Money Guy Show

The most important concept that determines how financially successful an individual/family is going to be is:

* Deferred gratification * The hardest part of financial independence is not the investing… it is the savings factor: In today’s world it is getting harder to be a good disciplined financial household. There is so much outside influence and temptation that only the strongest make it (faking success). **Credit Cards ** The desire to drive a new flashy car ** “Same as Cash” for everything including Furniture, Electronics, & Plastic Surgery

For more information, including How to Accumulate $1,000,000 by Age 65, visit the show notes at www.moneyguy.com/2007/09/simple-advice-for-your-finances

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I personally make use of both credit cards and the large sum of equity that I have in my personal residence. I responsibly pay my credit cards off each month, but thoroughly enjoy the $1,200 to $1,500 of annual rewards and cash back that I receive. I also use my home equity as a tool that allows me not to keep huge sums of cash sitting on the sidelines just in case I need money for an emergency. I want as much of my money working for me at all times, so that eventually my army of working dollars earns more than I can make with my back, hands, and brain. Let’s face it: Investment income that is automatic and pays your monthly bills can open your life to many more opportunities as well as complete financial independence.

However, I am quickly realizing that many have gone too far in the use of debt. Just as Alan Greenspan spoke of the late 90s equity markets with the words, irrational exuberance, I think that we can use the exact the same logic and apply it to the average person’s use of debt. Many have taken the tool of debt to levels that are now causing them to sink into financial ruin.

For more information, visit the show notes at http://www.moneyguy.com/2007/08/financial-devastation-through-debt

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the benefits of using Long/Short Funds.

A long/short fund takes advantage of a technique that many hedge funds use that allows them to make money in both a rising and falling market. Long/short fund managers divide their funds’ assets into two types of positions (long and short holdings).

Long positions – meaning they buy stocks expecting that they will rise in value and can be sold at some point in the future at a gain (this is the traditional form of investing that most investors are use to… buy value priced stocks with the anticipation of selling for a gain)

For more information, visit the show notes at http://www.moneyguy.com/2007/08/act-rich-and-protect-yourself-from-a-down-market

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I have spent the last two weeks preparing for the IRS. Unfortunately, I still do a small number of business tax returns (old habits are hard to get away from). One of my small business tax clients was selected for a full examination (Audit). I have over over 10 years of experience in completing tax returns, and this is the first business return that has been selected for an audit. I guess it was my turn to sit on the hot seat. We had the IRS agents here in the office on Wed. and then we met at the client’s business on Thursday for a site evaluation and Q&A session. I am elated that we made it through the audit without any problems and the client did not have to pay any additional taxes, but as you can imagine it has been a stress that has caused a few nights of restless sleep. I knew that we had nothing to hide, but you never know where there might be a difference of opinion on deductions.

For more information, visit the show notes at http://www.moneyguy.com/2007/07/attn-small-business-owners-a-legal-way-to-hide-money-from-the-tax-man

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I’m a straight talker, so please don’t hate me for a harsh, but true statement: when people are falling short of their financial goals, it’s almost always because of their own actions and decisions.

Examples:

• Putting off investing in your Roth IRA or maximizing your 401k at work (“I need the extra money to fake success for my friends and family”)
• Hating your boss and job, but doing nothing to change your situation (“I’m scared to try something new and the interviewing process for a new job is stressful”)
• Putting off the dream of being self employed (“Where will I get clients from and how do I get started?”)
• Renting your life and not having an ownership mentality (“I really like my low rent payments and driving a flashy car”)
• Taking foolish risks (“They’ll figure out Social Security’s problems by the time I retire”)

THE SECRET TO SUCCESS IS THROUGH DEFERRED GRATIFICATION AND TAKING THE ROAD LESS TRAVELED

For more information, visit the show notes at http://www.moneyguy.com/2007/07/are-you-on-the-road-to-wealth-and-independence

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A quick review of your financial health is today’s topic.  I am taking a brief break from talking about investments.  Instead I am going to load you up with planning ideas and even tools that I use to keep my financial house in order.

Estate Planning & Risk Management (I know that it is dark to talk about death or other bad events that could occur in your life, but it is important to discuss).

Wills – If you have children you must have a Will.  Otherwise, you are leaving their future in the hands of the state.  I find it hard to believe that the state would be better at determining your families future instead of you.  DON’T PLAY WITH FIRE….. GET A WILL!!!

For more information, visit the show notes at http://www.moneyguy.com/2007/06/the-30-minute-financial-plan

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First you guys need to know my thoughts on what is known as Efficient Market Theory

Efficient Market – Since everyone has the same information about a stock, the price of a stock should reflect the knowledge and expectations of all investors. The bottom line is that an investor should not be able to beat the market since there is no way for him/her to know something about a stock that isn’t already reflected in the stock’s price.

I feel that this Theory holds true for Large Cap. US Companies. There are really only 1,000 Large Cap Companies (Cap Value > $10 Billion). Meanwhile there are pundits, analyst, and advisors like myself on every street corner to evaluate these 1,000 stocks. With the vast amounts of information and the speed that information now reaches us through the Internet, Cable Business Channels, AM Business Talk Radio how could you know anymore than anyone else?

For more information, visit the show notes at http://www.moneyguy.com/2007/06/how-to-choose-mutual-funds

For more information, visit http://www.moneyguy.com/2007/06/how-to-choose-mutual-funds 

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There are tons of podcasts out there that explain how to spend less than you make, and how credit card debt can drain financial freedom. How many actually have the training and know how to help you with the crucial portion of your extra cash flow and retirement funds? I would dare to say not many because most either do not know what to tell you or they are trying to sell you a product so they will never tell you (unless you invest $2k into their proprietary system). I am here to help by focusing the next few shows on investing.

Today is the first part of our investment series and we are getting back to the basics, but before I get into the details I wanted to mention an article I read this weekend:

For more information, visit the show notes at http://www.moneyguy.com/2007/05/when-where-and-how-to-invest-investing-101

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Tax Refund Challenge:

Now that you have filed your taxes it is time to evaluate where you are financially. Say what you will about filing tax returns they at least allow you to take inventory on how much you earned in 2006. I am always talking about saving for the future and making sure that you are locking away 15%-20% of your gross wages for the future. That is easy to say when you earn a good living, but I know from emails that I receive that many out there are struggling financially. The average refund was estimated to total $2,480 for 2006 up from $2,371 for 2005. I would challenge you to look at your return and if you are not happy with your income level do something about it. Success is easier than you think… You just have to believe and figure out where your passion is. Use the refund money as your initial savings for starting a business, or for going back to school. It is very fulfilling and can be financially rewarding to make a big change and have success that leads you to a better life.

For more information, visit the show notes at http://www.moneyguy.com/2007/04/lazy-investing-can-be-good-investing

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The financial markets have been very choppy this quarter. We started off 2007 with day after day of the stock markets hitting new highs. Then one crazy Tuesday in February (27th to be exact) the bottom fell out of the market (I blame it on my producer Heidi; she was off that day spending time with her dentist and a root canal). Ever since it has been up and down to the point that many of you are wondering what in the world is going on.

On today’s show I am going to share with you the resources that help me determine what is going on in the financial world.

For more information, visit the show notes at http://www.moneyguy.com/2007/03/free-professional-advice-and-research-my-little-blackbook

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There is a storm of concern that has been building for quite some time, and it is finally getting the attention that it deserves…. 401K FEES:

CNNMoney.com “Lawmakers to take close look at hidden 401(k) fees”

US Deprtment of Labor “A Look at 401(k) Plan Fees”

MarketWatch “More fee disclosure could save 401(k) owners money, Congress told”

For more information, visit the show notes at http://www.moneyguy.com/2007/03/are-401k-fees-robbing-you-of-your-retirement

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Term Life Insurance is appropriate for people who want life insurance only for a limited term, such as until your children are grown or you reach retirement age.

Term life insurance has become much more affordable in recent years due in part to the fact that people are living longer. A $500,000 term-life policy can now cost as little as $350 a year for 20 years, which is considerably cheaper in comparison to the more than $1,000 a year that it would have cost you in the early 1990s.

For more on Shopping for Insurance, visit the show notes at http://www.moneyguy.com/2007/02/objective-life-insurance-adviceno-really

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When I use others’ research I always try to give proper credit to the source. Much of the information and research for today’s podcast comes from Consumer Reports Money Adviser (January 2007 Issue).

If you listen to AM radio, watch any of the cable news networks and/or your evening news, or read a newspaper, you have probably heard the following terms: Federal Reserve, Federal Reserve Chairman Ben Bernanke, Inverted Yield Curve, GDP, and Inflation Rate. How many of us really know what these figures and terms truly represent?

For more information, visit the show notes at http://www.moneyguy.com/2007/02/too-scared-to-ask-economic-indicators-explained

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The backbone of good investing is Asset Allocation, and today I am going to load you up with great information.

Terms needed to understand asset allocation:

Domestic Stocks = US Companies Market Capitilization of US Stocks (According to Morningstar): Large Cap = US Companies with a Market Cap greater than $11 Billion (these are the companies that are household names like Wal-mart, GE, Home Depot, Coca-Cola, Pfizer, and so forth) Mid Cap = US Companies with a Market Cap between $2-$11 Billion (these are companies that you might have heard of like HR Block, but are not the size of the previous listed group. Small Cap = US Companies with a Market Cap below $2 Billion. Probably not going to recognize the small company unless you specifically use their product or they are in your town.

For more financial terms, visit the show notes at http://www.moneyguy.com/2007/01/the-abcs-of-asset-allocation

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Before we can look forward I think that it is smart to review what happened in 2006:

Domestic Stock Markets: * The 2006 market was interesting in the fact that the first half was pretty flat as everyone tried to figure out what the Federal Reserve was going to do with interest rates.

* The second half was El Fuego (“ON FIRE” for my Spanish-challenged listeners). The Fed decided to take a break with interest rates, oil prices dropped, everybody and their brother decided it was a good time to merge with other businesses, corporate profits were better than anticipated, unemployment was lower than expected, and interest rates came down.

* All of this was the perfect mix of optimism and lower inflationairy news that allowed patient long-term investors to be rewarded.

* Actual numbers for 2006 (with dividends reinvested): S&P 500 Gained 16% Dow Jones Industrial Average returned 19% (at an all time high) NASDAQ was up 10% (still more than 50% below 2000 levels)

For more information, visit the show notes at http://www.moneyguy.com/2007/01/what-to-learn-from-2006-and-use-in-2007

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A recap on where to get good advice and what to watch out for.

Unfortunately, my industry still has too many short sighted individuals. What I mean by this statement is that there are a lot of advisors, brokers, agents, and reps that are looking for the big score, and could care less about the long term financial health of their clients.

My personal belief is that if you do good things for others it comes right back to you. Fortunately for me and my company most have not realized that you can make more long-term money by being good to your clients.

For more, including The Five Signs of Bad Financial Advice by Suze Orman, visit the show notes at http://www.moneyguy.com/2006/12/planning-well-and-avoiding-the-sharks

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The government recognizes that most individuals have been asleep at the wheel when it comes to saving for their retirement, and they are also unaware that Social Security is only a few decades from a funding disaster (don’t worry I am not going to go there on today’s show).

As a result of this SILENT BUT DEADLY BUILDING DISASTER the government has made several changes that provide tremendous opportunities for you to save for your future retirement and financial independence.

What retirement option should you use and in which order should they be funded?

For more information, visit the show notes at http://www.moneyguy.com/2006/11/organizing-your-retirement-options

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I received an email from a subscriber (thanks Helen) suggesting that I watch the PBS Frontline special titled “Can You Afford to Retire”. I was so impressed with the program that I have decided to focus today’s podcast entirely on the special.

The focus of the program is on the changing retirement landscape.

1974 Retirement Funding: 11% Employee 89% Employer

2006 Retirement Funding: 51% Employee 49% Employer

“Defined Pensions”: The Endangered Species

...and more.

For more information, visit the show notes at http://www.moneyguy.com/2006/11/retirement-in-crisis/

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Ok everyone please quit sending me emails on how to become a Financial Advisor. I have been bullied enough that I will spill the beans.

According to CNNMoney.com I have the 3rd best job in America.

Before you run out and decide to change careers let me provide you with my thoughts:

* You have to be good at taking test and going to school * To be good you have to love numbers (and I mean truly love numbers) * This is also one of those professions that requires a unique personality mix – you have to be very analytical (to the point that you are truly a numbers nerd), but somehow enjoy talking with and building relationships with others. Trust me there are not many of us out there; most are good at one but not both and that can lead to limited success. * This is also one of those industries where you are not paid what you are truly worth for a number of years (3 years of experience required for CFP certification & 2 years of experience required for CPA).

For more information, visit the show notes at http://www.Money-Guy.com/financial-advisor-3rd-best-job-in-america

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In this weeks Financial Chaos Topic we discuss the following:

A Creative Way to Give and Avoid Taxes at the Same Time

If you are Charitable and Sick that the Government makes you take taxable RMD from your Retirement Accounts

Wesley Snipes joins the ranks of Willie Nelson and other not so tax smart celebrities. Don't mess with the only organization that can show up and just take your stuff!

For more, go to http://www.moneyguy.com/2006/10/the-tax-smart-way-to-better-the-world/

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In this week's Market and Media Update:

** Should we be concerned with the recent run up of the stock markets? Investor Apathy Means the Market Stays Bullish - Motley Fool

** Who is this YouTube Inc. guy (Chad Hurley) that is now worth $1.65 BILLION? Google's Billionaire Boys Club Gets a New Member

** Now that I am depressed about reading about YouTube's success I might as well play the lottery! How to Play the Lottery; The Smart Way - Howstuffworks

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Listen to the show for the following information:

* The Hierarchy of Investment Decisions

* The Cycle of Market Emotions

* Common Investing Mistakes

* How to Solve Investing Mistakes

* How to Accumulate $1 Million by Age 65

* Insight from Warren Buffett

For more, visit http://www.moneyguy.com/2006/10/lazy-investors-are-the-wealthest/ 

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Update on the Market and Media, September 20, 2006

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The following statement is harsh but true: Most individuals are not going to become affluent because they take the easy way out in the majority of their financial decisions. Examples: Putting off investing in your ROTH IRA or maximizing your 401k at work...

Read more: http://www.moneyguy.com/2006/09/secrets-of-real-estate-investing-grq/

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Update on the markets and media, September 2006

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Recap of the recent financial markets, August 2006

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The majority of subscriber questions that I receive focus on 401ks and other employer provided retirement plans. I have finally recognized that I need to focus on helping you maximize your retirement accounts.

To learn the Common Mistakes on managing your Retirement Plan, go to http://www.moneyguy.com/2006/08/conquering-your-401k-and-other-retirement-accounts/

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Episode 13 of the Money-Guy Podcast

For this episode of the Money-Guy Podcast, Brian answered subscriber emails, so there will be no show notes. Thanks for your continued support!

For more, go to http://www.moneyguy.com/2006/08/money-guy-08-04-2006

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Credit is also a great lead in to the Power of Debt. Debt gets a bad rap by most financial professionals and there is a reason.

Unfortunately most individuals do not use debt as a wealth enabler instead they use it to extend their income and life style (an expensive way of faking success).

For more, go to http://www.moneyguy.com/2006/07/money-guy-07-13-2006-podcast/

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Being Serious Credit is truly powerful:

If used correctly it can help make your life much easier including

• Buying or refinancing real estate
• Earn you rewards for everyday purchased through credit cards
• Lower your Insurance Rates (in case you did not know most insurers are now using your credit rating to help them evaluate you as a property and casualty insurance client

For more, visit http://www.moneyguy.com/2006/06/money-guy-6-29-2006/

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Investment Lemmings-Don't Become One!

The last two weeks have been big losing days for stock investments. Since May, Morgan Stanley's EAFE Index, which tracks European, Asian, and other international stocks is down 12% while the Emerging Markets Index is down 20% and the S&P is down 6%. Also, around nine billion dollars was transferred from stocks to money markets last week.

For more information, visit http://www.moneyguy.com/2006/06/money-guy-6-15-2006/

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On May 17, 2006, President Bush signed into law the Tax Increase Prevention and Reconciliation Act of 2005. Many income tax benefits expired at the end of 2005 but were not extended by this legislation (e.g. the deduction for state and local sales taxes; the deductions for school teacher's expenses; the deduction for higher education expenses; etc.). 

More information can be found at http://www.moneyguy.com/2006/05/money-guy-05-31-2006 

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Basic Goal Planning:

Short Term= Anything less than 5-7 years. 

Long Term= Anything greater than the 7-year holding period.

For more information, go to http://www.moneyguy.com/2006/05/23

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The Importance of Wills and Estate Planning 

Wills Help You With:

• Funeral Arrangements
• Disposing of your property
• Names a guardian for your minor children
• Names the executor or the administrator of your estate

For more information, including Legal Terms Used in Estate Planning, go to http://www.moneyguy.com/2006/05/money-guy-5-5-2006-podcast/

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While not great investments, cars are important purchases for most of us.

Beyond how we feel driving them, they're expensive to buy, own, and operate.

Fortunately, smart buyers can get an edge by doing their homework, collecting the right data, and having a negotiating strategy. Being smart definitely pays off!

To read the 4 Steps to Winning the New Car Game, go to http://www.moneyguy.com/2006/04/winning-the-car-buying-game/

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Financial Chaos Topic: Choosing a Financial Professional

The US Securities Exchange Commission (SEC) says the best advice it can give you about how to invest wisely is Ask Questions.

For a full list of questions, visit http://www.moneyguy.com/2006/04/money-guy-452006-podcast/ 

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Steps To Take If You Come Into a Financial Windfall

1. Create breathing room for yourself
2. Screw your head down to your shoulders
3. Organize a Financial Team

For more information, go to http://www.moneyguy.com/2006/03/march-15th-2006-podcast-from-the-money-guy-j-brian-preston-cpa-cfp-pfs 

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Common Deductions That Too Many People Miss

1. Non-cash Contribution

2. New Points on Refinancing

3. Old Points on Refinancing

4. Health Insurance Premiums

5. Educator Expenses

6. Miscellaneous Expenses

For more details, go to http://www.moneyguy.com/2006/02/february-27-2006-podcast-tax-planning 

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New and Exciting Update!! Next Financial Chaos Topic: Tax Preparation and Planning with special guest co-host Brandon Verner, CPA, a partner with Verner, Perling & Company, P.C.

For more information, visit http://www.moneyguy.com/2006/02/february-13th-2006-podcast-from-the-money-guy-j-brian-preston-cpa-cfp-pfs 

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Why Big Insurers Are Staying Away From This Year's Hot Investment Product from the December 14th, 2005 Wall Street Journal by Jonathan Clements

Choosing a 529 College-Savings Plan: When It Makes Sense to Go Out of State from the January 4th, 2006 Wall Street Journal by Jonathan Clements

For more information, visit http://www.moneyguy.com/2006/01/restoring-order-to-your-financial-chaos 

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