As the NBA Finals aired this week, after my usual bedtime, I found it hard to go to sleep for fear of missing LeBron James pull off something spectacular. The Golden State Warriors had been firing on all cylinders all season long, and were heavily favored to eliminate the injured and worn-out Cleveland Cavaliers in Game 6. I could have gotten my normal nights rest, but I couldn't fall asleep and risk missing the self-proclaimed 'greatest player in the world' overcome all the obstacles and lead his team back to his home state for Game 7. This excitement surrounding the 'what-ifs' in sports plays out a lot with individual investors. On Wall Street they have termed it 'FOMO' or Fear Of Missing Out. There is always that hot stock that if you had waged it all at the right time, or even right now, could set you up to retire in no time. However, there is a more rest assured way to reach your financial goals. By consistently contributing and investing into a diversified portfolio of asset classes that have time tested returns, you greatly increase your odds of success in the long run. The following article highlights this strategy with some interesting facts to back it up.
Most teenagers do more taking than making when it comes to money and any money they do earn, disappears into thin air. I get it, but it never hurts to teach your kids the savings bonus they have by being young known as Compound Interest, or interest on interest. Dave Ramsey gives a powerful compound interest example in the following article that shows how starting young pays off big over time at a 12% rate of interest (pulled out of thin air), to explain to your kids how to get to $1 Million. http://www.daveramsey.com/blog/how-teens-can-become-millionaires/
How to make the most out of your 401k
You often hear not to look at your 401k or brokerage accounts often because short term movements can trigger ill advised decisions within those accounts...the set it and forget it mindset. But was your initially allocation the right choice? The following link is a great article on how to make selections and changes within your accounts.
Section 401k of the Internal Revenue Code was added by law makers in 1986. Its initial purpose was to limit top executive access to the perks of cash-deferred plans. Since the 1950's, companies had argued with with IRS to be able to squirrel away money into these plans. Ted Benna, a benefits consultant, used his interpretation of the law to start the first 401k Plan for his employer. The 401k Plan quickly caught on with other companies in the early 80's and has since replaced pension plans as the top retirement savings plan.
Book Recommendation:
41: A Portrait of My Father by George W. Bush
I hope you enjoyed this month's newsletter. Feel free to contact me with any questions and topics of interest for next months newsletter. Thank you.
Justin Burgess Investment Advisor
Copley Investment Management
5025 B Wrightsville Ave
Wilmington, NC 28409
CIM's goal is to provide quality financial advice at an economical cost. Whether investing for retirement or the next generation, you can rest assured that we are paying attention. Our professional credentials, independence, experience, integrity, and transparent business model qualify us to accomplish this goal.
