What New Parents Need to Know About Money

When Lauren Lindsay’s daughter was born, the baby’s severe digestion problems required special formula that cost $26 a can.

Ms. Lindsay and her husband didn’t think twice about buying their daughter the formula she needed. But at several cans a week, the cost was still hard to swallow.

Veronica Dagher on Lunch Break has money tips for new parents. Parents-to-be who get their financial house in order have a better shot being prepared for the unexpected once junior is born and can save families from financial catastrophe.

“Expect the unexpected when you have children,” says Ms. Lindsay, who is also a certified financial planner in Covington, La.

Couples who get their financial house in order have a better shot at being prepared for the unexpected once Junior is born. Planning ahead also can save families from financial catastrophe.

Here are eight financial tips for parents-to-be:

1 Live on one paycheck.

As soon as a couple finds out they are expecting, they should try to live on one paycheck for several months before the baby is born, says June Walbert, a San Antonio-based certified financial planner. She says this helps parents figure out what expenses they need to cut and helps them get acclimated to a reduced income should one parent decide to stay home for an extended period of time.

via What New Parents Need to Know About Money – WSJ.com.

Where does the fair income tax rate land?

Much has been said and written in recent weeks about our individual federal income tax rate.

Because the income tax law is complex and regulations are so voluminous, Americans do not pay a single tax rate.

Rather, the tax rate depends on the kind of income you have, your deductions, and if Congress has enacted special credits for this and that.

In 2010, the Obamas had $1.79 million in total income, an effective tax rate of 26 percent, and their tax return was 59 pages.

The Gingriches reported total income of $3.1 million, that their effective tax rate was 31.6 percent, and that their tax return was 46 pages. Then there are the Romneys who are indeed a wealthy couple. Their tax return required 203 pages to report total income of $21.6 million and their effective tax rate was 13.9 percent.

via Where does the fair income tax rate land? | The Coloradoan | coloradoan.com.

How Much You Need vs. How Much You Can Lose – WSJ.com

Never gamble unless you can afford to lose.

That is essentially the message of a small but growing chorus of academics and financial advisers, who are calling for a new approach to managing investment risk in the wake of the two bear markets and unprecedented market volatility of recent years.

The current rally in the Dow Jones Industrial Average notwithstanding, they believe individual investors should shift their focus from how much money they hope to make in the markets to how much money, if any, they can afford to lose.

The process involves distinguishing your needs from your wants so that you can determine the amount of market risk that is appropriate for you to take, or what Zvi Bodie, a finance professor at Boston University, calls your “risk set point.”

via How Much You Need vs. How Much You Can Lose – WSJ.com.

A Three-Year Bull Market: Feeling Better Yet?

On March 9, 2009, the stock market hit its postcrash bottom.

Today, after a three-year rally that’s seen the Dow Jones Industrial Average rise 98%, from 6547 points to 12978, investors are trying to understand how to explain the good fortune, and whether it will continue.

“In March 2009, the stock market was priced for another Depression,” says James Paulsen, chief investment strategist at Wells Capital Management. “What we have come to realize is that the economy was probably never that close to depression and is now in recovery; consequently, valuations are being reversed.”

Adds John Brynjolfsson, who runs hedge fund Armored Wolf: “We’ve been to the depths of Hades and back.”

Continue reading here: A Three-Year Bull Market: Feeling Better Yet? – WSJ.com.

Making Sense of Financial Data

Practically every day, the government, corporations, think-tanks, pollsters and associations release data into the already burgeoning stream of information for the media and consumer to lap up and absorb. The problem is, it is mostly useless. Not because the information is bad, although it might very well be skewed, but once it is released for our consumption-what do we do with it? Our choices are limited to applying our own points of view in determining relevancy, or relying on someone else, whose opinions we agree with or ignore it all together. Either way, if our investment decisions are based on the minute -to-minute flood of financial or economic data, we are probably fooling ourselves under the illusion of control. In other words, if we take information, parse it (albeit subjectively) and then make a financial decision, we now have control over our financial success and destiny. Sounds good, right?

via Making Sense of Financial Data – Forbes.

Five Leadership Lessons From James T. Kirk

Captain James T. Kirk is one of the most famous Captains in the history of Starfleet. There’s a good reason for that. He saved the planet Earth several times, stopped the Doomsday Machine, helped negotiate peace with the Klingon Empire, kept the balance of power between the Federation and the Romulan Empire, and even managed to fight Nazis. On his five-year mission commanding the U.S.S. Enterprise, as well as subsequent commands, James T. Kirk was a quintessential leader, who led his crew into the unknown and continued to succeed time and time again.

(Image via Wikipedia)

Kirk’s success was no fluke, either. His style of command demonstrates a keen understanding of leadership and how to maintain a team that succeeds time and time again, regardless of the dangers faced.  Here are five of the key leadership lessons that you can take away from Captain Kirk as you pilot your own organization into unknown futures.

1. Never Stop Learning

“You know the greatest danger facing us is ourselves, an irrational fear of the unknown. But there’s no such thing as the unknown– only things temporarily hidden, temporarily not understood.”

 

Captain Kirk may have a reputation as a suave ladies man, but don’t let that exterior cool fool you. Kirk’s reputation at the Academy was that of a “walking stack of books,” in the words of his former first officer, Gary Mitchell. And a passion for learning helped him through several missions. Perhaps the best demonstration of this is in the episode “Arena,” where Kirk is forced to fight a Gorn Captain in single combat by advanced beings. Using his own knowledge and materials at hand, Kirk is able to build a rudimentary shotgun, which he uses to defeat the Gorn.

The Life Planning Network Group News | LinkedIn.

Ten Tips For Financial Success

I just finished sorting through my emails.  I’d been away for a day, out of touch, and my inbox was packed!  I am pretty methodical, dealing with each item in turn; answering those in need of replies, forwarding others to those holding the better solution, and deleting the rest.  The last two items in the box gave me pause to stop and consider; not because they were of any importance, but because their similarities made me laugh.

The first was an advertisement for an alternative investment, the second for a product promising great “enhancements.”  The first ad promised great satisfaction, marking the buyer as someone who stood out in a crowd, with the ability to capture benefits beyond imagination.  Now that I think about it, both ads promised the same thing!

Read the complete article here:    http://www.forbes.com/sites/moneybuilder/2010/08/23/ten-tips-for-financial-success/

Five Secrets to Financial Success

Yes, this is the list you’ve been waiting for; the information you’ve dreamed about. The FIVE secrets to obtain unimagined wealth and success. Just think, by the time you finish this column you will be on your way— realizing, of course that all the articles promising success were misleading and misguided parodies of the truth. You are finally here – at the oracle of untold happiness.

The Life Planning Network Group News | LinkedIn.

Making Sense of Financial Data

This is a great article by Michael Kay.  It points out the futility of trying to make your financial decisions on factors that you cannot control.  Toward the end of the article, he identifies Ten Steps to a more meaningful financial life, which include:

1. Articulate your goals: What MUST happen for you to feel satisfied based on your values.
2. Create a plan that is consistent with your goals and your ability to deal with market volatility.
3. Relegate financial statistics and data along with the newsletters and magazine articles into the classification of investment pornography; it’s titillating, but can easily lead to trouble-it’s just noise.
4. Assess your risk tolerance-how much pain can you endure before you abandon your plan. Don’t adjust your risk tolerance to over ambitious goals.

 

Practically every day, the government, corporations, think-tanks, pollsters and associations release data into the already burgeoning stream of information for the media and consumer to lap up and absorb.  The problem is, it is mostly useless. Not because the information is bad, although it might very well be skewed, but once it is released for our consumption-what do we do with it?  Our choices are limited to applying our own points of view in determining relevancy, or relying on someone else, whose opinions we agree with or ignore it all together.  Either way, …..

Read the complete article here:  The Life Planning Network Group News | LinkedIn.

Warren Buffett: Why stocks beat gold and bonds

I’ve always liked reading Warren Buffet’s perspective on investing – and this article discussing his view of stocks, Gold and bonds is no exception.

Steve

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In an adaptation from his upcoming shareholder letter, the Oracle of Omaha explains why equities almost always beat the alternatives over time.

By Warren Buffett

FORTUNE — Investing is often described as the process of laying out money now in the expectation of receiving more money in the future. At Berkshire Hathaway (BRKA) we take a more demanding approach, defining investing as the transfer to others of purchasing power now with the reasoned expectation of receiving more purchasing power — after taxes have been paid on nominal gains — in the future. More succinctly, investing is forgoing consumption now in order to have the ability to consume more at a later date.

From our definition there flows an important corollary: The riskiness of an investment is not measured by beta (a Wall Street term encompassing volatility and often used in measuring risk) but rather by the probability — the reasoned probability — of that investment causing its owner a loss of purchasing power over his contemplated holding period. Assets can fluctuate greatly in price and not be risky as long as they are reasonably certain to deliver increased purchasing power over their holding period. And as we will see, a nonfluctuating asset can be laden with risk.

read the complete article here:  Warren Buffett: Why stocks beat gold and bonds – The Term Sheet: Fortune’s deals blog Term Sheet.