Archives for August 2013

The Best Retirement Tips for 20 Somethings

The average 20-year-old is in the process of finishing their college career, settling into their new career of choice and making decisions that will affect them for the rest of their life. What we suggest is that, while they are doing these things, they also start planning for something that may seem very far off in the distant future; their retirement.

Okay, we realize that retirement is some 40+ odd years away and that there’s certainly plenty of time to start saving but the fact is that, during your 20s, the financial habits that you create are the same ones that will (hopefully) set you up for a good life when your career comes to an end. Below are some of the best tips that we’ve come across over the years that can help you to do just that. Enjoy.

  • Understanding how compound interest works and taking advantage of it now is probably our best piece of advice. By simply putting $5000 a year in a tax-deferred retirement account, an amount that equals just over $400 a month, you’ll have over $1.3 million 40 years from now. That assumes an 8% per year average which is rather high so let’s cut that in half and say that you’ll get 4% which is more likely. That still equals a retirement fund of over half a million dollars.
  • Paying yourself first is a financial technique that most specialists will advise and so will we. Opening a 401(k) with your employer is one of the best ways to do that and having money taken automatically out of your paycheck every week is the best way to fund it. If your employer has a matching program you’d also be well of vice to take full advantage of it and put in the maximum amount that you can to take advantage of what is essentially free money.
  • This might be the hardest pill to swallow but controlling your spending is absolutely vital if you want to have a comfortable nest egg when you retire. Simply put, the less money you spend in the next 30 to 40 years the more money you’ll have when you stop working. We’re not suggesting that you live like a pauper and eat beans and rice for the next 3 to 4 decades but simply make better spending decisions, put together and use a budget software app and take advantage of any and all opportunities to save whenever you . Once retirement comes around trust us, you’ll be glad you did
  • Start educating yourself about your retirement options now, including all of the savings options that you have, the types of investments available and any other financial information that you can get your hands on.
  • Pay off your college loans as fast as possible. The interest on college loans can make it very difficult to pay yourself first, put money in savings and build a comfortable retirement account. While it may mean making some sacrifices for a few years, the quicker you pay this debt the better off you’ll be.
  • Make, and meet, smaller financial goals so that you become financially disciplined and create excellent financial habits. Pay off your credit cards in full every month, save for that new car and pay for it in cash rather than taking out a loan and try to resist using credit cards to make large purchases that you can’t pay off at month’s end.
  • Try your best to boost your contributions to savings, IRAs and 401(k)s every year. Using the money from your bonus or pay raise is a great way to do this.
  • Start diversifying your portfolio now. Even though you can afford to take a few more risks (and absorb a few more hits) right now, it doesn’t mean that your portfolio should be composed of 100% stocks. Simply put, a diversified portfolio will, in most cases, provide you with a better overall outcome by the time you reach retirement age.
  • Turn financial organization into a habit now, while you’re still young. While you may pile your laundry in a heap on the floor and have three months’ worth of McDonald’s wrappers under the seat of your car, when it comes to finances, disorganization can be very costly.

Right now, while you’re in your 20s and your life and career are ahead of you, is the best time to put these tips and advice to work for you. Even if retirement is something that you really don’t want to think about, the habits that you create now will stick with you throughout your life and career and could very well mean the difference between a comfortable retirement and a retirement filled with financial stress.

If you have questions about retirement planning or concerns about your finances please let us know and we’ll get back to you with answers and advice.


Choose the Right Bank for your Small Business

If you’re an entrepreneur and getting ready to start a new small business one of your first task is going to be to find a bank that helps you to achieve your business goals. Indeed, a mistake that many new business owners make is to use a bank out of simple convenience or loyalty when in fact they should be taking time to ask tough questions and make sure that their bank has their best interests in mind (at least to a point).

That being said, below are a number of steps, tips and advice that you can use to help you select a bank that’s suited to your specific needs as well as helping you to improve your overall relationship with your bank. Enjoy.

  • One of the first things you should do is get to know your banks branch manager on a personal as well as a business level. By building a connection with the decision-makers at your bank with face-to-face conversations, you’ll increase the chance that they will accept your proposal or lend you the money that you need when the time comes. You should also review your personal accounts with them and show them that you are committed to bringing them new business if they are committed to helping your business grow.

There are a number of services that you should definitely inquire about and also some that you should qualify for including employee credit cards, mortgage loans and other products that can sometimes be bundled for better rates.

Loyalty to your bank should pay off in lower interest rates and less overhead and should enable you to utilize one bank instead of several.

  • At least once a year you should ask your bank for feedback on the performance of your company. The fact is, there are many small business owners who don’t take advantage of the expert advice and experience that a bank manager has, advice and experience that could very well help them grow more quickly. It’s recommended that, at least once a year, you schedule a formal briefing with the branch manager and other key banking staff as well as the key members of your own staff.

What this can do is provide you with valuable feedback about your company’s financial performance over the previous year as well as pinpoint the areas of opportunity and growth that you may have but not be aware of. Even better, the advice that you get will help you and your team to sharpen your pitch when meeting with potential investors.

  • Make sure that, at least occasionally, the relationship manager at your bank is bringing you new business contacts and ideas. If you are working with an effective business banker you’ll find that they understand quite well what it means to cultivate collaboration between their clients. For example, if you’ve recently given them a great presentation you should expect them to mention it to some of their other customers and, when they come across a customer who may be able to help you, they should do the same.

Frankly, your bank manager’s job is to contact you about new products and services that they offer but, if that’s all they do, you may wish to find another banker to work with.

  • Talk frankly with your bank about how they are doing and what plans for growth that they may have. If you look at your bank as a partner in your business then you will quickly realize that asking hard questions about their track record and their predicted growth, as well as any plans that they have for the future, are only normal. Ask about their limits for federal deposit insurance, their security measures to protect you from fraud or mismanagement and anything else that might affect you positively or negatively in the future.

While you may not be looking right now for a bank loan it’s always a good idea to build connections and demonstrate loyalty with any bank that you are going to work with in the future. The fact is, most businesses will face theft or fraud at one point and, if you have a relationship with your bank that you can count on, you’ll have a much easier time straightening things out when the inevitable happens.

A smart bank manager will recognize the value of a long-term relationship with a successful business and, if you nurture a strong relationship, you’ll find that this can pay off greatly in many ways.

If you have any questions about banking, personal finance or any other type of finance question, please let us know and we’ll be sure to answer those questions and give you options as well.

10 Tips for the New Entrepreneur

Entrepreneurs come in a wide variety of shapes and sizes but one thing that all of them have in common is that, at one point in time, they were new entrepreneurs. Unfortunately, there are very few real resources that address the challenges that new entrepreneurs face and it’s for that reason that we’ve put together this blog today. The 10 tips below should be extremely helpful for anyone who’s just starting their own business and help them to avoid many of the pitfalls and problems that many new entrepreneurs have to deal with (or at least see them coming).

  1. Don’t jump at every ‘opportunity’. When you first get started it may seem like a good idea to involve yourself in everything possible but spreading yourself too thin definitely can limit your effectiveness. When first starting out it’s better to do one or two things very well than a dozen things are not so well. If you are ready to jump into another project  before yours has even gotten off the ground it might mean that your original plans aren’t as strong as they should be.
  2. Build your business around something you love to do. Here’s the thing; creating a profitable business is hard enough when you’re starting out that there is no need to convolute the process by getting into something that you either don’t know, don’t love or a combination of the two. Even though a new business idea may be trending or have a potential for large profits and returns, if you don’t truly love what you’re getting into your best bet would probably be to not get into it at all.
  3. Perfect your elevator pitch. It helps to be able to quickly and concisely explain what your business is and what it produces. Being able to describe it to a complete stranger and walk away knowing that they understand exactly what you’re doing is vital to your success. If you can’t do that, you may not understand your service or product as well as think.
  4. Knowing everything isn’t necessary, but knowing people who can fill in the gaps in your knowledge is. Here’s the thing; nobody knows everything about their business until they’ve been in it for quite a few years (and even then sometimes not). This is only a problem if you don’t have people around you that can help fill in your knowledge gaps, meaning that surrounding yourself with at least one or two knowledgeable individuals is vital to your success. It also just makes good business sense.
  5. Frugality is your friend. When you’re just starting out the last thing you need is a fancy office filled with expensive furniture in a high cost location. (Unless, of course, you’ve managed to secure the funding to do this.) (Which you probably haven’t.) In most cases, maintaining an extremely low overhead and strictly managing your capital and cash flow are not only a good idea but are vital to ‘making it’ in the long run.
  6. There is no such thing as a perfect plan. Even if you’re purchasing a franchise where everything has been laid out and tested previously, there will be bumps in the road and setbacks. If you’re prepared for them, your chances of success will be much higher. Some of the best entrepreneurs in the country faced immense challenges and were forced to learn from their mistakes but, since they were prepared for these challenges, they endured.
  7. If you’re entrepreneurial idea will needs lots of funding, you may wish to reconsider. Simply put, if you can’t start your business on a shoestring budget you may not want to start it at all. In today’s tentative business world, finding backers for an expensive and unproven idea is extremely difficult. Better to start small and, once you’re successful, bring your idea to investors who will then be more likely to back you.
  8. Take care of your health. Many entrepreneurs work themselves to exhaustion and, frankly, in many cases, a new business venture can be very exhausting. While working hard and putting in long days is necessary, it is also necessary to give yourself a break, take care of your physical and mental health and set your business aside occasionally to re-energize your batteries. The reality is that if you get sidetracked by exhaustion or burnout there’s nobody that’s going to be able to step in and to take over for you while you recover.
  9. Avoid exaggerating what you and your new business can do. This one is extremely important. If you make promises that you can’t keep or exaggerate what your product or service can do you’ll quickly find that negative word-of-mouth stops your new business dead in its tracks. While enthusiastically talking about your business is a great idea, keep the hyperbole to a minimum.
  10. Know when to say when. If your new business is sinking you further and further into debt and it looks like there’s just no way that it’s going to work, don’t let your ego push you to keep going. Take the experience for what it is, a learning experience, and move on. Remember that, unless you are actually the captain of a ship, there’s no need to go down with it.

If you have any questions or comments about this blog or need help to figure out what your next decision should be, please drop us a line and we’ll be sure to get back to you with answers and solutions. Best of luck with your new business venture.