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66 pages

English

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What if your middle class background is holding you back from the financial success you want? Dan Danford, CFP(R) earned a master's degree in personal finance and another one in business - but those aren't the reasons this little book is so powerful. Rather, it is his ability to explain that sets it apart. Many middle class money beliefs are just plain wrong and Danford explains why in simple terms

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Personal finance

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Publié par	First Edition Design Publishing
Date de parution	15 janvier 2017
Nombre de lectures	0
EAN13	9781506903255
Langue	English

Informations légales : prix de location à la page 0,0540€. Cette information est donnée uniquement à titre indicatif conformément à la législation en vigueur.

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Stuck in the Middle :
The Mistakes That Jeopardize Your Financial Successand How to Fix Them

DanDanford, CFP®
Stuckin the Middle
Copyright©2016 Dan Danford

ISBN978-1506-903-24-8 HC/DJ
ISBN978-1506-903-23-1 PRINT
ISBN978-1506-903-25-5 EBOOK

LCCN2016956353

October2016

Publishedand Distributed by
FirstEdition Design Publishing, Inc.
P.O.Box 20217, Sarasota, FL 34276-3217
www.firsteditiondesignpublishing.com

ALLRIGHTS RESERVED. No part of this book publication may be reproduced, stored ina retrieval system, or transmitted in any form or by any means ─ electronic,mechanical, photo-copy, recording, or any other ─ except brief quotation inreviews, without the prior permission of the author or publisher.

Althoughthe author and publisher have made every effort to ensure that the informationin this book was correct at press time, the author and publisher do not assumeand hereby disclaim any liability to any party for any loss, damage, ordisruption caused by errors or omissions, whether such errors or omissions resultfrom negligence, accident, or any other cause.
tABLE OF cONTENTS
Chapter1
Tax Refunds and OtherWindfalls . 5
Chapter2
The Shrinking Middle Class . 9
Chapter3
Price Matters More ThanQuality . 13
Chapter4
Neither a Borrower Nor aLender Be . 17
Chapter5
Banks Are For Managing Cash,Not Investing .. 21
Chapter6
Don’t Place All Your Eggs inOne Basket . 27
Chapter7
Extra Effort Doesn’t AlwaysYield Extra Results . 31
Chapter8
The Stock Market is Not aCasino .. 37
Chapter9
Don’t Self-Manage YourPortfolio .. 43
Chapter10
The Cost of Hiring Competencehas Gone Down .. 49
Chapter11
Many Mistakes Are Endorsed bythe Media . 59
Chapter12
A Brave New World .. 67
Chapter13
An Aging Population ChangesRetirement Planning .. 73
Chapter14
It’s Not About the Money . 77
Chapter15
Women Have Unique FinancialNeeds . 81
Chapter16
Pay Off Your Mortgage and RuinYour Retirement . 89
Chapter17
Money Disorders Sabotage GreatIntentions . 99
Chapter18
Small Businesses Create WealthAnd Planning Issues . 105
Chapter19
Technology Offers Great NewOptions For Investors . 111
Chapter20
What Is An Annuity? 115

Conclusion .. 119
Appendix . 121
Introduction
I’ve spoken to a lot of peopleabout investing and finances over the years. My first stint in the business wasas a trust officer for a regional bank in 1984. My area of responsibility wastax-qualified retirement plans and Individual Retirement Accounts. Since then,I’ve visited with thousands of people planning for or living in retirement.
Of course, the nature of mybusiness puts me in contact with people who are serious about retirement. Theywouldn’t be talking with an investment advisor if they weren’t saving,investing, and anticipating some retirement fruits from their labors. Mostly,they have the basics right. Nearly all of them are sincere and most are on theright track.
I’m often surprised, however, atsome of the financial mistakes I encounter. I don’t mean things like matherrors or misplaced credit cards, but rather ideas that conflict with what weknow to be true today. Many people don’t keep up with innovations in investingand so they are left with outdated information.
Another issue is where peoplelearned their outdated lessons. A lot of basic money ideas come from earlyfamily experiences. Those early imprints are powerful and not easily changed, butthe financial world of our parents was far different from the world today. Financialproducts, services, and fees were far different than they are today. It’s aserious handicap to address today’s challenges with yesterday’s knowledge.
The most damaging mistakestypically arise from personal experience. Feelings and emotions about money areoften strong — and wrong. Urges usually point the wrong way: the urge to sellwhen the market is down; the urge to buy when the market is up; the urgetowards safety when volatility occurs; the urge towards tangible assets; theurge towards things we already know; the urge to save money by avoiding experts;the urge to follow the crowd. Most of these are rooted in psychology orsociology and for good reasons, but they point investors in the wrong directionfor financial success.
That’s really the point of thisbook. I’m hopeful that I can open your eyes to some better ways of doingthings. Perhaps I can plant some seeds that will make your life journey moreproductive. Not every idea is for every person, but you and your advisor canconsider the possibilities. Sometimes a modest change can add value, convenience,or performance to your investment efforts.
Performance gets outsizeemphasis in most investment discussions and I get that. It is important, but ina long-term way that many people overlook. They get excited at the prospect ofshort-term gains and leap to mistakes that threaten longer-term results. I’llargue that many people get excited about performance mainly because it’s theeasiest metric to measure. Value and convenience are more subjective, and soharder to measure, but I contend that they are every bit as important to yoursuccess as pure performance.
The reason is because investmentand financial issues are sideline considerations for most people who are toobusy for deep research into investments. Their focus is typically on other issues:family, career, recreation, and meaningful relationships. Because of theirattention to other areas, convenience and value are extremely helpful for apart-time pursuit of financial goals. Simply, if something isn’t convenient orcost effective, it probably won’t get done.
Finally, my goal is to introduceyou to some new ideas that might explain some things you might not fullyunderstand. This isn’t a textbook and there are other great resources fordeeper study. I simply want to share some ideas to help you succeed. I hope youand your advisor can explore these suggestions as they apply to your specificfinancial circumstances.
Chapter 1
Tax Refunds and OtherWindfalls
Recently, a media reporter askedme for some suggestions for a story about tax refunds. She wanted some ideas asto what people might do with the money. It wasn’t a new subject for me.Reporters often call when the lottery prize reaches the sky. I’ve probably donea half-dozen lottery interviews over the years and I try to offer some insightseven though viewers or readers are unlikely to win. I typically make the samerecommendations as I do for inheritances, bonuses, or other windfalls.
If you are the fortunatebeneficiary of a windfall, I suggest that the money should satisfy your basichuman instincts as well as accomplish some good. I believe people do best whenthey splurge a little and save a little. I suggest three destinations for themoney:

Blow it . This is thefun part — the splurge. Take a weekend vacation or even a cruise if thatappeals to you. Using some of the money to pursue pleasure is a piece of theAmerican Dream…and the memories will bring you joy for years to come. We allneed some joy in our lives. A lot of financial plans fail because they ignorethe need for joy. Where’s the joy in receiving a tax refund or bonus if it allgoes toward paying off the credit cards or replacing the furnace?

Mow it . This isfinancial lawn maintenance. If you have a leaky roof, debts to pay, or need toestablish a fund for emergencies, use some of the money to address issues thatare holding you back. Enroll in a class if you suck at budgeting; order somesoftware to track expenses or balance your checkbook. Few people succeedfinancially without occasionally mowing their financial lawn.

Grow it . An obviouschoice is to reroute a chunk of the money into your retirement account orcollege funds. For maximum growth, plant seeds that can prosper over a decadeor two. Jim Stowers, founder of the American Century family of mutual funds,once noted that the “perfect time to plant an oak tree was twenty years ago.The next perfect time is now.”

But financial growth isn’t theonly option. In fact, it may not even be the best option. Perhaps a few collegeclasses or a new certification at work might boost your career; or a wardrobeconsultant to add some luster to your professional look; or maybe a publicspeaking coach to inject some bells and whistles into your businesspresentations. Personal growth often offers a faster and healthier return thanfinancial investments. Hey, learning to play the guitar might be a lot of fun!
Personal growth is a powerfuluse of money. Books, lessons, seminars, and experiences all bring lasting valuefor the dollars spent. Some of that value might translate into increasedearnings or lower expenses; some might add substance to life or lead to betteruse of precious resources. In almost every case, the value created exceeds themoney spent.
I reject the notion thatpersonal finance has to be boring. In fact, one reason many people fail isbecause they envision it as boring, and it very likely has been drudgery mostof their lives. So the remedy to the boredom challenge is to add some spice inaccomplishing goals.
No disrespect for the boringstuff, which has been well documented when it comes to personal finance. Everybookstore and library is crammed with “how to” financial books. Countless internetsites offer advice. Much of it is relevant and helpful, but knowing somethingisn’t the same as doing it. That’s where most people come up short.
For windfalls, blow it, mow it,and grow it. For all else, let’s take a fresh look at some things you alreadyshould know. As humorist Will Rogers said, “It isn’t what we know that gives ustrouble, it’s what we know that ain’t so.”
That’s what we’ll be looking atin subsequent chapters.
Chapter 2
The Shrinking MiddleClass

“Astrong, educated middle class is what made America the greatest country in theworld.”
— Lincoln Chafee

I’ve been managing money forover 30 years. I was a bank trust officer, then president