Morton Brown Family Wealth Co-founder of Allentown, Kathryn Brown offers advice for financial success
Few things cause more arguments and sleepless nights than fears about finances, but with curiosity and attention, money can become more of an opportunity than a source of stress. Kathryn M. Brown, Co-Founder and Director of Morton Brown Family Wealth, is here to demystify money matters for those of us wondering how to save and invest for a prosperous future.
Why is money such a difficult area?
Because most people don’t get a consistent education on how to handle money, we’re left to form beliefs and feelings about it at random. “We learn about finances from the people around us,” says Brown. “How our parents manage or don’t manage money, experiences that we have had or that we have heard from others. People look around to see what other people are doing.
Along with these anecdotal data, talking about money is almost taboo. Without clear and open conversations, we concoct our own assumptions and anxieties.
To pull yourself together, start with your budget. “You don’t have to chase the penny,” says Brown, “but understand what’s going on in your bank account each month and what’s coming out of it. Generally speaking, if you can set aside and invest 10% of your income throughout your life, you will have a good retirement start.
Understanding stocks and bonds
Basically, buying stocks is buying a part of a business, and their value is tied to the success of the business. “If it works well,” says Brown, “you make money alongside the business. If it goes bankrupt, you could lose your investment. Bonds, on the other hand, are loans to businesses, municipalities, or governments that pay you interest with the promise of ultimately paying back the full principal. Bonds are generally less risky, but the trade-off is a cap on your earning potential, compared to stocks.
Investing your money in a wide range of these elements minimizes the risk. Your strategy may start with more stocks when you are trying to build an aggressive portfolio, and then move on to more bonds when you start to retire.
Why saving is not enough
Cash is vital for your daily operations and provides a bucket for emergency use. However, if you’re planning more than six months of spending, it’s probably time to start investing. Cash will lose its relative value over time with the onset of inflation. Compound income on invested money accumulates to reap greater profits over long periods of time, which is an antidote to the devaluation of the dollar. The good news is: time is on your side!
Give your money the chance to grow by capitalizing on free money opportunities first. “Make sure you contribute enough to your employer’s pension plan to maximize the matching contributions it can offer,” says Brown. “It’s usually an easy starting point. “
Soak your toe
Beyond emergency savings and your employer-sponsored retirement plan, maybe it’s time to start working with an advisor or robo-advisor. Some companies require a minimum investment, others do not. Large custodians like Charles Schwab, Fidelity, and Vanguard offer advisory options, whether you start with zero or one million dollars.
“As your investments increase, so do the complexities of the rest of your financial life. At this point, maybe it’s time to engage with a dedicated financial advisor, ideally a Certified Financial Planner ™ who can holistically guide all facets of finance, ”said Brown.
No matter what stage you are in, a good tip to stay on track is to set up systematic investments that are automatically withdrawn from your paycheck or savings account, for added convenience and peace of mind. “If he’s not there to spend,” adds Brown, “you’re less likely to spend it.”
While it is good to periodically check what your money is doing, remember that it is a long game. Don’t get caught up in the ups and downs of everyday life: keep your cool on the way. prosperity.
No stupid questions
If you still have a lot of questions, great! That’s what advisers are for. “I try to ask as many questions as possible and encourage my clients to do the same,” says Brown. “A good advisor should be prepared to recognize a client’s anxiety and really talk about it with them.
Don’t be afraid to ask, “If I invest this, how can I get it back?” »Configure your apps or portals to see what your money is doing and understand how you can withdraw it if you need to. Don’t hesitate to ask the tough questions: What if you lose your job? What happens in the event of market liquidation? What’s going on with Bitcoin?
There are answers behind the fog of financial confusion, and with a little research and the right advice, you can start putting your money to work for you.
Kathryn M. Brown, CFP®, ChFC®
Co-Founder and Director of Morton Brown Family Wealth