GET RICH LIKE WARREN BUFFETT

Posted By: TimoStevens (Wealth Sage, 2009)

1. Reinvest Your Profits.

When you first make money,there is the temptation to spend it. Dont... instead, reinvest the profits. A small sum can turn into great wealth!

Warren Buffet used the proceeds of his pinball machine venture to buy stocks and to start another small business.

2. Be Willing to Be Different.

Dont base your decisions upon what everyone is saying or doing. The average is what everybody else is doing.

To be above average you need to measure yourself by what Warren Buffet calls the Inner Scorecard, judging yourself by your own standard and the world's

3. Never Suck Your Thumb.

Warren Buffett prides himself in swiftly making up his mind and acting on it.

"When people offer me a business or an investment, I won't talk unless they bring me a price.Then I give them an answer on the spot" he says.

Nevertheless, it pays to gather in advance all the necessary information you need to make a decision, and stick to a deadline.

4. Spell out the Deal Before You Start.

Always nail down the specifics of a deal in advance - even with your family & friends.

Your bargaining leverage is always greatest before you begin a job - that's when you have something to offer that the other party wants.

5. Watch Small Expenses.

Exercising vigilance over every expenses can make your profits and your pay check go a long way.

Warren Buffet invests in businesses run by managers who obsess over the tiniest costs. He once admired a friend who painted only on the side of his office building that faced the road.

6. Limit What you Borrow.

Living on credit cards and loans won't make you rich. Warren Buffett has never borrowed a significant amount - not to invest, not for mortgage.

For those overwhelmed by debt, he says, "negotiate with creditors to pay what you can. Then, when you're debt-free, work on saving some money that you can use to invest.

7. Be Persistent.

With tenacity and ingenuity, you can win against a more established competitor.

Warren Buffett admires business ideology of entrepreneurs and managers who possess unwavering courage that makes a winner out of an underdog.

8. Know When To Quit.

Know when to walk away from a loss, and don't let anxiety fool you into trying again.

Once as a teen, Warren Buffett bet on a race and lost. To recoup his funds, he bet on another race. Again he lost, and almost squandered nearly a week's earnings. Such mistake, he did not repeat again!

9. Assess The Risk.

Asking yourself, "and then what?", can help you see all of the possible consequences when you're struggling to make a decision - and can guide you to the smartest choice.

10. Know What Success Really Means.

Despite his wealth, Warren Buffett does not measure success by dollars. He has pledged to give away his entire fortune to charities.

"I know people who have a lot of money, and they get testimonial dinners and hospital wings named after them. But the truth is that, nobody in the world loves them. When you are my age, you'll measure your success in life by how many of the people you want to have love you actually do love you. That's the ultimate test of how you've lived your life"... Warren Buffett!

Excerpted From: WarrenBuffett.com

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BACK ON TRACK

Posted By: TimoStevens (Wealth Sage, 2009)

Discussed here are ideas to help you get your investment plans back up again!

(1) Abandon the popular averages;

Over the past years, all of the major averages are grossly negative or just beginning to get back toward their best past levels. At the same time, the stock exchange advance/decline line has been extremely positive. Additionally, the last time averages were up, issue breadth was totally negative.

(2) And the bases of investing, again, are what?;

Most investors confuse Quality with analyst expectations and think that Diversification means getting one of every product type that's out there. In fact, they are basic risk minimization tools that every investor needs to use.

(3) Appreciate the power of income;

Base income just has to grow every year, for a person to have any hope of keeping up with inflation. Growing Market Value is inflationary; particularly with respect to hat size, and income paves the road toretirement income.

(4) Buy Low, Sell Higher;

Profitable company stock prices fluctuate just like unprofitable ones. The difference is that the former are much likely to move back up again. Buy quality at lower prices but, set a reasonable (10% or so) profit-taking target... and pull the trigger. Reload, and do it again!

(5) Embrace the working Capital Model;

For both portfolio Asset Allocation and Performance Evaluation, use the cost basis of your holdings as opposed to their Market Value. This is the only way to use short time periods (a year being the shortest for anything at all meaningful) for any kind of analysis.

(6) Fall in love with volatility, not securities of any kind;

Market volatility is one of the few things that you can be certain about. Use it wisely and it will shorten your road to investment success.

(7) Remember Peak-to-Peak and Trough-to-Trough;

There was a time when tests like these where the only valid (market value) tests of an investor's understanding. Well, they still are! But then, there's never a correlation between the calendar year and any market, interest rate or economic cycle.

(8) Corrections are every bit lovable as rallies;

Profit-taking is much more fun, and much easier decision-making than buying stocks while in the throes of a falling Equity Market. Yet, one is just the flip side of the other.

(9) Understand the Investor's Creed;

In a rising market, you should be selling more than buying, resulting in a growing cash position. And in a falling market, you should be buying more than selling, resulting in a smaller cash position.

Nevertheless, if you run out of cash while the market is still falling, you are doing it right. In the same way, if you feel stupid having taken your profits and the market is still foaming, your brilliance will not be rewarded.

(10) Investing is not a competitive event;

It's all about you: your money, your risk tolerance, your goals and your objectives. It doesn't matter what the others are doing, why and how. There is no average, index or benchmark that can be compared to the Market Value changes of a properly diversified portfolio.

Excerpted From: Ten New Investment Concepts, Steve Selengut - www.buzzle.com.

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THE 4 INVESTING PILLARS

Posted By: TimoStevens (Wealth Sage, 2009)

Windfalls do happen... yet, for every jackpot story, there are thousands of tales about investors who lost money speculating their way through high-risk, short-term gambles.

However, the only way to accumulate wealth is to begin investing early in life, having the courage and staying close to some fundamental guidelines such as;

a) Invest Automatically, Ringgit by Ringgit;

This involves dollar-based investing whereby you can buy fractional shares. Who said you can't own a share because its selling for RM500 and you only have about RM100 a month to invest.

RM100 could buy a tenth of a share of one company, a quarter of a share of another and a full share of yet another. What matters is that, you have the ability to invest regularly in companies you want.

Time and consistency, convert fractions into bigger whole numbers.

b) Diversifying to Diminish Risk;

Spread out your investments among different asset classes (i.e. stocks bonds, cash, etc). Diversification helps reduce risk in your portfolio and improve your returns over time.

As no one knows for sure which investments will be successful. As such, staying diversified increases your chances of owning investments that will progress in value.

c) Using Index Funds;

An index is a group of stocks or bonds that experts believe represents a larger group of investments, such as all "high tech stocks." Index funds (e.g.ETFs) are becoming famous.

They are managed passively and do take much of the guesswork out of investing. Simplicity and lower costs make index funds very attractive.

d) Buying into the Long-Term;

Long-term investing isn't rosy, but it has a solid success rate. When it comes to investing, time is your friend. And compound interest can be a beautiful thing - especially when measured through the span of decades.

For instance, if you invest RM1000 once a year in a tax deferred Retirement Account in an investment that averages a 7% annual return, it'll grow to more than RM1,000,000 after 20 - 30 years tax deffered.

Whatever stage you find yourself in life, you'll have an opportunity somehow, to start investing to accumulate wealth. Even if you begin with a small monthly amount, a commitment to consistent investing will add up in the long run.

Now, that's a decision that can determine the quality of your life in the years to come.

Source: Four Cornerstones of Investing, Dam Lampard - YoungMoney

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THE BASIC RULES OF INVESTING

Posted By: TimoStevens (Wealth Sage, 2009)

Rule 1:

Always know what kind of income your are working for!

There are 3 different kinds of income;

a) Earned Income - income from paychecks and bonuses
b) Portfolio Income - income from investment activities like stocks, bonds, mutual funds, etc.
c) Passive Income - income from real estates and royalties from patents or licensed agreements

PS: You have to work hard for portfolio and passive income if you want to acquire wealth!

Rule 2:

Convert earned income into portfolio or passive income!

This is all you should do as an investor; convert the income earned through your hard work and sweat into the kind of income that will make you acquire wealth and become rich.

Rule 3:

Keep your earned income secured by purchasing a security you hope converts your earned income into passion or portfolio income!

A security is something you hope will keep your money secure. Yet, not all securities are assets. So its up to you, the investor, to know which securities are assets and which securities are liabilities.

Rule 4:

The investor is the asset or liability, not the investment or security!

It is the investor not knowing the difference between an asset or liability that makes investing risky. Investing is not risky, it is the investor who is risky.

Rule 5:

A true investor is prepared for whatever happens. A non-investor tries to predict what and when things will happen!

Success in investing al begins with training your mind to know what to look for and being prepared for the moment an investment is presented to you.

Rule 6:

If you are prepared with adequate education and experience or extra cash, and you find a good investment deal the money will find you or you will find the money!

When you are ready, done your homework, gained some experience and track record, found something that is a good investment, then finding the money is not that hard.

Rule 7:

Develop the ability to evaluate Risk and Reward!

It's not the investment that is risky; it is the investor who does not have the adequate skills that makes the investment even riskier.

Source: Rich Dad's Guide To Investing - Robert Kiyosaki

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GREATER THAN GOLD - THE 5 WISDOMS OF WEALTH

Posted By: TimoStevens (Wealth Sage, 2009)

"Wealth is reserved for those who know its principles and abide by them."
"Wealth that comes quickly, goes quickly also."
"Wealth that stays to give enjoyment and satisfaction comes gradually, because it is a child born of knowledge and persistent purpose."
"To earn wealth is but a slight burden upon the thoughtful man. Bearing the burden consistently from year to year accomplishes the final purpose."

Save and Invest your Earnings

"Wealth gladly comes in increasing amount to anyone who will keep aside not less than 10% of his earnings, to create an estate for his fortune and family."

When you set aside 10% of your earnings consistently and invest it wisely, you will surely create valuable assets that will provide regular income for you and your family in future.

"The more money you accumulate, the more it readily comes to you and in increased amount. Money which you save, earns more and its earnings earn even more."


Make Money Work for You

"Money works hard and multiplies diligently for the person who finds for it a profitable employment or vehicle."

Money is a willing worker, and ever eager to multiply when opportunity presents itself.

To anyone who has stacks of cash lying by, opportunity always comes for its most profitable use. And as the years passes, wealth multiplies itself in surprising fashion.


Seek Professional Guidance

"Wealth clings to the protection of the cautious owner who invests it under the advice of men wise in its handling."

Exercise caution and protect your earnings under the advice and guidance of professional wealth managers and experts.

When you seek the counsel of people wise in handling money, you soon learn not to jeopardize your treasures, but to preserve it safely and enjoy its consistent increase.


Acquire Experience

"Wealth slips away from the person who invests in businesses or projects with which he or she is not familiar or which are not approved by experts."

If you have money and yet not skilled in handling it, any use for it appears most profitable.

More often than not, based on your limited knowledge and experience, you tend to make investment decisions that results in either a loss, shows little or no possibility of profits.

Thus, it pays to invest in your personal development and knowledge of wealth management. And as well, heeding the advice of experts.


Avoid Get-Rich-Quick Schemes

"Wealth flees from the person who forces it to generate impossible earnings, who follows the alluring advice of tricksters and schemers, or who trusts it to his/her own inexperience and romantic desires in investment."

Take the time to study and research the various investment opportunities that can enable you accumulate wealth. Practice the advice and wisdom of the experts.

As such, you'll be able to discern and avoid, fanciful propositions that thrills like fairy tales or promising impossible earnings, when they come your way.

Who can measure in bags of gold, the value of wisdom? Yet without wisdom, wealth is quickly lost by those who have it. But with wisdom, wealth can be secured by even those who don't have it.

Excepted From: The Richest Man in Babylon, George S. Clason

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WHAT IS MICHAEL JACKSON WORTH?

Posted By: TimoStevens (Wealth Sage, 2009)

It’s well known that Michael Jackson died with piles of debt.

Despite his millions of records sold, he spent money faster than an Arab prince, but without the recurring oil income. A recent article by Ethan Smith in the Wall Street Journal said Mr. Jackson had debts of up to $500 million.

Still, Mr. Jackson made one smart financial bet during his life: buying the 50% interest in a music publishing catalog that includes the rights to 251 Beatles’ songs. Estimates for that stake range from $500 million to $1 billion, if you also include the rights to his own songs.

The big question: How will all his debts balance out with the Beatle’s songs and other assets?

The Journal article said the value of Mr. Jackson’s biggest assets probably still exceeds his growing debt, citing sources familiar with his finances. (Mr. Jackson’s spokespeople didn’t comment at the time).

The answer is sure to provide a lifetime annuity for scores of trust and estate lawyers. His estate is complicated by his family and siblings: three children by different women, his brothers, sister, mom and dad.

Mr. Jackson’s latest financial backers included Thomas Barrack, the founder of the Los Angeles real estate firm Colony Capital who bought Neverland for $22 million and is putting millions into the estate to fix it up for resale.

And Denver billionaire Philip Anschutz, the family-values crusader who was helping finance Jacko’s comeback concert tour. It’s unclear how Mr. Anschutz’s deal may come out in the financial wash.

Whatever the outcome, the Jackson estate will likely make for big headlines long after the music is gone.

By: Robert Frank, The Wealth Report, WSJ Blogs.

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FAILURE TO COMMUNICATE

Posted By: TmoStevens (Wealth Sage, 2009)

Wealth Advisers vs. the Wealthy

There has always been a cultural divide between the wealthy and their financial advisers.

Wealth advisers think the wealthy are short-termist, overly demanding cheap-skates who refuse to pay for or follow quality advice. The wealthy view financial advisers as fee-sucking predators who are just out to sell product.

The cultural divide has widened with the economic crisis. According to an article (subscription required) in Financial News, citing U.K. research by the Wealth Bulletin and Bruce Weatherill, the wealthy and their advisers have vastly different views of how advisers have performed of late.

The research shows that 80% of wealth managers thought their performance was good or very good amid the financial crisis. Only 30% of clients agreed; a further 30% thought it was poor or very poor.

It is easy for advisers to say the economy is to blame for client losses. And they are right, to a degree.

Still, the study’s numbers point to deeper problem. If wealth advisers don’t feel responsible for the losses of the past year, they won’t feel a need to change what they are doing. And if they don’t feel the need to change what they are doing, their performance–and client resentment–will only continue.

On the other hand, 20% of firms rated their performance as less than good. These are the firms, along with start-up businesses and the rare firms that actually did perform well, that will be the winners in what promises to be the coming industry shake-up.

By: Robert Frank, The Wealth Report,WSJ Blogs

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LONG TERM PROFITS IN A DIVERSIFIED WAY

Posted By: TimoStevens (Wealth Sage, 2009)

Diversification, is a significant lesson every investor should have tatooed on their minds. It implies not keeping all your eggs in one basket. Instead, investors should invest in different securities and assets of differing risk profiles. Whereby regardless of the market environments, some assets will always out-perform the others.

A lesson in diversification, consists of the following;

1. Extend beyond just Equities and Bonds; These are fundamental asset classes, but they depend on a company (or country, in the case of bonds) being a going concern. When one goes bankrupt, both bets are off.

2. Add in Real Assets; These can be Real Estate or Commodities...

Commodities ranges from agriculture, base metals, chemicals, oil
to precious stones, etc.

Real Estate also ranges widely from residential, commercial to
industrial, and are very sensitive to geography.

N/B: Access to real estates can be in the form of unit trusts or even direct exposures via real estate investment trusts (REITs), buying a small plot of oil palm land or investing in properties locally and overseas.

3. High net-worth investors may selectively consider alternatives such as hedge funds, foreign currencies and derivatives. As these may continue to be valuable as risk diversification tools.

4. Take stock of your portfolio regularly; Treat the portfolio like a plant, it takes regular tending, trimming and pruning to ensure that it continues to grow well. A good portfolio should be able to withstand market shocks, but it may need to be reinforced to help it stand better.

"Although a diversification plan could have worked or did not work well in the past it does not mean that it would be relevant or less valuable in the future. I believe in looking backwards to learn the right lessons and then focus on going forward," - Tay Han Chong, VP - UOB's personal financial services division.

Adapted From: Forward and Backward - Tay Han Chong, StarBizWeek.

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3 BUCKETS FOR YOUR INVESTMENT PLAN

Posted By: TmoStevens (Wealth Sage, 2009)

"In preparing for the global stock market recovery, I would suggest that you need to have a holding power. This implies a period of 3 years or more, because as investment fluctuates, you may not want to sell and take a loss but instead wait for the market to recover," Yap Ming Hui, COO - Whitman Independent Advisors Sdn Bhd.

To have staying power, among other objectives, one should divide his cash into three (3) buckets - one each for low-risk moderate-risk and high-risk assets.

First Bucket (Low-Risk Asset):

This is also known as the "Liquidity Bucket", which comprises of low-risk assets with low-return such as, savings/current accounts, fixed deposits and bond investments.

This bucket should contain up to six months' expenses, mainly cash, to be used during emergency and when the going gets tough.

Second Bucket (Moderate-Risk Asset):

This consists of balanced investments, diversified investments and select property investments. The purpose of these fund is for retirement, children's education and also wealth enhancement.

The funds in this bucket should give consistent average returns and should also have limited donwside risk.

Third Bucket (High-Risk Asset):

This bucket consists of direct stocks, initial public offerings (IPOs), single country or theme funds and even the lottery.


If the first bucket of low-risk asset has not being achieved, you shouldn't start investing in high-risk assets, such as the stock market.

Likewise, putting too much in the first bucket is not advisable. Thus, any savings of more than six months' worth of expenses should go into the second bucket (i.e. the moderate-risk asset).

The allocation of funds between the second and third buckets, should vary depending on the individual as it depends much on personal, business and family objectives.

Nevertheless, the rest of your earnings or retirement savings should be kept in the second and third buckets to maintain and enhance wealth, because keeping cash would result in loss through inflation.

Adapted From: When To Make Investment? - Loong Tse Min StarBizWeek.

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About

This is an online Wealth Management Resource, that deals with the issues of wealth building, development and legacy.

VISION:

"To Enhance, Educate, Enlighten and Empower people all over the world on the subjects of Wealth Management."

MISSION:

"To share the knowledge of Wealth Management, thus enabling individuals transform themselves from nobodies into somebodies, thereby achieving the lifestyle and luxury enjoyed only by the privileged few... the rich & famous!"

OBJECTIVES:

The WealthKlinik message comprises of the following areas of interests;


a) Wealth Creation
b) Wealth Accumulation
c) Wealth Growth
d) Wealth Protection
e) Wealth Preservation
f) Wealth Distribution

QUOTE:

"Becoming wealthy is not a matter of how much you earn, who your parents are, or what you do... it is a matter of managing your money properly" - Noel Whittaker

This is a Mayor Media Publication. For more information, please contact blogpub@mayormedia.com.my

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HOW THE RICH FEEL ABOUT MUTUAL & HEDGE FUNDS

Posted By: TimoStevens (Wealth Sage, 2009)

If you're rich, the financial services would like to know how you feel about mutual funds and a host of alternative investments.

There have been several attempts to figure it out. A study by Prince and Associates, for example, suggests that the uber-rich scorn mutual funds and even exchange traded funds.

In fact, they found that the richest do not invest in mutual funds at all, preferring hedge funds and direct investments in startups. dailyii.com, however, notes that the finding is at odds with a survey by the Spectrum Group that found even the wealthy don't truly "get" hedge funds, and that less than 10 percent owned one.

These are not necessarily inconsistent. The top 10 percent could easily account for the bulk of individual money invested with hedge funds.

But to complicate matters, Advisor Perspectives has found that, according to their database anyway, the very wealthy continue to hold mutual funds. It all comes down to how you slice the data... Interesting!

Source: FierceFinance

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WAYS TO BECOME WEALTHY...

Excerpted By: Timo Stevens (Wealth Sage, 2009)

Take responsibility for your Life

You are responsible for where you are in your life! Your decisions matter a lot, and so do your dreams, aspirations and every situation you find yourself. Would you rather invest that $1000 now, and enjoy its compounded value ten years later? Or you’d rather spend that money today, because you don’t want to wait ten years to be rich.

And what if after ten years you’ll still live with no income, retirement benefits or disabled? Remember, your life is what you make it. Where you are right now is the sum total of the decisions you have made in the past. Why not set the stage for your life in the future right now? They say, as you make your bed so you lie on it.

The Power of Small Amounts

Do not despise the day of small beginnings! It is important to develop an understanding of wealth accumulated over time, through the power of small amounts. Wealth, like a house is built one brick at a time.

Still most people make the silly mistake of thinking that they have to start with a mammoth-like army. They often think that, they’ll never become rich because they aren’t making thousands or million dollar investments at a time. Hence, forget to realize that even entire armies are built one soldier at a time, and so should their financial arsenal be.

Buy Freedom with every Dollar Saved

Money has the ability to work in your place, the more of it you employ, the faster and larger it will grow. Along with more money comes more freedom – the freedom to retire and travel around the world, the freedom to spend more time with your kids, the freedom to quit your job, or the freedom to venture into other interests.

Thus, with each dollar you save, you are buying yourself that freedom. Whatever your source of income, it is possible for your to start building wealth today. It may be only a dollar at a time, but each of those investments is a stone in the foundation of your financial freedom.

Change Your Money Thoughts

It is important to change the way you think about money. The reason a vast majority of people never accumulate wealth is because they don’t understand how money works and its real nature.

Cash, like a person, is a living thing. When you wake up in the morning and go to work, you are selling a product - yourself (i.e. your labor). Each dollar you save is like an employee. Over the course of time, the goal is to make your employees work hard, and eventually, they will make enough money to hire more workers (cash). When you become successful, you no longer have to sell your own labor, but can live off of the labor of your assets.

More Money is not the Solution

Realize that money doesn’t answer all, and more money is not going to solve your problem either. Money is a magnifying glass; it’ll accelerate and bring your true habits to light. If you can’t be responsible for a job paying $20,000 a year, the worst that can happen is for you to earn six figures – it will destroy you!

Many people earn $100,000 a year, yet live from paycheck to paycheck and don’t know why it’s happening. The problem isn’t the size of your checkbook; instead, it’s your understanding and use of money.

Buy the Stock, Not the Product

Do you know why aren’t wealthy? Ever felt like you were putting money aside, yet never seemed to be getting anywhere ahead? Well, its simple – stop buying the products companies sell and start buying the company itself (i.e. owning its stocks)!

A survey once revealed that 27-30% of all the income wealthy people earned went into investments and savings. That isn’t a result of being rich, that’s why they are rich. When the pain of getting out of the bondage of financial slavery is greater than the pain of changing your spending habits, you will become rich.

Study, Admire and Emulate Success

Pick the traits you admire and dislike the most about your heroes. Then do everything in your capability to develop those traits you like and reject the ones you don’t. Mold yourself into who you want to become. By investing in yourself first, money will begin to flow into your life.

Success begets success, and so does wealth too. You have to purchase your way into that cycle, and you do so by building your army one soldier at a time and putting your money to work for you

Learn from a Rich Dad

If your parents aren’t living the life you want to live, then don’t do what they did! You must break away from the mentality of past generations if you want to have a different lifestyle than they had.

To achieve the financial freedom and success that your family may or may not have had, you have to do two things,

i) make a firm commitment to get out of debt.
ii) pay yourself first – i.e. make saving and investing your highest financial priorities.

Stop Worrying

The miracle of life is that it doesn't matter so much where you are - it matters where you are going. Once you have made the choice to take back control of your life by building up your net worth, don't give a second thought to the "what ifs" of finance. Every moment that goes by, you are growing and getting closer and closer to your ultimate goal - control and freedom.

Every dollar that passes through your hands is a seed to your financial future. Rest assured, if you are diligent and work at it, financial prosperity is inevitable.

The day will come when you make your last payment on your car, your house, or whatever else it is you owe. Once that happens, do everything you can to avoid going into debt again.

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ESTATE PLANNING TOOLS

By: TimoStevens (Wealth Sage, 2009)

Wills and trusts are two of the most popular estate planning tools. Both allow you to spell out how you would like your property to be distributed, but they also go far beyond that.

Just about everyone needs a will. Besides enabling you to determine the distribution of your property, a will gives you the opportunity to nominate your executor and guardians for your minor children.

If you fail to make such designations through your will, the decisions will probably be left to the courts. Bear in mind that property distributed through your will is subject to probate, which can be a time-consuming and costly process.

Trusts differ from wills in that they are actual legal entities. Like a will, trusts spell out how you want your property distributed. Trusts let you customize the distribution of your estate with the added advantages of property management and probate avoidance.

Wills and trusts are not mutually exclusive. While not everyone with a will needs a trust, all those with trusts should have a will as well.

Incapacity poses almost as much of a threat to your financial well-being as death does. Fortunately, there are tools that can help you cope with this threat.

A durable power of attorney is a legal agreement that avoids the need for a conservatorship and enables you to designate who will make your legal and financial decisions if you become incapacitated. Unlike the standard power of attorney, durable powers remain valid if you become incapacitated.

Similar to the durable power of attorney, a health care proxy is a document in which you designate someone to make your health care decisions for you if you are incapacitated. The person you designate can generally make decisions regarding medical facilities, medical treatments, surgery, and a variety of other health care issues.

Much like the durable power of attorney, the health care proxy involves some important decisions. Take the utmost care when choosing who will make them.

A related document, the living will, also known as a directive to physicians or a health care directive, spells out the kinds of life-sustaining treatment you will permit in the event of your incapacity. The directive creates an agreement between you and the attending physician.

The decision for or against life support is one that only you can make. That makes the living will a valuable estate planning tool. And you may use a living will in conjunction with a durable power of attorney and the health care.

Bear in mind that laws governing the recognition and treatment of living wills may vary from state to state.

Source: What Key Estate Planning Tools Should I Know About? - Towers Wealth Management Inc.

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ESTATE PLANNING TIP

By: TimoStevens (Wealth Sage, 2009)

Keep all your important financial and legal information in a central file for your executor. Be sure to include, the following documents necessary for planning your estate;

• letters of last instructions
• medical records
• bank/brokerage statements
• income and gift tax returns
• insurance policies
• titles and deeds
• will and trust documents

Source: What Key Estate Planning Tools Should I Know About? - Towers Wealth Management Inc.

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PROTECTING YOUR HOME

By: TimoStevens (Wealth Sage, 2009)

"Your home is one of your greatest assets, and it should be well protected...!"

Homeowners insurance protects against liability (in case someone is injured on your property), damage to the structure of your home and/or personal belongings, and theft. Most policies cover damage caused by certain “perils,” such as fire, lightning, and wind damage (except in certain locations). You must purchase separate policies to cover disasters such as floods, earthquakes, and tornadoes, which can be a good idea if you live in a high-risk zone.

Most insurance companies offer different levels of coverage. Standard policies usually cover a home’s contents for half the dollar limit carried on the house and reimburse only for the depreciated value of furniture and belongings. Other policies cover 80% to 100% of the value of a home, as well as its belongings.

When evaluating a homeowners policy to determine whether it is right for you, find out how much it would cost to rebuild your home. Typically, even if you are insured for 80% or more of the cost of rebuilding, your carrier will pay the cost of any repair only up to the limit of your coverage. Because of this drawback, consider a guaranteed replacement provision, a feature that ensures almost full reimbursement for replacement costs.

A guaranteed replacement provision places responsibility for valuation of a home on the insurance company. The insurance company conducts periodic appraisals, makes sure coverage is adequate, and automatically upgrades your policy as the value of your property increases.

Of course, your premium rises automatically along with this increase in coverage. This type of policy will also pay to replace your furniture and belongings with new or equal-quality items at current market prices.

For an extra cost, additional valuables can be protected with “floaters” designed to cover such items as jewelry, silverware, furs, artwork, other value collections, and the contents of a safe-deposit box, up to a certain amount.

Regardless of your needs, you should be able to find a policy that will be well suited for your specific situation. The most important thing is to protect one of your greatest assets—your home.

Source: How Can You Protect Your Home? Towers Wealth Management, Inc.

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INSURE YOUR FUTURE

By: TimoStevens (Wealth Sage, 2009)

The concept of insurance is simply that if enough of us can pool our money to form a large enough fund, then together we can handle practically any financial disaster. Our motivation for contributing to this fund is our own eligibility to draw from it in the event of a disaster. One for all and all for one, so to speak.

Purchasing individual or family insurance coverage is probably one of the most important financial decisions you will make. A great deal of study and advice is needed to choose wisely. A few basic guidelines can safely be applied to most consumers. Beyond these, each individual’s needs are unique and should be carefully assessed by an expert.

1. How much insurance do you need?

A good rule of thumb is: Don’t insure yourself against misfortunes you can pay for yourself. Insurance is there to protect you in case of an event with overwhelming expenses. If anything short of a calamity does occur, it will usually cost you less in actual costs than the insurance premiums you would have paid.

2. What kind of policy is best?

Broader is better. Purchase insurance that will cover as many misfortunes as possible with a single policy; for example, homeowners insurance that covers not only damage to the house itself but also to its contents. Carefully examine policies that exclude coverage in certain areas, the “policy exclusions.”

3. From whom should I buy?

Always buy from a financially strong company. Take the time to shop around for the best prices with the most coverage for your specific situation. You may be able to save money by buying multiple policies from the same agent.

Source: HOW CAN YOU INSURE YOUR FUTURE? - Towers Wealth Management, Inc.

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COMMON INVESTING PITFALLS TO AVOID

By: TimoStevens (Wealth Sage, 2009)

The following are common mistakes many people make when considering what to do about investing.

1. Doing nothing.

There is no guarantee that the market will go up the first day, month, or even year that you invest in it. But there is one guarantee: Doing nothing at all will not provide for a comfortable retirement.

2. Starting late.

Postponing your investing career is second only to not investing at all on the list of investment sins. The earlier you start the better off you are, because your investment returns will need time to compound.

3. Investing before paying down credit card debt.

If you have money in your savings account and you have revolving debt on your credit card, pay it off first, then think about investing.

4. Investing for the short term.

If you'll need your cash next year for a down payment on a house or for the family vacation, then invest your money in shorter term instruments such as, money market funds or CDs. Otherwise, invest money in the stock market that you won't need for at least three years, and preferably five years or longer.

5. Turning down free money.

You'd never turn down a dollar if it was offered with no strings attached. That's what you're doing if your company offers a retirement savings plan with an employer match and you're not participating. Take advantage of all tax-advantaged, employer-matched savings programs.

6. Playing it safe.

If you're young, most of your investing dollars should be in the stock market. You have enough time to weather any dips in the market and to reap the rewards of long-term gains. Although you may want to transition into bonds later in life as you depend on your investments for income, stocks should make up a large portion of the portfolio of every investor.

7. Playing it scary.

Not every investment is for everyone. Even if you're a daredevil, you shouldn't pour all of your money into something that could end up going down the drain.

8. Viewing collectibles or lottery tickets as investments.

If old comic books, Barbie dolls, and abandoned exercise equipment could be used to fund retirements, do you think the stock market would exist? Probably not. Don't make the mistake of thinking your jewelry, those Beanie Babies, or the lottery will provide for you in your latter years.

9. Trading in and out of the market.

The best approach to investing is the long-term one. Pick your investments well and you'll reap greater rewards over the long term than you had ever dreamed possible. Trading in and out of the market and will saddle with fees that chip away at your returns, and you'll potentially miss out on gains that long-term investors enjoy with much less effort.

Source: Why Should I Invest? - Motley Fool Staff

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THE 7 COMMON DENOMINATORS OF WEALTH BUILDING

By: Timo Stevens (Wealth Sage, 2009)

1. Live well below your means.

2. Allocate time, energy, and money efficiently in ways conducive to building wealth.

3. Believe that financial independence is more important than displaying high social status.

4. Don’t seek your parents economic outpatient care.

5. Make your children economically self-sufficient.

6. Be proficient in targeting market opportunities.

7. Chose the right occupation.

Adapted From: The Millionaire Next Door, Thomas Stanley & William Danko.

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