels of certain hormones like testosterone and cortisol. This elevated amount of testosterone encourages men to take risks mainly for the rush of it. Women, historically the mothers and caregivers, on the other hand, focus on protection and sustenance and these characteristics also extend to investing habits.
– Men are more likely to seek advice for their finances, using newspaper articles, the internet and are more likely to hire a financial advisor. Women on the other hand are less likely to have financial advisor. Many may seek professional advice with a spouse but otherwise, most women more on friends and family to help them with their finances. And when they do have a financial advisor, studies reveal that many women are dissatisfied with their advisor.
– Confidence is an issue. A recent Prudential study on how men and women invest, it revealed that men tend to be more confident when managing their finances than women, are more comfortable with different types of investments and strategies and make their own investment decisions. Women, on the other hand, are less aware of investment strategies and feel less confident. As a result, many women tend to make conservative choices and seek FDIC-backed investments–safety without the higher yields of the market.
Speaking The Same Language; How Can Men and Women Learn From Each Other?
– Because women live an average of 5-7 years longer than men do, longevity is a factor and retirement income must last. Consider stocks and alternative investments to provide more exposure to the market. In addition, while women statistically save more than men do, they spend less time in the workforce, and often leave work entirely or take many years off during their peak earning years (ages 35-50) to raise children and/or care for ageing parents. Men are more likely to invest in equities but should think twice before moving positions.
– Diversification is key. Investing the bulk of your money in bonds or in company stock may seem safe but could be detrimental in the long run; the investment may plummet in value or fail to keep up with inflation. When you hold a diversified portfolio that includes a mix of cash, bonds, equities and alternative investments, you’ll have a better chance to achieve higher returns in the portfolio.
– Studies show that men learn independently about finances while women prefer to learn in groups. Education is crucial! Both men and women could benefit from mixing it up once in a while. Make sure you that you are using the right online tools and webinars, attending seminars and face-to-face meetings and getting the big picture from the experts. While the internet is a great source of knowledge for financial literacy and investing, attending occasional live seminars give you the chance to ask questions and hear questions and answers from the group. Be sure that the “expert” is a true expert and is focused on providing financial education rather then selling you products.
– Have the right mixture of curiosity and confidence. If you don’t already, challenge yourself to learn more about the financial markets by reading one article a day on Bloomberg.com or yahoofinance.com, and watch 10 minutes a day of market news. Talk to friends and family about their investing behavior, impressions on the market or the economy. The more we’re engaged in the markets, the more we learn and the more confidence we attain as a result. However, while confidence is good, overconfidence leads to risky behavior, erratic movements and poor decision-making so remember to think twice and do a little extra research before taking the plunge.
– Find the right financial advisor and meet (by telephone or in person) on a quarterly basis. Make sure you’re in touch with your advisor, ask questions, check on your own investments and make changes when appropriate, and if they aren’t hustling for your business it’s time to find a new advisor.
By Lena Rizkallah, Money Moxie
Years ago, I was at a meeting with my boss and some clients when my cellphone rang. At that time, the song “Drop It Like It’s Hot” was a big hit and like any self-respecting 15-year old, I decided that since that song was my jam, it also had to be my ringtone. However, when my phone rang during the meeting and the bass filled the boardroom–and since I was actually not 15 years old–I decided that was the point in my life to rethink hip-hop ringtones. Time to grow up!
Ironically, only a few years later, I met the guy who actually created the ringtone for “Drop It Like It’s Hot!” Michael Zumchak was the nerd behind the ringtone and nowadays he’s the wizard behind the Easy Excel classes that he teaches to individuals and corporations in NYC (http://www.easyexcelclasses.com/). I had heard about his Easy Excel classes from friends, colleagues and Yelp–that he’s a smart, funny instructor who makes learning Excel simple and fun. I took the class a few weekends ago and I was not disappointed!
The basics class is for everyone–from beginners to programmers to people who just want to brush up and fine-tune their Excel skills. Michael has a low-key, easy-going approach to a very dry, coma-inducing subject. I took the class on a dreary Saturday afternoon, and while staring at numbers, lines and formulas all afternoon could lull anyone into a nice long nap, Michael kept the pace moving, encouraged (DEMANDED!) class interaction and cracked jokes left and right. Besides his comedic style of teaching, Michael has a great knack for breaking down a complicated, sometimes mind-numbing application like Excel, and explains what we need to know, and what we don’t need to know. That information is priceless because if you’re like most people faced with a long, complicated spreadsheet that’s color-coded, contains multiple pages and full of various notes, formulas and charts–the more complex the spreadsheet, the less user-friendly it is and the angrier you become!
Michael began the class with simple tips and formatting short-cuts, then went into creating formulas and spreadsheets. His tips on formatting–long forgotten since college–were awesome and he went over the rules of creating a clean, uncomplicated spreadsheet so many times that everyone got into it and started enthusiastically shouting out the rules like we were in 5th grade! I left the class feeling more comfortable, knowledgeable and confident with my revitalized Excel skills–and much less angry and confused.
Make Your Budget EXCELlent!
Even if you don’t use Excel for work, consider taking this class if you want to create your own budget. If you’ve been thinking of putting together a budget–and you don’t want to use Mint.com or any other online application–sign up and get yourself in gear. With Excel, you’ll be able to customize your budgeting spreadsheet to your specific needs and spending habits. Once you get the mechanics of the spreadsheet and formulas down, you can make adjustments in your spreadsheet based on any life changes or changes in your spending/saving needs. And at the very least, you’ll have fun in class!
By: Lena Rizkallah, Money Moxie
It seems that the recession and high unemployment rate, as well as general worker dissatisfaction, has created a unique atmosphere for entrepreneurship and creativity. People have been laid-off, sometimes more than once, and many have realized that they’d rather work for themselves than work for “the man.” But starting and funding a new business or venture takes money, and as a result, people are turning to crowd-funding sources like Indiegogo and Kickstarter that allow individuals, businesses, non-profits and organizations to raise money from family, friends and friends-of-friends. This new trend, which also got a boost from President Obama’s Jobs Act last year, is really taking off and helping people raise money so their businesses and projects can take off too!
Nancy Vitale and Nilou Safinya recently launched a fundraising campaign for their new film/TV production company to raise money for their first short film, RUNNING WITH SHARKS. The women met through the Middle Eastern theater community and have been friends ever since. Nancy studied dramaturgy/new script development at Columbia School of the Arts and worked as a dramaturg for various regional theatres all over the US. She is also one of the founders and the Producing Artistic Director of Noor Theatre (www.NoorTheatre.org), a Company-in-Residence at New York Theatre Workshop, which co-produced the critically acclaimed play ‘Food and Fadwa’ in 2012. Nilou’s background is also in theatre – in directing, stage managing and producing. She studied Theatre and Psychology at Columbia University and then worked for several years in the NY theatre scene, and more recently for an independent film and TV production company before turning freelance.
Their joint venture, Eyes Up Here Productions, is a film and theater production company through which they hope to provide a venue for women ( and men!) to tell their stories. They first short film, RUNNING WITH SHARKS is their own story of being bullied at an aerobics exercise class and the chaos that ensues.
Currently, they are raising money to fund and produce their film and are in their second week of their funding campaign on Indiegogo. You can learn more about their venture and make a donation here http://www.indiegogo.com/projects/running-with-sharks-a-comedic-short-film-series-pilot.
Recently, Money Moxie sat down with Nancy and Nilou to chat about their plans for their production company as well as their first film.
MONEY MOXIE: What is the concept behind your new production company?
Nancy: The concept is simple – to develop great stories in collaboration with artists we believe in. The name and branding focus the attention of all audiences – up here – at the big screen, small screen, mobile device, theatre stage, you name it.
Nilou: As far as the more tongue-in-cheek implications of the name, we are two real women with real stories to tell, and we want to direct your gaze to those stories. The rest is in the Eyes of the beholder.
MM: How long did it take to get the company started-from idea to where it is now– and what did it take to get you where you are now?
Nilou: When the script for RUNNING WITH SHARKS was complete, we decided that producing it ourselves would be a great way to launch our new company.
Nancy: This way we are also challenging ourselves to continue generating and developing work once this production is complete.
MM: What are your goals for your company?
Nilou: Our immediate goal is to produce and finish this short by the summertime. Once it is completed, we plan to send it out to both film and TV festivals. We are also going to use the short as a pilot presentation to put forth to networks and broadcasters as a concept for a comedy series.
Nancy: Following that, we hope to develop more properties for TV, film and theatre. We are looking to develop our own content as well as the content of other artists we admire.
MM: Tell us about the project and your goals for the project. How did you come to the $ goal that you set in your fundraising campaign?
Nancy: The project is a short comedic film called RUNNING WITH SHARKS, which we describe as a story for anyone who has ever felt judged in a swimsuit. It was loosely inspired by our own experience at a swanky Upper East side gym, where we were yelled at by territorial gym rats, who happened to be older than our mothers. Rather than letting it bother us, I wrote about it in an effort to point out how we ladies can be oddly competitive with one another. I would say that the competition doesn’t help anyone, but it made me write a short film script rather than cry in a corner, so it was somewhat helpful.
Nilou: Even though we almost did cry in a corner! Especially when I was yelled at for putting a support belt in the way of the alpha rat and Nancy was snickered at behind her back! The $8,500 goal we set for the Indiegogo campaign is the honestly the bare-bones minimum we need to rent the necessary equipment, get insurance, hire cast and crew (at extremely minimal fees) and take care of anything else that we cannot get our friends to donate out of the goodness of their big, beautiful hearts.
Nancy: Setting up the campaign, we turned to friends who have funded films and plays using Kickstarter and Indiegogo and asked them about strategies that worked for them. Everyone recommended a brief, upbeat and fun campaign that engaged people as often as possible without being annoying.
MM: Why indiegogo as opposed to other avenues for investing? Did you get help from family/friends, bootstrapping or finding investors?
Nancy: As a new, unknown company, finding investors to give us thousands of dollars of start up money is not easy. We could also beg friends and family to help, but that is not a sustainable model. By launching this campaign, we have to put ourselves out there to the rest of the world, tell them why we want to tell these kinds of stories, that they’re important and that we want to tell more of them with their support. It’s about building a base of supporters that will eventually also be our audience.
Nilou: We are simultaneously talking to any brands we have access to as well as possible investors we know just to get the ball rolling and who knows – maybe someone will bite! However, once we complete this first project and have a tangible example of the work we want to do, we will certainly seek investors more actively for company proper as we explore raising funds for our next projects.
MM: What has been the response so far regarding the company and your campaign? Where are you in terms of your fundraising goal?
Nancy: We are half- way through the campaign and half- way to our goal. Let’s keep it up!
Nilou: The response has been lovely, very positive, and people really seem to enjoy the pitch video as well as the company name. Our friends and family have been very supportive and complementary. We just need to get more people to see it.
MM: Knowing what you know now, would you have changed anything about raising money? What advice would you offer people who are thinking of bootstrapping, fundraising, asking money from family/friends?
Nancy: Don’t do it too often. Eventually you’ll exhaust your base.
Nilou: We both often raise money for projects that are non-profit in nature, so there’s no financial return on investment and this sort of fundraising can be very difficult, especially past a certain level. To be very clear, Eyes Up Here is not intended to be a non-profit venture.
Nancy: We’re excited about moving into the next phase of profit-bearing entertainment, but we need a little help with this test run first. Please.
Nilou: And thank you.
If you’ve been following business news lately, you might be pleasantly surprised that the stock market reached a post-recession record high yesterday, the highest since October 2007. Investors who have been “stocking” up on equities will probably see some great rewards from the risky moves they’ve made over the past few years. Many experts say that the strength of the stock market follows positive corporate earnings and profitability, a strengthening housing market, and the continued perception of the US as the best place to park money compared to global markets.
While the stock market has shown major signs of improvement, the economy still seems to be plugging along at a sluggish pace. Despite the recent good news, small businesses and large companies are still finding it difficult to navigate the challenging economic environment. Even the mighty retail giant Wal-Mart has seen its profits decline, thanks to lackluster consumer spending. A flurry of recent articles indicates that Wal Mart has been struggling to keep sales up and its shelves adequately stocked since the beginning of the year. Experts link the weakness in consumer spending to various factors, like the expiration of the payroll tax holiday and tax refunds arriving later in February this year than in prior years; hence less disposable income for consumers to shop with.
On the other hand, the luxury market has been pretty resilient during the recession and is still charging ahead for the most part. While consumer reports indicate that 2012 was a turning point for many luxury retailers that saw a decline in sales for the first time in many years (such as Burberry, Gucci and Tiffany), other high-end retailers implemented various strategies to maintain and even increase their market share. Companies like Prada, Hermes and LVMH focused on ultra-luxury rather than expansion, improved their technology and online presence, entered various emerging marketplaces –and saw sales continue to soar.
Small business owners and entrepreneurs who want to develop and expand their brands would be wise to adapt some of the successful practices of the luxury market. Simone Esposito is an expert and consultant who works with luxury and ultra-luxury international companies on branding and business development. He has worked with companies such as Thomas Pink, Loro Piana and Asprey of London, and has built a reputation as a forward-thinking consultant who anticipates market movements and trends and helps clients develop strategies to take advantage of industry shifts.
“The time is right for luxury brands to re-engage their customers, making sure to build a long-term loyalty,” urges Simone. “Companies must place the customer experience at the heart of their enterprise.”
Simone also insists that while some companies are doing a good job of adapting to new technologies which helps move sales along, they must continue to reinforce their offline presence as well– and this could ring true as well for small business owners and entrepreneurs. “I think that developing personal relationships with customers is something that all brands should aim for, ” he says. “Many prime brands (I am not only talking luxury here) have invested in upgrading their online presence in recent years forgetting to upgrade their offline, personal relationships. Unfortunately, according to the Luxury Institute, this translates only to 10-15% of luxury customers having a first-name relationship with a sales professional. It has been proven that customers who have a true human relationship with a brand generally buy way more from that brand, and loyalty is a direct and logic consequence.”
Simone insists that luxury companies emphasize customer service, and in today’s challenging economy, all companies would benefit from providing a positive and memorable customer experience. “A luxury brand offers luxury products, of course, but to attract and retain discriminating buyers, it must also offer luxury customer service. In fact, what sets a luxury brand apart from the crowd isn’t only price—it’s also the quality of the overall customer experience.”
Wal-mart and other large companies may find it more cumbersome to increase sales and swiftly take advantage of market upturns, but small companies and entrepreneurs are in a good position to follow the lead of the luxury market, and to innovate and implement smart strategies that can lead to growth.
A recent USA Today poll revealed that about 25% of Americans know little to nothing about the sequester–the mandatory across-the-board budget cuts set to be instituted on March 1 (that’s next week by the way). This is alarming since these budget cuts could affect us on a daily basis and could make life pretty inconvenient. Probably because of this collective cluelessness, another Pew/USA Today poll revealed that if nothing is done to resolve the sequester issue, about half of Americans will put the blame on Congressional Republicans and about 30% will blame the Obama Administration. And so, the finger-pointing continues in yet another politican-created crisis.
How did we get ourselves into this mess?
The sequester resulted from the debt ceiling debacle in the summer of 2011. Congress was debating whether to raise the debt ceiling and had a deadline of August 1st to come up with an agreement along with a deficit reduction plan. A “supercommittee” of politicians from both parties worked together to figure out mutually beneficial tax increases and budget cuts. Not surprisingly, the committee failed to agree on final terms; what they did come up with was a plan to decide to plan to hopefully-maybe-fingers-crossed come up with some deficit reduction options sometime in the inter-galactic future.
This mandate was part of the Budget Control Act of 2011, and also included the sequestration language; that is, failure to agree on deficit-reducing legislation would automatically trigger the sequester, which are automatic cuts that would affect every discretionary area of the federal budget.
When the Budget Control Act was drafted, no one thought Congress would be so irresponsible as to allow these budget cuts to be triggered. But like the 2011 debt ceiling debacle that lasted over 6 months and culminated in deadline drama, and the recent fiscal cliff thriller that ended with “cliff”-hanging legislation on New Years Eve, it looks like Congress is going to ride this one out too.
How will the sequester affect government budgets & the economy?
The sequester calls for $1.2 trillion in deficit reducing budget cuts over ten years, about $85 billion in cuts for this year alone. All areas of discretionary government spending will be affected, including social services, defense, education and housing. The areas not affected by the sequester are funding Social Security, Medicare, Veterans Benefits, etc.
Economists and politicians fear that implementing the sequester will have negative effects on our economy. Some economists believe that these austerity measures would reduce economic growth by .5% –so that the US economy would grow at 1.5% annually instead of the 2% growth that was forecasted (already well below the healthy 3% minimum growth we’ve seen in past years). The cuts are also expected to increase the unemployment rate, expected to hover around 7.9% by end of 2013.
Recently, Erskine Bowles, former Clinton White House Chief of Staff and more recently, a co-author of a famous deficit reduction proposal that was commissioned by Obama but that went nowhere (the Bowles-Simpson deficit reduction plan), was quoted regarding the spending cuts from the sequester:
“They are dumb and they are stupid, stupid, stupid. They are inane. There’s no business in the country that makes cuts across the board. You go in there and you try to cut those things that have the least adverse effect on productivity.
“Second, they’re cutting those areas where we actually need to invest: education, infrastructure, research.
“And third, they don’t make any cuts in those things that are growing faster than the economy. And that’s stupid, stupid, stupid.”
What Do The Cuts Possibly Mean For Us?
While the cuts have not yet been instituted, it’s possible that government-funded programs, agencies, infrastructure initiatives, etc. will be curbed in the next few months. Here are some likely outcomes:
– Government and military civilian worker furloughs are likely.
– National parks, monuments, camp sites, forests, etc. could be closed or reduce hours of operation and services. Libraries may also reduce hours, services and close branches.
– Fewer teachers as well as cuts to education funding and grants; access to after-school and Head Start programs may be reduced or eliminated.
– Housing and mortgage assistance could be affected as cuts may affect HUD (that provides housing for lower-income Americans) and government-funded mortagage assistance programs.
– Less spending for research and programs for National Institutes of Health (NIH), Center for Disease Control (think West Nile, bird flu, etc), Food & Drug Administration (the return of cosmetic testing on kittens??? NO!), etc.
– Fewer government workers like the TSA (longer lines at airport security!!!), border control agents, immigration and drug enforcement agents, etc. IRS agents may also see reduced hours or cuts.
– Budget-slashing at the Justice Department could lead to fewer investigations of wrong-doing and more abusive practices slipping through the cracks. Budget cuts to other government-funded regulatory agencies like the SEC, FDIC, etc. could result in less oversight and possibly more abuses in the financial industry.
– The sequester could hurt Hurricane Sandy government-funded recovery efforts.
– Cuts to defense resulting in less training for deployment readiness, cuts to equipment and weapons maintenance, investment in weapons, etc.
– Major cuts to defense funding could result in decreased naval and Air Force operations.
The Sequester Squeeze
With a week left to go before the sequester kicks in, Congressional politicians have been busy doing what they do best: finger-pointing while on vacation. The Republicans have been putting the responsibility on the Obama Administration, calling it the “Obama sequester” (even though the vast majority of Republicans voted for the Budget Control Act and the sequester in 2011.) The Democrats have taken their turns at the blame-game, accusing the Republicans of dragging their feet and not caring whether the cuts kick in.
Either way, it looks like we’re in for a bit of austerity starting next week. If so, now might be a good time to check out a ton of library books you don’t plan on returning and fudging on your taxes. There may not be anyone on the other side to check up on you.