Tag Archives: Financial Advisor

How Can I Save $200 a Month for My Retirement

I am 59 and lost most of my retirement to my bankruptcy.

I know $200 a month in savings will not pay for my retirement, but I have six years until I can collect my Social Security check, and I have to at least build a good emergency fund.

Usually, most Certified Financial Planners will recommend to have enough money in a liquid account that will cover your expenses for six to 12 months if you lost your job or, for whatever reason, could not earn income for an extended period of time.

So, how much money will I have after six years of saving $200 a month. Obviously, I will have at least $2,400 times seven years. That comes to $14,400. But what about interest. If U average 6 percent interest a year my $14,400 will total significantly more.

I could put the money into a Roth IRA, which would allow me to withdraw the principal tax-free when I turn 59 ½, which is in about nine months. The contributions to the  Roth IRA, however, are not tax deductible. That’s OK for now.

But the question most people have is how can I save $200 a month.

One easy way is to have the money automatically withdrawn from every paycheck. If you get paid twice a month, you could have $100 sent to your Roth IRA every time you get paid. Out of sight, out of mind. Or, if it isn’t my checking account it won’t get spent.

Here are other ways you can start saving $200 a month:

  • Deep-six your cable subscription. Do you really need 100s, if not 1,000s of channels. Instead, watch all your favorite shows online. You can even stream it from your tablet or laptop to your TV set. You can save from $50 to $80 a month.
  • Do you really need Netflix, Hulu and Amazon Prime? Save another $9 a month.
  • Do you regularly eat lunch out during the workweek? Start packing your own meal. You can save $30+ a week, depending on where you were eating..

How is that so far? You already have saved $90 to $129 a month.  Here are other things you can do:

  • Check out your car insurance. I was with one company for 30+ years but when my monthly bill came to $125 a month, I started comparison shopping. I saved almost $40 a month by switching to another company..
  • If you are a major movie goer like I am you can save a lot of money by choosing when you go to the theater. Yes, you can save a lot more just watching all the movies on Netflix or Hulu, but I don’t enjoy movies online. That’s why I go often to the movies at the theaters. Since just the tickets are about $11 each, I can save $5 if I go on value Tuesday or save $9 if I wait until the movie reaches the $2 movie house. In my city, I also belong to the film society, which operates both a mainstream movie theater with first-run films, and the independent art house. My membership cost $50 a year. You get two free passes plus one or two bags of popcorn for free. And the movies only cost $5 each. Plus, their concession food is much cheaper than the chains. One last trick, go to the 10 or 11 a.m.showing. It usually costs about $6 at certain movie theaters. If I save $5 every time I go to the movies, I will save at least $60 a month. Sometimes less, sometimes more. (Sneak in food and you save even more.)

Now with the $40 from the car insurance and the $60 from carefully choosing when I go to the movies and where, I have saved an additional $100 a month.

I haven’t scratched the surface on ways to save money, and I am right $200 a month. Take a deep look at what you are spending money on. Set priorities and cut the fat.

Understanding the U.S. Stock Market

Buy high, sell low!

Words to live by if you are going to invest in the stock market. Of course, it is easier to preach this philosophy than it is to actually accomplish it.

One way to do this is to time the market. Know when to sell off at the peak and get back in at the valley. If you try this strategy, you will undoubtedly read articles about how if you miss the five highest days in the market you will be worse off than if you stayed in the market.

Has anyone really been able to time the market? I doubt it. Even if you find someone who warned that the bubble was going to pop, chances are five years later they blew the next call.

Did anyone really see the China bubble in August 2015? You would think there were warning signs. When I asked a stock broker if his company warned its clients to get out before the wild ride when the DOW dropped by more than 10 percent, the financial professional said: “We recommend to our clients that they stay in the market for the long haul.”

That is kind of a self-serving strategy because it absolves the financial broker from any responsibility when stocks nose dives.

I found an article in Barrons from February 2015 entitled, appropriately enough, “Considering the Stock Market Crash of 2016.”

John Kimelman was writing about Paul B. Farrell’s article, “Stock Market Crash of 2016: The Countdown Begins.”

Did Farrell get it wrong? The market crashed, but it was more of a major correction — more than 10 percent decline — than the 50 percent devastating crashes he warned that was coming in 2016.

Or is this just a prelude to Farrell being right. Are we going to relive the stock market implosion of 2008?

“Farrell writes that investors are in a state of denial about how bad things can get. But today’s investors aren’t behaving as bullishly as their counterparts in 2000 and 2007, two recent market tops. Also, it’s hard to imagine what catalyst may emerge in the next year that could be as terrible for stock values as the bursting of a tech bubble or a financial crisis brought about by an overinflated housing market,” according to Kimelman.

What are you to do then? Who do you listen to?

Kimelman suggests taking the approach preached by CNNMoney’s Matt Egan who writes about the “dangers of pulling money out of the stock market” if you think a crash will occur: “For example, people who invested $1,000 in the S&P 500 at the beginning of 2008 and again at the start [of] 2009 were back in positive territory by the end of 2009, according to a new analysis by financial technology firm CircleBlack.”

I faced that dilemma last when when my stock portfolio lost about $5,000 of its value. I had not pulled it out — I did not get the warning about China’s economic crisis. I have made the conscious decision to stay invested and wait for the market to grow again.

Probably a year or two from now the market will recover. If I can, I will invest more money in the market now while it is down and, perhaps, when it climbs back to 18,000+ I will  be ahead of the game.

I could use some help in make my financial decision because my options are limited.

Howard Gold, who wrote “What Should I do with My Money Now?” on MarketWatch.com, agrees.

“Bank deposits and money market funds are paying zero or even negative real returns. Yields on Treasuries are laughable and rates on investment-grade corporate bonds have plummeted, as have those of high-yield bonds.

“Commodities, except for agricultural-based ones, have languished. All the “alternative” asset classes that supposedly offer diversification — like real estate investment trusts — have moved up sharply with stocks. Gold and silver have underperformed boring old U.S. stocks for nearly the last year. So have once-torrid emerging markets.”

It is so confusing.

That is why as an individual investor you should not look for a financial Houdini, but you should take advantage of a certified financial planner who can explain all the options available.

The Wall Street Journal points out that a certified financial planner, who is not receiving commissions by pushing a product, can be of value to the individual investor.

“Financial planners can also help you remain disciplined about your financial strategies. They’ll make the moves for you or badger you until you make them yourself. Procrastination can cause all sorts of money problems or unrealized potential, so it pays to have someone riding you to stay on track.
“We’re not suggesting that you ignore personal finance and turn over all your concerns to an adviser. But even if you know the basics, it’s a comfort to know that you have someone keeping watch over your money.”