You Have Control Over Your Financial Future

While the past few years haven’t necessarily been easy for anyone, there is some good news on the financial front. Despite the challenges we’ve faced in 2020 and 2021, there has never been a better time to work toward building a prosperous future for yourself and your family.

Why is that? Well, there are more investment opportunities now than ever before with options that are in reach for everyone.

And the best part of it all is: You have control over your financial future, especially when you take the time to learn more about investing. 

Investing has never been more accessible

 There are over 5,000 publicly traded companies listed on the New York Stock Exchange (NYSE) and the NASDAQ combined in all sorts of categories. 

  • You can invest in technology companies such as Apple (AAPL), Facebook (FB), Amazon (AMZN), Spotify (SPOT), and Alphabet Inc. (GOOG). 
  • Retail stores and restaurants such as Target (TGT), Walmart (WMT), CVS Health Corp (CVS), Starbucks (SBUX), and Chipotle Mexican Grill Inc (CMG). 
  • Energy companies such as Exxon (XOM) and First Solar (FSLR). 

When you buy stock in companies, you become an owner and can partake in their success. 

Buying stock has never been easier. With an online broker, you can buy shares using your personal computer or smartphone. And most online brokers offer commission free trades for stocks and exchange traded funds (ETFs). Also, there are many low-cost mutual funds and managed account options. The low cost and easy access makes investing more accessible to everyone.

Remember, when investing make sure you are diversified and have the right asset allocation.

Focus on your goals

Investing is not a competition. Other people’s financial success has no effect on yours. Don’t waste time worrying about the amount of other people’s wealth, how they acquired it or their income level.

Your success starts with planning your financial goals, deciding what’s important to you and then taking the necessary steps to achieve them (i.e., saving and investing).

There is no dispute that some people have more advantages than others. But no matter what your current financial situation is, your actions will determine your financial future.

A little money can go a long way

Here’s a lesser-known fact about getting started with investing: You don’t have to wait until you have a large sum of money to invest. You can start with just a few hundred dollars. If you consistently invest a little each month, the power compounding can work for you.

Here’s a hypothetical example. Let’s say you start off with an initial investment of $100 and you decide to invest $200 every month. If you’re paid bimonthly, that’s $100 a paycheck. Let’s also assume you invest in the stock market. Historically, the S&P 500 has provided about a 10% annualized return over the last century. If you input these numbers in a compound interest calculator, what can you expect? Assuming you reinvest the dividends and interest and they are compounded monthly, after 10 years you could have $41,240. After 20 years, $152,607. And after 40 years, $1,270,186. You’re a millionaire!

Note: Although the long-term historical performance for stocks has been positive, there is no guarantee that past performance will continue. There is always risk investing in the stock market.

Increase your discretionary income

There is no doubt that the more money you have to invest, the more wealth you can accumulate, and faster too. The number one source of money to invest is your income. The key to finding income to invest is to control your spending. 

You may have more money to invest than you realize. Take a look at your expenses and see where you can cut back. The easiest place to start is by looking at your variable expenses. Variable expenses are those you have some degree of control over such as groceries, eating out, entertainment, online subscriptions, shopping, travel, etc. 

An inspirational story about investing

There is an amazing story about a man named Ronald Read

Ronald was born in 1921 and grew up on a farm in Vermont. He lived until the age of 92 and passed away in 2014. He was the first in his family to graduate from high school and enlisted in the U.S. Army during WWII where he was stationed in Italy and served as a military policeman. After his service, he returned to Vermont and worked as gas station attendant and mechanic for 25 years. He retired for a year then went back to work part time as a janitor at a JC Penney store for 17 years until 1997.

Months after Ronald passed away in 2014, his life received national attention in major news outlets. Ronald Read had a secret, and that secret was revealed after he passed away. To the surprise of his friends, Ronald was a millionaire. Not just a millionaire, but a multi-millionaire. His estate was valued at almost $8 million dollars. Ronald was widowed and left $4.8 million to a local hospital, $1.2 million to the local library and the remainder to his two step sons.

So how did a man that grew up on a farm in Vermont, worked most of his life as a gas station attendant, mechanic, and a part time janitor become a millionaire? When you read stories about him, he has been described as very frugal. He drove a second-hand Toyota-Yaris, dressed in worn flannel shirts and wore an old coat held together with safety pins. He chopped his own wood for his woodstove. His only indulgence was having breakfast at a local coffee shop. He would park his car far away in a spot to save to money by avoiding the parking meter

Ronald was not only frugal, but he was a good investor. The bulk of his estate was in stocks. He owned at least 95 different companies. He actually held them in certificate form in a safe deposit box, something rarely done today. Ronald was patient. Many of the stocks he owned he held for years, and some decades. His holdings were from a variety of sectors, including railroads, utility companies, banks, health care, telecom and consumer products. Not all of his stocks performed well, but he was diversified. He only bought companies he was familiar with. He selected stocks that paid dividends and when he received his dividend check, he used it to purchase more shares. By being patient and reinvesting his dividends, he was able to take advantage of compounding over many years.

Ronald Read’s story is an inspiration because it illustrates how everyone has control over their financial future. Don’t let time pass you by and miss the opportunities available for you. 

Next steps

Ready to get started with investing? Consider these next steps.

1. Start planning your financial goals. Decide what is important to you. Money is nothing but a tool to assist you create the life you want to create for yourself. Financial goals are life goals.

2. Determine the time frame for each goal. Distinguish between your short-term goals, long-term goals and mid-term goals.

3. Estimate the cost and how much you need to save for each goal.

4. Evaluate your cash flow and create a budget to meet your goals. Look at your variable expenses first.

5. Prioritize your goals. You may not be able to reach all of them right away. Decide what’s most important and focus on those.

6. Select your investments. Make sure you have the right asset allocation and are diversified.

7. Periodically review your goals and progress.

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