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Your financial future starts now!
May 01, 2022
How are you doing financially?
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10. Leaving a Legacy / Giving Back
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Good Quotes (about money)!"Too many people spend money they earned . . . to buy things they don't want . . . to impress people they don't like" ~ Will Rogers
"It’s not how much money you make, but how much money you keep, how hard it works for you, and how many generations you keep it for." ~ Robert Kiyosaki
"Financial peace isn’t the acquisition of stuff. It’s learning to live on less than you make, so you can give money back and have money to invest. You can’t win until you do this". ~ Dave Ramsey
"Beware of small expenses. A small leak will sink a great ship." ~ Benjamin Franklin
"Try to save something while your salary is small; it’s impossible to save after you begin to earn more." ~ Jack Benny
"Only buy something that you’d be perfectly happy to hold if the market shuts down for ten years." ~ Warren Buffet
"If a person gets his attitude toward money straight, it will help straighten out almost every other area in his life." ~ Billy Graham
Why Financial Goals?I learned from my parents (my Dad was a truck driver and my mom a stay at home Mom) that you don't need a high paying career or business to develop significant wealth. You just need a disciplined saving/investing habit and the benefit of time. The magic of compound interest helps take a modest investment and turn it into significant wealth over a 20-30 year time horizon!
BUILDING WEALTH IS A LONG TERM PROCESS. DON'T EXPECT TO GET WEALTHY QUICKLY.
You are likely goal focused otherwise you wouldn't be reading this newsletter. Your goals will cost you money, and for many of you, significant money!
The good news is that if you follow some CORE PRINCIPLES, you can develop all the money you need to achieve your goals.
Here are 7 key principles from my experience. Note that these are only my opinions but based on personal and proven experience. There are hundreds of ways to develop wealth.
1. Live below your means and stop trying to look like you're already RICH. - Don't buy a new car and have a large car payment in your twenties or thirties - Don't spend excessively on clothes - Don't spend significant money on anything that depreciates in value
If you've ever decluttered your house, you'll understand that much of what you accumulate was unnecessary in the first place.
2. Invest 15% or more of your pay check. If you want to become really wealthy and retire early, invest 20% or more!. Pay your self first BEFORE, just like you would pay a bill.
3. Invest in INDEX FUNDS tied to a major index such as the S&P 500 with low management fees with a track record of 8-10% annualized rate of return over the long term. Paying high management fees to own mutual funds or other assets reduces your returns enormously over the long term.
In prior newsletters, I recommended ARK funds from Cathy Wood. We still own some ARK-K funds which have unfortunately done terrible over the past year due to macro conditions (high inflation environment has really punished tech stocks, especially in disruptive technologies). The outlook however is very positive for their stated 5 year time horizon and I believe in Cathy's investment abilities and the future for excellent returns with all of the ARK funds.
Do your own research and only invest in funds which you are comfortable with holding for the long term.
4. Invest in individual stocks ONLY if you have high conviction in the company. Kathy and I have extremely high conviction in the company Tesla (Stock symbol TSLA). The conviction is boosted by owning our Tesla Model 3! The stock price is volatile (it can go up or down 30-40% in value in a week), but over the long term of a decade or more, many smart investors believe Tesla will increase in value by 5X - 20X. We have close to a 2.5X return so far in just a couple of years.
Our daughter Maddie is also investing her savings and any spare money in TSLA stock with our encouragement.
We are diversified with our real estate so we have taken an aggressive position with Tesla stock. For you, consider up 10-30% of your investment portfolio in a company or small group of companies that have the potential to increase in value like the companies Apple, Costco and Amazon have done. Great products, great leaders, growth markets, market leaders. But only invest in companies that you understand and would be happy to hold for the long term.
5. Invest in rental property, in a growth market where the population and demographics are poised for future growth. Have your tenants pay off the mortgage. Over the long term, real estate will always pay off.
6. Invest in your self by reading self-help books and autobiographies of successful people. Attend personal development seminars. It is good and I recommend spending money on your own personal development and growth to improve your earning potential in the future.
7. Write down your financial goals and keep a commitment to them.
10 Financial Goals at 100 GOALS CLUBDeveloping financial life goals and understanding how money works is essential to living your life of abundance. While money is not everything, and being obsessed about money is bad, most people agree that having enough financial wealth to live a comfortable lifestyle is important. Depending upon the type of goals you set for yourself, considerable financial net worth may be required. To travel the world, you'll need the financial resources to do so.
The purpose of this goal category is to help you understand the need to learn about money, and to track it, and do things to increase your income and the growth of your asset base, so that you have the financial resources to live the life you dream of.
The following 10 financial life goals are designed to do just that.
41 - Learn personal finance 101 / good financial habits - There are excellent YouTube channels with great investment advice such as "The Money Guy Show". "The Ramsey Show" also has an excellent channel although I don't agree with everything he recommends (like paying off your mortgage early vs. investing). Actively search out someone who you connect with, but be careful because not all on-line advice is good.
42 - Learn a financial tool to manage your money - EXCEL is one of the best tools for doing this and what I use exclusively.
43 - Develop a budget - We track our monthly cash flow (loosely) in an excel spreadsheet to understand our income and expenses. It is important to track this carefully when you are in your early phase of life.
44 - Develop a good credit rating - Ensure you pay off all bank/financing debt, credit card debt and other expenses on-time. This will almost guarantee a good credit rating.
45 - Track & develop your net worth - What gets measured and tracked, improves. Start tracking all your assets and liabilities and update this every year (Net-worth = Assets - Liabilities). This is one of the best things we've done and continue to do more than 30 years later. As you track this, you will realize the impact of your financial decisions. After about 15-20 years, you'll really start to see the exponential nature of your wealth (with the magic of compound interest), grow.
46 - Invest 10% of your income - My 100 life goals book originally recommended 10% however I believe 15%-20% is a much better target if you are not investing in real estate. We only invested 10% as we were also investing in real estate simultaneously. Both investment strategies have worked out better than we could have imagined, thanks to living in one of the greatest real estate markets (Greater Toronto Area) and above average returns in the stock market.
47 - Find a financial adviser / mentor - This is important but recognize you can get poor financial advice from some financial advisers with traditional thinking (i.e. over diversification may or may not be a good thing depending upon your situation). Some financial investors don't always act in your best interest, making decision on where they will receive the largest fees. Ask them how they are compensated before making investment decisions. If you are so inclined and have the right temperament, investing on your own may produce great results.
48 - Own investment real estate - This is getting harder to do if you live in a place where real estate prices are sky rocketing. But there are creative ways to invest in real estate if you are willing to find them. The returns can be life changing.
49 - Increase your income - When you keep advancing your skills (including communication skills), you will advance your career either as an employee or with your own business. Change your employer if you are not being recognized for your true value, but only after really trying to show your worth first (learn how to ask for regular raises).
50 - Plan your retirement - Develop a rough plan for when you would like to retire and what your finances will need to be to support your retirement and lifestyle goals.
Visit https://www.100goalsclub.com/life-goals-financial.html for the website version of this information.
What are your Financial Life Goals?The key to achieving good financial success is setting financial life goals. At age 30 and as part of my original 100 goals, I wrote out 4 specific financial goals to live our life by . . .
1. Develop seven wealth guiding principles to follow
2. Invest monthly 10% of Net income for long term growth
3. Achieve an average annual rate of return of > 10% on our equity investments
4. Retire at age 65 as a millionaire with net worth over $ 2 million dollars
All of these goals have been accomplished and more . . . ahead of schedule. Kathy and I retired at ages 55 and 57, last year.
There are literally hundreds of strategies for developing significant financial wealth. They all start with a foundation of understanding money.
Don't make the mistake of being careless with your money and your home finances. The benefit of being wise with your money and developing good financial habits now are critical to your future.
As many of these 100 Life Goals require money to achieve, setting up sound money strategies early in life are important. Once you understand the power of Compound Interest (reference Goal 41 - Learn personal finance 101), you will look at money entirely differently. Every dollar you save and invest now will multiply many times over if you have decades remaining in your life. Think about that the next time you visit your local Starbucks or McDonalds.
Here is a fundamental statement to getting wealthy over the long term:
"AVERAGE RETURNS SUSTAINED FOR AN ABOVE-AVERAGE PERIOD OF TIME LEAD TO EXTRAORDINARY RETURNS"
For example, if you invest just $ 500/month for 30 years and average a 10% return in the stock market, you will have more than $ 1M with a total investment of just $ 180,000 ($500/month x 12 months/year x 30 years). Increase your average rate of return to 12% and it will be worth more than $ 1.5M!
The Rule of 72!Check out my prior newsletter from December 1st, 2020 where I explain the RULE OF 72 and how long it takes to double your money achieving different annualized investment returns from 3% to 20%, as well as HOW TO INVEST.
THE RULE OF 72 IS ONE OF THE MOST IMPORTANT GUIDELINES FOR UNDERSTANDING HOW YOUR MONEY WILL GROW THROUGHOUT YOUR LIFE BASED ON DIFFERENT ANNUALIZED INVESTMENT RETURNS!!
Goal Achievement TipI am currently reading the book "Better than Before" from NYTimes bestseller Gretchen Rubin and author of "The Happiness Project". The book is all about developing HABITS and is an excellent read! If you can master your habits, you master your life.
The book explains that there are 4 different types of people and how they gravitate towards Habits. I expect that this translates well into how people identify with goals too:
The author Gretchen Rubin explains how it important it is to KNOW YOURSELF. Which one of these categories of people to you most identify with?
1 - UPHOLDERS - People who are self directed and take minimal effort in following through with things that are important such as habits.
2- QUESTIONERS - People who question things and will only follow through with a task, request or habit if they are satisfied it is the right thing to do.
3 - OBLIGERS - People who will do things if important for other people, but not necessarily for them self, out of a sense of obligation.
4 - REBELS - People who resist all expectations whether from others or themselves, acting only from a sense of choice, of freedom. Likely not people who will set goals.
The author goes on to explain how understanding which of these 4 types of person you are will help you develop a plan for developing and sticking with your positive habits, whether it its related to your health, career, finances or other important life area.
WHEN YOU LEARN TO MASTER GOOD HABITS, YOU WILL CHANGE YOUR LIFE!!
This book is available for $ 19.75 paperback version on Amazon.
Karah and Korey "Just Married"!Karah, our oldest daughter and former Canadian Rhythmic Gymnast, just married her life partner Korey on April 27th. Korey competed for Canada at the 2016 Rio Olympics in the sport of Wrestling. Together they make a great team and my wife Kathy, daughter Maddie and I are so happy that they tied the knot. We are also proud to become grand parents to their daughter Brynlee. Our family bond is further strengthened and we look forward to our future together as they live out their best life.
Twenty-two of us celebrated together in Mexico (Finest Playa Mujeres) last week. It was fabulous spending so much time together with family and friends.
Our first time to Mexico, this resort was top notch and we will be going back again some day. It is great for families and couples, with impeccable resort amenities, food and service. Check out the resort below.
Reach out to me if you ever consider a travel goal of going to Mexico and this resort and I can answer any questions you may have.
Next newsletter . . .My next newsletter will be on June 1st where I will focus on Career Goals on how to properly think about and build your career.
Brian Klodt founder of the 100 Goals Club
CREATE YOUR HAPPY LIFE! https://www.100goalsclub.com
P.S. Feel free to reach out to me at email@example.com with any feedback on this newsletter or suggestions for future newsletters.
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