How Far Would You Go For Money?

What a question to start this Monday off, huh? I’m just getting started this week. “Would You Kill For Money?” – This is the question that I was left to ponder after I watched the movie Money Monster this past weekend. If you’re a movie lover like me, I hate it when people spill the beans, so I won’t.  However, I believe you’ll come to a similar pondering after watching the trailer. But, I have to address the fundamental premise of the movie – people will go to great lengths to earn some money. The movie provides many other “ah ha” moments, a tutorial on algorithmic trading, and urges you not to believe the stock tips you hear on TV.

Desperation can cause the best of us to go to great measures in order to make a return on an investment.  I’ve been there before and let me tell you – you start rationalizing poor decisions and trying to recoup your costs. The economist in me calls this “sunk cost fallacy,” or the tendency to let the costs you already incurred negatively influence your behavior.

What I learned, however, is that if an investment goes bad, one must be willing to walk away and take the loss. I did this last year with my J.C. Penney investment (the stock performed so poorly). I also did this a few years ago when I closed on my business - Smarteys.

What Should You Do When You’re Losing? 

No one likes to lose money! Trust me, I hate it. But, it happens to us all. The important thing to do is to have a framework to evaluate your investment.

So, here are a few questions you should ask yourself to determine if you should walk away from an investment that is losing money:

1. Will I expect to get a higher return by taking my money out of my current investment and putting it into a new investment?
2. Has the fundamental premise of why I invested in the first place changed?
3. Have I already surpassed my loss stop point? [Note: A smart thing to do is to determine your loss point beforeyou make the investment]
4. What are the tax implications of taking a loss on my investment?
5. Am I willing to put more money into a down investment? [Note: If the answer is “No,” then take a look back at #1].

Let me know what you think of these questions as it relates to an investment you’re starting to think through. There’s no shame in sharing – we can help each other find real answers and solutions. Leave a comment below and let me know your thoughts.

Have a wonderful day, and DON’T kill anyone over money, even when things get bad.

Want a Magic Pill?

I hope you embraced this Mother’s Day weekend, albeit living as a mother yourself, celebrating a mother in your life, or remembering one that has made an impact on you. I have always thought that my Mom had some kind of magic pill that gave her energy, always made her smile, and provided multi-tasking skills. In my mind, this pink magic pill allowed her to work a long day, take care of my brother and me growing up, and still keep her other relationships – as a wife, daughter, sister, aunt, and friend.

I eventually came to realize that there was no pill. Yup, to my dismay, no magic pill existed. Instead, it was her hard work, sacrifice, and definitely some prayers!

When it comes to our money and investing, it is easy to assume that others have gained their wealth by some magic pill. To no surprise, many people feel that you can take a magic pill for dieting too. (Side note – I read this weekend’s New York Times piece on “Why You Can’t Lose Weight on a Diet,” and mindful eating is suggested.)

Removing those who inherit large sums of wealth, most people who invest make hard choices, short-term sacrifices for long-term gain, and stay disciplined.  Let’s not kid ourselves - Having a certain level of income does help too. And, while luck and blessings sometime pay a part in reaping financial success, I want you to know that it takes work too! And, you are capable of hitting your financial goals.

Just look at one of your fellow readers, who hit a BIG goal this week:

Nicki Carr paid off $7,000 in credit card debt over the last twelve months. Nicki told me that she is now going to allocate the money she would have used to pay off her credit card to investing, and specifically in ETFs. 

Nicki asked me to share that she makes less than $75k, so if she can do it, you can too in your year of action. If you need a refresher on ETFs, check out my video!

Pay Off Debt or Invest? 

I know what you’re thinking – well, Charisse, Nicki may not have other outlays of cash that you have. You’re right – you do not know and nor do I. What I do know is that Nicki made it a top priority to pay off high-interest rate credit card debt (in her case, 22%) before investing. I agree that she made the right financial choice because the stock market has only returned 7% historically, which is a lower return than 22% on a credit card. Check out this article that goes through the math of making a decision between debt and investing.

You too can make great financial decisions!

You Can Invest on a Budget!

I hope you had a wonderful weekend. I was in NYC and let me tell you – I had a ball in bringing in the month of May. I’m going to keep it short and sweet today and let you listen to my talk last week on “Investing on a Budget.” As a reminder, Prudential invited me to speak as their featured guest on the Hip Hop Sisters Foundation Wealthy Wednesday call. I thoroughly enjoyed myself.

I know, the topic may sound contradictory, but I have no doubt that you will get a lot out of this one because I walk though exactly how to make room for investing in your life. If you did dial-in, thank you for your participation – I appreciate your support. 

If you have not done so, please listen when you have a moment. If you (or your parents are retiring), I give some good strategies on how to think about investing later on in life during the Q&A period. 

One of the biggest reasons why people do not invest is because they do not think they have money to do so. But, I will allay those fears and provide some tips to get you started.

Did You Hear?

For those of you who heard about Goldman Sachs opening a new online bank, you did hear correctly. I think Goldman has a way to go here, but it is very interesting that they have strategically decided to go this route. What does this mean for you? We’ll all have to wait and see if they can offer good products and a competitive advantage over what you’re using today. I will be following this one!

Have a great week and Spring is here, for real this time.

Ride on Prince’s Heels!

Happy Monday! And, if you’re celebrating Passover, I hope you enjoyed Seder.

I know - you’re receiving this email a little earlier than usual, but I can’t help it!

We’ve all had a few days to digest the heartbreaking news that Prince is gone. While I have never been a Prince groupie, I love dancing to “Kiss” and “I Wanna Be Your Lover.”

More over, I have always appreciated Prince’s individuality, including his love for the heels. It is Prince’s ability to embrace his uniqueness that offers a lesson for us going forward. And, Prince was a conscious investor!

Be Ready to Pull the Trigger

When it comes to investing, you must always develop your own philosophy for what is going to make you money. You have to be an individual, always searching for good themes that will help you reach your goals.

A great time to execute on individual stock investing themes is during earnings season. As I talked about late last year, company earnings do matter. In this past week, two earnings reports really stood out to me:

Steph Curry boosts Under Armour (UA) Earnings. UA’s footwear sales reached $264 million in the quarter, largely in part to Steph’s shoes, which outsold sales of LeBron James’ shoes. The stock jumped roughly 7% on the earnings, and is up 17% this year. BTW, if you haven’t read the backstory on how Steph left Nike for Under Armor, it’s worth the read – drama, power, and more!

Google Missed Earnings. The stock was down 5% on its earnings announcement because it missed Wall Street expectations.  The stock is down about the same amount for the year. Google is losing money on its blue sky projects, such as driveless cars and home automation. But, it announced that searches on mobile devices surpassed those on traditional computers – Wow. If you believe that GOOG will get more ad dollars from mobile, are you ready to buy GOOG?

I know – you didn’t think earnings reports could be so exciting, right? These reports give clues to trends as well as what’s hot and not. This week, see if one of your favorite company is reporting earnings.

Does the stock provide a better opportunity than the goods or services you buy? Leave a comment below sharing your thoughts.

Join Me

This Wednesday at 10pm EST / 9pm CST.  I will be the keynote speaker for the Hip Hops Sister’s Foundation Wealthy Wednesday call, sponsored by Prudential, on “Investing on a Budget.” Check it out here. I’d love to have you, even after you put the kids to bed!

You Owe Money!

You don’t owe me any money. Well, at least right now (wink wink). 

But, I bet the IRS has said to you at some point - “You Owe Me Money!” If not to you, then definitely I know your family member or friend has had this happen to them.

I owed money, again! I just sent off my payment today and I think my taxes are too high. I’m not alone - A recent Gallup poll pegged the percentage of Americans who think their own federal income tax bills are too high at 57%.

One of the best ways, however, to INVEST and reduce your tax burden is to put money into a 401k or 403b plan. The most common complaint I hear is “Charisse, I can’t afford to put more money into my 401k plan because then I won’t have enough to live from.” Well, this might well be the case for some of you but I know it’s not the case for all.

Leave a comment below letting me know what your approach has been to putting money in your 401k/403b (or NOT).

The Case for the 401k or 403b

• A regular allocation a 401k or 403b plan gets you in the game of investing for your own long-term benefit. You may not think that they’re actually investing, but you are since you’re investing in mutual funds within the 401k platform.
• Regardless of your debt profile, if your company offers a “dollar for dollar” 401k matching program, putting money into your retirement account is a high return proposition – you are getting a 100% return on your money because for every dollar you put in, your employer puts in a dollar as well.    
• Even in the absence of dollar for dollar matching, reducing your taxable income with a 401k will save you dollars at tax time. A 401k is tax-deductible, meaning it will reduce the taxes you pay today. Wouldn’t you rather put money up for yourself than pay the IRS? The maximum contribution to a 401k in the 2016 tax year is $18,000.
• Putting money into a 401k when your housing expenditures are less than 20% of your income and your make over $75,000 in annual income IS easier – it just is. Anyone who tells you an different is lying. The more income you make and the less you spend on housing costs, the more income you have to invest.

What Should You Do?

Evaluate how much money you are currently putting into your 401k. Ask yourself – Do I need an adjustment given a desire to invest more and/or save money in taxes? Share your thoughts with me.

Carpe Diem!

I hope you are in a peaceful state! First, I want to share a success story from a fellow reader, Ken Dolan-Delvecchio. Ken shared this on my blog. I hope it inspires you: Hi Charisse, I really like your notes. They're refreshing and inspirational. I invested about $10,000 over the course of several weeks time when the stock market was slumping. I just kept throwing a couple thousand every week or so into my Vanguard account. I'm happy with what's happening now. And you never know of course. I'm in it for the long-haul. Thanks for your helpful notes.

- Best regards, Ken

Success stories like this are powerful because they are proof that ACTION matters.

After attending a funeral this weekend, I was reminded how important it is to take action NOW in order to prepare for an unexpected future. None of us is promised tomorrow and death is as common as birth. I know it’s hard to talk about, so I want to focus on a major aspects of it that involve investing – annuities and death stocks.

The Annuity Ambiguity

You might hear a lot of commentary around annuities, which may come into place before (or after) someone dies. The goal of annuities is to provide a steady stream of income during retirement, and usually an insurance company makes investments to make sure your annuity achieves its goal. If you are not familiar annuities, then I guarantee that your parent or someone close to retirement age has heard of these.  There are four major types of annuities – immediate, deferred income, fixed, and variable.

Your Action - If you have an annuity, leave a comment below and share your experience.  If you don’t have an annuity, check in with your loved ones to see if they have an annuity and why they chose a specific type. The important thing is to start the conversation because if you have to take care of a parent, it will be important for you to know this.

If you have a desire to learn more about annuities, please let me know.

Death Stocks

Did you realize that some people make a killing by investing in death stocks? Think caskets, funeral homes, and cemeteries – I know, it sounds morbid but people make loads of money investing in these companies. When I worked at JPMorgan, I use to do research on these stocks because they generally had good cash flows and people are always dying. Remember what I said last week – if you can invest in things that you are familiar with, you will have more confidence.  

Your Action – Think about what sectors of the market generate good cash flows. Leave a comment below.

OK I want to leave on an upbeat note - Tell 3 people in your life you love them! You might not get a chance tomorrow.

Invest in Lean Hogs or Tesla?

We have reached the end of the first quarter of 2016 – oh my! Did you stick to your guns in this year of action and invest in the stock market when it was down in mid-February? If you did, you probably enjoyed a double-digit return over the last month and a half. Share your badass story in the comments section below so others will be encouraged. If you didn’t invest, ask yourself why you stayed on the sidelines. It’s OK because there are many reasons – fear, too many choices, or you just forgot – that prevent many people from jumping in. Or, maybe you just didn’t have the cash – very plausible and I’ve been there. Remember that you have to be intentional when it comes to investing and I’m here to help.

To keep it going or start, it’s important to know what you want to invest in (or not).

How About Those Lean Hogs & Teslas?

In case you didn’t see it, Lean Hogs futures were up over 35% during this quarter. This was the best performing group in the entire market, more than gold, utilities, or telecom stocks. I know ….what!?!

Lean Hogs futures are contract agreements to buy or sell a set amount of hog (AKA PORK) at a predetermined price in the future. The majority of pork meat consumed in the U.S. is first traded through these futures on the Chicago Mercantile Exchange.  I covered exchanges in my video series on the market.

Given that lean hogs were up so much, I have no desire to invest here because I think prices are overvalued. Do you agree or not? Leave a comment below.

On the other hand, we learned that Tesla Motors’ new Model 3 electric car racked up over 276,000 reservations since the company announced it would take $1,000 per reservation starting on March 31. My goodness.

In anticipation of the release, the stock went from $141 on February 8^th to $237 last Friday, or almost a 68% return. Now, if you think Tesla will manufacture way more than expected, then Tesla’s stock may not be overvalued.

If you like Tesla cars, would you rather buy a Tesla or buy Tesla stock? Scroll down and leave a comment sharing your thoughts. Let’s just say that in my house, my husband asks me every day to look at the pretty picture of the Tesla – he wants to buy.

Your Action

If you want to learn how to evaluate investment opportunities like Lean Hog futures or Tesla Cars but don’t know how, drop me an email by clicking the "Contact Me" button below. I’d love to hear from you.  I think investing is super fun when one has a theme in mind to act on with the goal of making money.

Does Your Family Talk Moola?

If you celebrate, I hope you all had a wonderful Easter holiday! I sure did. There is nothing more satisfying to me than spending time with family and friends. My family and I actually talked a lot about investing over the last few days. I am SO proud of my family for being open about their money. Unfortunately, family discussions around money tend to turn ugly, but rest assured that it doesn’t always have to be this way.

If you have kids, there are so many great ways to introduce financial concepts. I told my little 6-year-old cousin that he could only have the $20 cash gift if he saved $5 of it to do something with 6 months from now. He took that trade! Would you take that trade? Leave comment below letting me know what you’d do.

So, I wanted to share 3 tid bits I gathered around this year’s festivities:

1. Getting into an investment club is a powerful way to hold yourself accountable for investing consistently to other people who value investing.
2. Look into the injured spouse tax clause if you are in a situation where you owe child support and do not want it to suffer the financial consequences of filing jointly as a married couple. 
3. If you’re planning a wedding out of town, give your bridal party more than six months to prepare for the financial commitment of participating in the wedding.

If you have any other tidbits to add from this holiday weekend, please leave a comment below and share the goodies. Don’t keep them to yourself.

If You Missed It

This Thursday, March 31^st, I will be speaking on the topic of leadership in front of the Willow Creek Business Summit in Chicago. If you’re in town, I’d love for you to join me. This is the rescheduled event from the original speaking engagement I had in February, which was cancelled due to weather.

I hope you enjoy the rest of March – we’re flying by in 2016.

Let Madness Be Your Guide

Madness will drive you to new heights. Even if you are not immersed in this year’s NCAA basketball tournament, women’s or men’s, or March Madness, you cannot escape your friends like me who keep bringing it up.  Every NCAA basketball participant wants to win sooooo badly that they will go quite mad until they get the ultimate prize: winning.

When it comes to investing and your money, sometimes madness, or “the quality or state of being mad,” is just the kind of motivation you need to spur you into action. My mad state came yesterday when $553.69 was debited from my checking account for my Sprint bill. We have a family plan, and with all the taxes, hot spot, data, we typically pay close to $180 for 2 lines.

I HATE when I get an unexpected surprise for a bill that should be fairly consistent from month-to-month. Don’t you? And, I was hot because that’s almost $350 that could go into my savings.

Well, I called Sprint this morning and gave them an ear full. I went over my minutes, which has never happened to me. But, Sprint failed to notify me that I was close to the limit NOR did they proactively offer me a better plan (which they are currently offering to new customers) that would have prevented this. As soon as I said I was going to switch to T-Mobile, which was offering $65 per line, after 19 years of being with them they suddenly told me about their new plan of $65 per line + taxes. My credible threat worked!

It just goes to show you that you have the upper-hand with your phone carriers. Call them and see what they can do for your plan. And, have some pep in your voice.

Here’s My Madness Advice:

If something is really bothering you, let that be your guide to taking action. In your year of action, it is so important that you have control of your own destination. Some of us are encouraged by fear and others are encouraged by positive outcomes. But, every now and then, it is the madness that is the true driver of change.

This week, examine what aspects of your life are driving you mad. I suspect that there is a financial implication associated with that madness.

Leave a comment below letting me know what it is so we can brainstorm together on how to tackle it. There’s HOPE!

Until then, be well.

You Got Entrepreneur Swag!

I hope you enjoyed the weekend. If you trekked down to the festivities at South By Southwest also known as SXSW, I hope you enjoyed it. If you don’t know what SXSW is, no sweat - it is an annual set of film, interactive media, music festivals and emerging technology conferences that takes place in mid-March in Austin, TX.

What I want for you is to get inspired by the goal of SXSW, which is to be the “premier destination for discovery.” This year, I read about a robot trash can – oh my!   

When I think of discovery, I think of entrepreneurship. I believe that you have a little bit of entrepreneurial swag. It’s that entrepreneurial swag that helps us stay focused on reaching the new investing goals that we’ve set for ourselves in this year of action.

Investing in your own business might be one of your goals for this year. You may have highlighted this in response to my question last week - What is something you claim you want to do involving investing this year but you haven’t been able to do it yet? If you missed the opportunity to respond, just reply to me as it’s not too late.

Well, guess what? It takes some amount of money (and dumb luck or what I call “favor”) to get it off the ground to be successful. If you are toying with the idea of investing in your own business, here’s one of my biggest pieces of advice:

Figure Out How Much Money You Need to Get-off the Ground

One of the biggest challenges for entrepreneurs is to build that first product or service offering. One key question should be - HOW MUCH MONEY you need to get to that first milestone? Think about what that first milestone will accomplish for you. Do you have the money sitting in a savings account now, and if not, how many months will it take you to get to the required amount of money you need to hit the milestone?   

Leave a comment and share your approach of how you reached your financial goal. Did you abandon investing in the stock market, or pull money out of the market?

If you need help in coming up with this figure, just leave a comment on the blog and I’ll be sure to respond. You won’t be alone, so be brave and comment so that others can benefit too.

Onward,

Charisse

P.S. – Don’t keep this goodie to yourself. If investing in your own business is not on your list for this year, I know you know someone who does have it on their list. Share this blog with at least 1 friend.