Family and Business
Don ’ t be House Poor !
Page 6
DON ’ T GET SWAYED BY THESE INVESTMENT “ MYTHS ”
by Jason Witcher
Over time , you will run into various suggestions for investing successfully . Yet upon closer inspection , many of these ideas turn out to be “ myths ” – which could cause you trouble if you treat them as solid advice . Here are five of these myths , along with some reasons for ignoring them :
You can find the next “ big
thing ”. All of us probably wish we could have “ gotten in on the ground floor ” of Apple , Microsoft or some other tremendously profitable company . And who knows ? There may indeed be another similar business out there , waiting to take off .
It ’ s almost impossible for anyone to identify these potential “ blockbusters ”. There ’ s really no shortcut to investment success – you need the patience and discipline to invest for the long term , and you need to build a portfolio that ’ s appropriate for your goals and risk tolerance .
Investors should always seek to
“ buy low and sell high ”. This is actually good advice – or it would be , if it were possible to consistently follow it . How can you know when the market is “ high enough ” to sell or “ low enough ” to buy ? You can ’ t – and neither can anyone else . Trying to time the market rarely works . A more appropriate strategy is to invest regularly and to diversify your holdings among stocks , bonds , government securities , and other vehicles , based on your goals and risk tolerance . Diversification can help protect you against market downturns that primarily affect just one asset class . Keep in mind , though , that diversification can ’ t guarantee profits or protect against all losses .
It ’ s always smart to buy investments that have performed well recently . You may have read in investment prospectuses that “ past performance is no guarantee of future results .” These words are certainly true ; just because an investment has had a good run recently , it doesn ’ t mean its success will continue indefinitely . You need to evaluate each investment on its own merits and on how well it fits into your overall portfolio .
International investing is too risky . In today ’ s global economy , it may be more risky not to
May 2017
invest some of your portfolio internationally . U . S . stocks represent less than half of global stock market capitalization – so by stopping at our borders , you are depriving yourself of a world of opportunities . It ’ s true that foreign investments carry some special risks relating to currency fluctuations and political and economic events , but you can help contain this risk by confining your international holdings to a relatively small percentage of your portfolio . A financial professional can suggest the best ways for you to add a global element to your investments .
You need a lot of money to make a lot of money . Of course , it doesn ’ t hurt to have a sizable amount of money to invest right away . But the world is full of people who started investing with small sums and ended up having enough money to enjoy the retirement lifestyle they had envisioned . If you ’ re just beginning to invest , put in as much as you can afford each month ; as your income goes up , increase your investments . As an investor , time is your greatest ally .
Sticking to a consistent investment strategy can help you write your own investment tale – and you can leave the myths to the storybooks .
This article was written by Edward Jones for use by your local
Edward Jones Financial Advisor . Jason Witcher | Financial
Advisor | EdwardJones 1795 Parker Road SE , Suite E110
Conyers , GA 30094 Office : ( 770 ) 648-6235 | Fax :
( 877 ) -904-3509
Dave Says
Family and Business
Dear Dave ,
My husband and I own a small business . One of our relatives asked for a job recently and we both have reservations about hiring him because there are several dysfunctional relationships and personalities within our extended family . Are we being mean ? We ’ re not sure how to respond .
Becky
Dear Becky ,
Having a small business doesn ’ t give relatives a free pass to employment . As entrepreneurs , you have the right and responsibility to do what ’ s best for your company . And you don ’ t have to hire anyone — even a relative — who ’ s not a good fit .
There are situations where hiring a family member can actually be a plus . If a relative is qualified and the kind of person who understands they ’ ll have to bust it every single day and perform at a level equal to or above your other team members , that can be a special and productive thing . A relative who is a problem child , however , can be a nightmare in both your professional and personal lives .
Ask yourself a few questions : Would you hire this person if they weren ’ t part of the family ? Would you hire this person because they would make a good team member ? If the answers are no , then you don ’ t hire them — period .
Be kind about the situation because there may be some bruised feelings . But the bottom line is that you have to do what ’ s best for your business , your immediate family , and your team .
— Dave
Don ’ t be House Poor !
Dear Dave ,
I read where you recommend having your house payment or rent at an amount that ’ s 25 percent or less of your monthly take-home pay . Does this figure include property taxes and insurance too ? Mark
Dear Mark ,
Yes , it does . I ’ m trying to keep you from being “ house poor ”. Did you know you can qualify for a house payment , with taxes and insurance , that ’ s close to half of your take-home pay ? That ’ s ridiculous ! When you don ’ t have room in your budget to do anything else that matters because your house payment is so large , that ’ s what we call house poor .
When your income minus your basic living expenses equals almost nothing , it means your basic living expenses are way too high . Being in this kind of situation keeps you from saving for really important stuff like investing , retirement , and college for your kids .
I ’ m trying to position you where you can get the house and everything paid off so you can become wealthy . Remember , your most powerful wealth building tool is your income .
When we talk about driving a crappy car , not going out to eat , or not going on vacation — those are temporary things . It ’ s all about living like no one else , so that later you can live and give like no one else !— Dave
* Dave Ramsey is CEO of Ramsey Solutions . He has authored seven best-selling books , including The Total Money Makeover . The Dave Ramsey Show is heard by more than 12 million listeners each week on 575 radio stations and multiple digital platforms . Follow Dave on the web at daveramsey . com and on Twitter at @ DaveRamsey .
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