PEARLs and TAXES

Who's Handling Your Money, Pearl?

The theme for 2020 is making your money work for you. It is time out for spending frivolously and not preparing for retirement, children's college funds, purchasing that new home and starting that transition from employee to employer. That being said, let's start the year off right by having informative discussions about our money and how we relate to it.

Last week we discussed Pearls and Taxes. Not only do you have obligations to the Internal Revenue Service, but we also have an obligation to ourselves. One avenue to you should take seriously is the road of investing. I know you're wondering how can a Pearl apply the nacr3 tenants to investing so let me tell you.

• Know who is managing your money: A Pearl's first step to knowing who is managing your money is understanding how your history of managing your own money. Take a sobering look at how you manage your income and what your bank account shows as being priority expenses. Once you take this step, look into understanding how to reshape your expenses and research advantageous expenses such as bonds, annuities, mutual funds, stocks and retirement accounts, etc. These are withdrawals from your bank account that will WORK FOR YOU in the long and/or short term. Don't fear, there is a plethora of free information on how to invest, definition of terms and even leads to lucrative investments. One of my favorite persons to listen to on best financial practices is Ms. Lynn Richardson, Financial Expert. She's on Instagram, Twitter, Facebook, and LinkedIn. I follow her Instagram account (@lynnrichardson and @lynnmillionaire) with her weekly video sessions. Understanding your money and how it moves is the start of  STRONG decisions on your financial future. 

• Being diversified, unconstrained and informed: Research shows that Pearls tend to have a better temperament for investing which sets us apart from our male counterparts. We take the time to research a company, ask more questions to make informed discussions on whether to sell or buy. Given that women typically outlive men, making informed decisions regarding investments is directly related to long term wealth and retirement options which also makes us less impulsive when presented with market instability. Knowing these effable qualities create a resilient outlook on your financial future. Take the time to understand the differences between investments with smaller returns having lower risks and those with high returns but an increased risk. A diversified mix of increased risk and stable investments will insulate your portfolio during market fluctuations. Online tools such as MorningStar (https://www.morningstar.com/) and MotleyFool (https://www.fool.com/) offer podcasts, books, and classes to enrich your knowledge on diversifying your portfolio and different investment strategies ranging from a conservative to a very aggressive investment approach. Diversification and information will keep your portfolio RESILIENT.

• Reassessing your portfolio and asset allocation: Reassessing or rebalancing your portfolio is to maximize your return and risk. Pearls should do this while meeting the level of return she expects. One guideline that can help you determine asset allocation, is a very simple rule in which you subtract your age from 100 to arrive at the percentage of stocks you should own (ex: 25 years old should own 75% of stocks). Another rule of thumb is that your portfolio is that it should be rebalanced to its original mix when any given asset class moves more than 5 percent from its original value. There is also an online questionnaire that assists you in having an idea of asset allocations. Vanguard Funds Investment Questionnaire If rebalancing your asset allocations sounds overwhelming to you, several free or inexpensive money management firms will do this for you such as Acorn, Stash, Ellevest and TD Ameritrade Mobile. Frequent reassessment and realignment of your investment portfolio will keep your finances LUMINOUS and yielding according to your target goals. 

As you approach investing your money this year, keep in mind your own temperament as it relates to your money moves. In addition to conducting your own research, reach out to your community for information on trusted financial advisors. Many women lack the confidence or knowledge to aptly manage their monies as it relates to long term wealth and most questions can be answered with some research or guidance from a financial expert. This year, I want you to know who is managing your money!