SheSue Experience

NEVER!  A small inheritance was coming my way, so I decided it was time to learn more about investing my money. I admit, that I have always lived pretty much from paycheck to paycheck. My husband has a nowhere job and I spent the past 20 years taking care of and homeschooling my children.

I signed up for a community ed class on investing. This is a 5-part class. This post is week one: Foundations of Investing. We started with pretty basic stuff such as 5 reasons why investing should be a top priority:

• Inflation rises faster than your paycheck
• Be prepared for emergencies
• Your dreams always cost more than you expect
• Government programs may not be solvent (like Social Security)
  
• You may decide to make a life change that will require extra money

We learned about setting goals. Even though I know I’m starting way too late, I still need to get in writing an idea of how much money I need to be putting away. Some great financial calculators can be found at www.lpl.com/rebecca.horn. My goals need to be SMART:

Specific

Measurable

Actionable

Realistic

Time-line

She gave us a great sheet on tips for how to save money on every day things. Some examples: cut back on eating out, rent a video instead of going to a movie theater, buy things in bulk, combine errands to save on gas, cancel unused subscriptions like to magazines or gym dues, buy store brands, cancel the premium cable channel and take advantage of free entertainment.

Next we went over several charts reinforcing my guilt at not having started saving sooner. These charts showed how much more money you will have if you start investing earlier. Finally we began a discussion of types of investments. Three things to remember are diversity, quality and long term.

There are 2 major types of investments:

Loan Investments are money loaned to a bank, institution or company. In return, the investor expects timely payment of principal and interest over a fixed time period. These could include cash accounts such as checking, savings, money market and IRA accounts. OR income accounts such as CD’s, bonds, Treasure notes and bills, Corporate bonds, Municipal Bonds, Fixed annuities and 401(k) accounts.

Owner Investments are when you take partial ownership of the company or group of companies through the purchase of shares. The investor participates in the gains or losses of the investment. There is no fixed rate or fixed time period. These include: your home, business, growth and income stocks, variable annuities, 401(k), or Mutual funds.

We learned that we should only use loan investments as holding places for money we aren’t sure what we are going to do with. To make the most money, you need to put most of your money in the owner investments. The instructor was Rebecca Horn who is a local investment adviser.   She was a bit disorganized, but boy did she know her stuff.  She was also great at explaining things both in words and charts she drew on the board.

Some books she recommended:

Smart Women Finish Rich by David Bach

One Up On Wall Street by Peter Lycnh

Rich Dad Poor Dad by Robert Kiyosaki

Ordinary People, Extra-Ordinary Wealth by Ric Edelman

Millionaire Next Door by Thomas Stanley

Aflenza by David Wann and others

Anything by Suze Orman