The Power of Quitting ?
We’re heard about “quiet quitting" for the past 2 years.? Yet, many of us are raised to persevere and that “things will get better”.? But is it better to quit altogether, especially when it comes to your money ???
Today's newsletter is 833 words, estimated reading time: 5 minutes.
Quit Your Investments
I know this sounds crazy coming from me, but I mean it. Like a good job, investing and savings doesn’t stay the same forever. The same can be said about your money.? One should NEVER “set and forget it”.? Here’s 6 tips of when you should quit your investments.?
1. Quit your savings accounts that are earning less interest than inflation?
Why? Your money is losing value due to inflation.?
What to do instead? Buy an i-bond. Need more quick cash than an i-bond? Look into high yield savings accounts or a money market account.?
2. Stop putting money into your 401k
Why? If you need the cash to lower your rate for a loan.?
What to do instead? Invest in your present.? Use your cash to get a lower rate for your mortgage, car, or loan refinancing by putting more money down. By getting a better rate today, you’re also investing in your future.?
3. Sell your stocks
Why? It’s not serving you or selling is a better way to go.?
What to do instead? More on that below.?
4. Stop funding your emergency fund if you have expensive debt and/or medical expenses
Why? This is your emergency. You’re hemorrhaging money faster than you can make it. Medical expenses are not kind when you don’t pay promptly.??
What to do instead? Set up a payment plan for your medical expenses so that it’s manageable. For your expensive debt, refinance at a lower rate or take a loan that has a lower interest rate than your debt. For example, you may take out a personal loan at 8% to pay off your 20% credit card debt.?
5. Quit your high fee investments
Why? If you don't know how much it costs, it probably costs too much and hurts how much you actually make.?
What to do instead? Look up the fee of every mutual fund, ETF, and account that you have.? For example, if you invested in the S&P 500 through the SPDR S&P 500 ETF Trust (SPY) with a fee of 0.09%, that’s EXPENSIVE. Because competitors Vanguard and iShares offer the same product at 0.03% through VOO or IVV.? You’re overpaying by 0.06%. That’s money that compounds over time! The chart below shows the 4% difference over 10 years.? Money compounds over time!?
6. Quit you financial advisor if they charge more than 1% of the invested dollars
Why? Because reputable shops charge 1% or less.?
What to do? Consider investing in ETFs and understand your investments. If you need additional help, find someone who can walk you through your investments and the whys plainly for 1% or less of your invested dollars.?
领英推荐
No matter what, don’t be afraid to quit. There are benefits to quitting in the right circumstances.?
Quitting Your Stock (aka when to sell a stock)
Reasons people sell stocks can be limitless at times. We’re focusing on the top 3 excellent reasons to quit your stock aka sell it.?
1. Poor Financial Outlook
If you’ve done your homework on the financial position of a company, its management, industry and the outlook is poor, sell the stock if you think it is going down. Take your gains or reduce loss potential. I should have done that with Peloton…?
2. Optimize for Taxes
Tax-loss harvesting is increasingly popular and refers to selling stocks at a loss to offset capital gains. If you have a loser stock in your portfolio like I do, I would sell it to offset realized gains from another stock. For example, I have Peloton in my portfolio. If I sold my Amazon stock, which has lots of gains, to lessen my taxes, I’d also sell my Peloton stock. Why? Because I don’t see a future in Peloton and I want to reduce my capital gains tax.?
3. Optimizing for Other Stocks
I’ve held Cisco stock for 14 years. While I've made some modest gains, Cisco’s stock growth is nothing like Google’s or Amazon’s stock appreciation. While Cisco does offer dividends and is perceived as “safer”, I would have made more money if I just sold my Cisco stock and bought Amazon or Google. In the past 5 years, Cisco’s stock has grown 26%, while Amazon and Google's stocks have increased 42% and 96%, respectively!? Be sure to consider the overall risk you have in your portfolio if you choose to employ this strategy.?
Remember, you can always correct for stock mistakes. Stay vigilant so time doesn’t run away from you.?
??Fed Expected to Increase Interest Rates to 22 Year High??
Today, the Federal Reserve is expected to raise interest rates to 5.25 - 5.50%.?
What this means: Not only could this cool inflation, it could also lower wages, job market, and overall economy.?
??What to watch for: Will there be fewer job openings for the reminder of the year? How many fewer jobs?
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