Making 2017 the Year to Save: 10 Tips on How to Hack It


Before December comes to an end, most people commonly write down their resolutions for the New Year. And for countless individuals, one of their goals is to "save money". Easier written than done; because in spite of the good intentions, a big majority of these optimistic people fail by the second month of the year and their savings accounts remain stagnant (if not depleted) and their spending fly out of the window.

There must be an effective way to succeed in this most challenging mission. Here are 10 suggestions to help you finally hack it.

1. Set a specific savings objective

Hit the ground this New Year running – the better to burn those holiday calories away -- with a specific savings objective for 2017. Make sure the goal you set is quantifiable, attainable, realistic and suitable. Avoid being too optimistic and setting an unrealistic savings objective, which will increase your chances of not achieving your goal.

A sensible objective for saving requires having a definite item to buy or a specific figure you can realistically attain within the year. The whole process will need enough self-control and some sacrifices with regard to spending if you hope to reach your goal. Setting a very high target may only frustrate you in the end.

The next vital step is to get a friend or relative to help you achieve your goal; or, print out your objective and put it in a prominent place to remind yourself constantly – the PC or smartphone wallpaper would be a good place. 

2. Carefully select a savings account

Be discerning about where you put your savings. Savings accounts offer different features and benefits, whether you talk about fees, interests or minimum balances. It is best to conduct an assessment and select the most suitable account. Also, be mindful of other charges, such as ATM fees and monthly service charges.

Although the interest rate may appear small to you, it can accumulate before you realize it. The thing to remember is that even tiny amounts will come in handy when you have a definite amount to attain. Also visit the websites of banks with online services as some of them offer higher interest rates on savings accounts.

3. Avail of an automatic saving scheme

The common assumption is that people lack the self-discipline to put aside a part of their monthly income for a savings account. The only solution is to go automatic by contributing directly to your account each month. Many banks can provide free services to transfer a definite amount of money from your checking account to your savings account monthly.

You may also request your HR department to deposit directly a portion of your paycheck into a savings account each month.

4. Set up an emergency fund

Your savings account can also serve as a source of money for a rainy day; but if you can take the challenge on a higher level, you can also set up a fund devoted only for emergency purposes. Unless you get into an emergency situation and you are forced to use your savings account, the primary purpose for a savings account is to cover major purchases, such as advances for a car or a house purchase. Hence, in case you get laid off from your job or need medical attention, your emergency fund will come to your aid without you having to give up your original goal of buying a car or a house.

Ordinarily, an emergency fund should be sufficient to pay for your expenses for a period of four to seven months. Financial advisers suggest beginning with a relatively small goal – say, $1,000 -- and slowly increase your target.

5. Check your monthly expenses regularly

You need to begin a thorough monitoring of your monthly expenses. That means writing down your monthly expenses and every purchase to the last cent. This will tell you exactly where your money goes and in which areas you are spending above your budget. Consequently, you can have greater control of your money, allowing you to gain a better perspective of your spending habits so you can make a more suitable budget you can follow.

It might come as a surprise to you, for instance, that you shell out an inordinate amount of money on coffee weekly. Knowing that, you can decide to reduce your coffee intake each week and put whatever you save into your savings account.

6. Set your budget

When you have a clear idea of how you spend your money, you can set a realistic budget. While budgeting may appear to be a hit-or-miss process at the start, it will eventually become a more defined and accurate process once you have finally succeeded in cutting away your undisciplined spending habits.

Remember, there is no need to stop spending for entertainment or certain perks; however, your priority is to settle your bills promptly until you achieve your goal for saving. The main purpose for a budget is to compel you to spend within your income limit in order to enhance your savings.

7. Shop more wisely

Every time you shop, be more discriminating. Earn more points by applying for loyalty programs at the shops, join a warehouse club and purchase wholesale as much as you can, use discount coupons and shop whenever there are bargains deals or knockdown sales.

Use online shopping to your advantage by canvassing comparative prices on websites and buy according to whichever is the best offer. Buy an item not because an item is merely discounted; the best deal is one that has the greatest advantage for you in terms of quality, price and other features.

8. Use apps to your advantage

Practically everything now comes with an app that makes it very convenient to acquire or avail of, whether grabbing a taxi or chatting with pals. Make good use of the technology to help you save more money.

Some apps can help you in the budgeting process, some to help you locate the best buys in your community, as well as some to let you sell your used items. Monetize all the unused appliances and stuff in your home through these apps and make your savings grow.

9. Use a flexible spending account (FSA)

Contemplate applying for a flexible spending account in your company. Some employers provide FSAs as a benefits privilege for their employees which allows you to save money on health-care expenses not covered by insurance, as well as deductibles and joint-payments.

When you have joined such a program, decide on what amount to contribute for the year. The amount will be deducted from your paycheck eventually, minus income tax. Under the program, you can take out money from the account to cover for specific allowable medical expenses, which are effectively discounted due to your tax savings. Make sure you avail of the whole amount within the year covered.

10. Monitor your progress … and when you achieve your goal, reward yourself!

In order to succeed in the budgeting process, know where you are exactly each week in your finances. Set up a time for a "money date" when you can sit down each Sunday and assess expenses to make sure you are within the set budget. In case you find yourself off the track (whether you overspent or you failed to put away even a cent from your salary), get back on track. You cannot win all battles; but aim to win the war.

Nevertheless, once you achieve your savings goals, strike up a party and reward yourself (without overspending, of course)! Aim for the middle road in your savings strategy; that means you can still shop and spend but, this time, more responsibly.

Effective Ways to Choose Investments

at the office
Here are basic and essential steps to follow in choosing the right investment for your specific needs and goals:

1. Assess your personal needs and goals

Take ample time to consider why you want to invest and what you want to get out of it. Since nobody knows you better than yourself, your goals and your needs, as well as your tolerance for risk, start by analyzing your daily expenses and determine where you can get the money to invest. Online apps can help you do this money fact-finding process.

2. Decide how long you want to invest

When do you need the money you will invest? Soon or much later? Depending on your goals (a home purchase will differ from a bike purchase) your time target will vary and also influence the degree and form of risks you can handle. Here are examples:

Saving for a deposit to buy a house in two or three years will not suit investing in shares or funds since their value fluctuates. Opt for a cash savings account, such as Cash ISA.

Let us say you want to set up a pension fund after in 25 years, investing in short-term assets will not do; so choose long-term options. You will end up better off with long-term investments, except for cash savings accounts, since you can level out inflation and thus achieve your pension objective.

3. Choose an investment strategy

Having set up your needs and goals and considered the risks involved, make an investment plan to assist you in determining the kinds of products that match your plan.

It is always a safe and smart move to invest in low-risk investments, such as Cash ISAs. Next, you may augment medium-risk investments, such as unit trusts which have greater volatility. Go for high-risk investments only if you already have a solid portfolio of low and medium-risk investments. Even so, the risk will be much higher and you must consider the possibility of losing your money.

4. Choose to diversify!

It is common knowledge that to enhance your success at investing, you must also increase the risk you must take. However, you can control and increase the interaction between risk and return by distributing your over a broad selection of investment choices whose prices do not follow the same pattern. This is what we refer to as diversification. Its purpose is to level out the gains and also enhance growth, as well as decrease the general risk that your portfolio can take.

5. Choose your DIY level

Before buying any stock, seek professional advice to fully understand the product.
It all depends on how much time you want to devote in investing:

For do-it-yourself-ers who want to savor the moment of making decisions themselves, try buying individual shares; however, make sure you comprehend the risks.

For people with no time to spare or are not hands-on or for those with little money to invest, the common option is investment funds, like unit trusts and Open Ended Investment Companies (OEICs). Through these products, your money is lumped with other people’s money in purchasing diverse investments.

Seek financial counsel if you are not certain as to the kind of product will fit your needs or which investment funds to select.

6. Know the fees involved

Buying stocks directly, such as individual shares, will require paying a stockbroker service fee. On the other hand, in buying investment funds, you will pay charges to the fund manager. Also, seeking the help of a financial counselor will involve paying fees.

All those fees and charges will vary according to the company involved. Inquire first how much the fees are before making any final buying decisions. Although higher charges may mean higher service quality, assess whether the charges are reasonable and whether such service can be had at a lower fee rate somewhere else.

7. What to avoid in investing

Keep away from high-risk assets, except if you comprehend quite well the risks involved and are willing to handle them. As mentioned earlier, take on higher-risk products only when you already have solid low- and medium-risk investments.

There are, of course, certain investments you must totally avoid. Seek professional advice regarding this.

8. Monitor your investments regularly – but do not time the market

Investigations show that those who invest and monitor their investments daily are apt to buy and sell too frequently and derive lower gains compared to those who let their money grow over the long haul.

Yearly reviews are sufficient to show you over time how your investments are performing and still allow you to adapt your savings accordingly to attain your objective. However, you will have to read periodic statements to obtain an educated perspective of things. To help you do this, click on the list of tips below.

Remember, avoid the inclination to react wildly each time prices fluctuate abnormally. The veteran investor knows markets can fluctuate unpredictably over time; and sticking it out allows one to smooth out the movements.

How do the Wealthy Invest?

If we knew how the wealthy invest, we can begin setting the stage for our own financial success. Who else can teach us the prudent and secure steps toward increasing our chances of building wealth than the rich themselves who constantly ponder ways to do so? In spite of the fact that the wealthy also make significant mistakes that affect their gains, they remain on top of their game and bring in money, making the envy of many people. That is no accident. With diligence and the ability to get the proper financial advice, they have the knack for succeeding in enhancing their assets.

A recent Trust survey covering wealthy individuals revealed that one-third of respondents obtained their fortune by investing. Their secret, of course, lies in the right investment vehicles to choose. How can we imitate the wealthy and succeed as well? Here are some tips:

1.       Portfolio diversification. Successful wealthy investors have learned that betting on single stocks, such as Tesla Motors or Apple, and hoping to catch a windfall is often a worthless and risky move. A study recently conducted by Open folio showed that the top 5% wealthiest investors had the least portfolio volatility of all respondents and had below 40% of their portfolios assigned to single stocks. Hence, desist from stock picking and concentrate more on reducing volatility and investing in diverse assets to cushion the overall negative effects of market drops. In case you now have a well-diversified portfolio, remain steady and avoid the tendency to time the market. It may come as a great challenge to many, as it also does even to veteran investors who normally have better access to valuable financial data than most ordinary investors.

2.      Aim for a long-term engagement. The recent Brexit crisis and the ongoing US presidential campaign have brought anxiety to investors, causing many to sell off stocks or do various drastic changes in their portfolios. However, it is vital that investors should remain steadfast when such major market events occur. Statistically, those who patiently wait and stick to their guns are often rewarded, while others who do not, miss the opportunities provided by eventual recoveries and risk incurring transaction fees and adverse tax penalties. Only 14% of wealthy investors, according to a U.S Trust survey, gained their biggest investment returns through timing the market. Surprisingly, 86% made great headway by choosing to focus on a long-term buy-and-hold approach. Knee-jerk decisions tend to produce quite a significant undesirable effect on investors' long-term financial objectives; and that includes the building up of a sufficiently stable retirement fund.

3.      Stay away from variable annuities. Variable annuities, in general, do not provide secure investments for anyone – with the exception of the cunning advisors who sell them and invariably get fat commissions from such deals. As much as possible, avoid variable annuities which involve high fees and do not provide enough investment alternatives and the desired liquidity. Opt for investments which have lower fees and greater results. And in case you decide to choose a variable annuity, make certain that you collaborate with a financial advisor who is on the level, transparent and accessible. In spite of the Department of Labor's fiduciary rule taking effect in 2017, it is crucial for any investor to be aware of their financial advisor’s fee requirements.

4.      Be careful of target-date funds. Although target-date funds may appear as suitable portfolio choices, they do not necessarily fit your risk capacity, investment objectives or the other assets you possess. But as long as If you evaluate target-date funds meticulously, make certain to assess their investment approaches, fees and costs, and how suitably they will merge within your general asset distribution.

5.      Be aware of the risks of alternatives. So many investors who look for bigger gains turn to alternatives, such as hedge funds, illiquid real estate investment trusts or private equity. The best option is to first analyze factors -- for instance, your age, earnings capacity, risk tendency and tolerance and investment objectives -- with the assistance of a financial advisor in order to determine if these highly risky investments suit your circumstances in the present or far into the future. In the event you both decide to go ahead and invest in alternatives, bear in mind that generally, high-risk alternatives must cover only from 5% to 15% of a portfolio.

No matter what assets you decide to invest in, whether a large-cap manager, a liquid REIT or an ETF, evaluate the advantages and disadvantages in order to weigh if they match the level of risk you can afford to take and your long-term investment objectives. By doing this, you ascertain the safety and stability of your investment and, in the long run, increase your chances of gaining higher results.

What Should You Invest In?

Stocks, bonds, bank accounts or IRAs? How do you choose?

With several types of investments to choose from and also thousands of sub-categories under them, finding the most suitable investment choice can be a daunting task.

First off, the main consideration in any long-term investing decision is the rate of return expected from it. At times though, investing in short-term investment can enhance your wealth even if the returns are not as high as you want them to be. You can select from among these common short-term savings vehicles:

Short-term savings vehicles

Bank savings account: The most resorted to savings medium availed of by people, which provides small returns but better than keeping your money at home where it could be stolen or spent easily.

Money market funds: These funds are a type of special mutual funds that are invested in exceptionally short-term bonds. Money market fund shares are always valued at $1 whereas most mutual funds can have uncontrolled prices. Although they pay higher returns compared to bank savings accounts, they provide lower returns than certificates of deposit.

Certificate of deposit (CD): You can also open a CD, a special account made at a bank or another financial body which has an interest rate often at par with short- or intermediate-term bonds, depending on the CD’s deposit duration. The depositor receives regular returns on interest until the account matures, at which time the original amount deposited is returned together with accumulated interests incurred. Oftentimes, certificates of deposit through banks are insured to a maximum of $100,000.

Our company is partial to stocks as investment vehicles over the rest of the long-term choices since stocks have statistically provided the best rate of return in an investment. The most common long-term investing vehicles are as follows:

Long-term investing vehicles

Bonds: There are various forms of bonds. Also known as "fixed-income" securities, bonds generate a “fixed” or set income value each year when it is sold. They are very similar to CDs as investments options although they are issued by the government or corporations and not by banks.

Stocks: Stocks allow an individual to own a portion of a company or business. A single stock share represents an investor’s proportional stake or share of ownership in a business. As the business grows, the worth of an investor’s share in it also increases. Otherwise, the worth decreases.

Mutual funds: Mutual funds are vehicles which allow investors to combine their money to buy bonds, stocks, or any vehicle the fund manager considers viable. In short, you turn over the control of your money to a professional who now has the final say as to the performance of your investment. In most cases, these "professionals" play with your money by underperforming the market indexes to their own benefit.

Retirement plans

Several special plans are intended to build retirement savings; and many of these plans permit an individual to transfer money directly from his or her paycheck prior to taxes. In support for this plan, companies sometimes match the amount transferred, or even a small portion of that amount, as their goodwill contribution to their employees’ future. In some countries, the company share is required by law at specific amounts or percentage of salaries. In some cases, these plans can provide an “advance” out of the plan to purchase a house or pay for college, at no interest. In cases where an “advance” is not allowed, an individual can take out a loan from the account, or take a low-interest secured loan using the retirement savings as security. The rates of return on these plans vary according to the type of vehicle invested in, whether bonds, stocks, CDs, mutual funds or any mix.

Individual retirement account (IRA): This type of plan lets you invest some money into a tax-deferred retirement fund – which means you will not be taxed unless withdrawals are made or before the fund matures. Regular income-tax rates apply once money is withdrawn, which are higher than capital-gains tax rates. All IRAs are considered as specialized accounts and not as investments, allowing the account holder to invest freely in any manner. Some or all of your IRA payments may be considered tax-deductible, if the holder satisfies certain requirements.

Roth IRA: Unlike the previous IRA plan, this type of retirement account requires no tax payments up-front on contribution. Rather, it provides full exclusion from federal taxes when cash is withdrawn to purchase a first home or pay for retirement. Likewise, a Roth IRA can also be utilized for other specific needs, for instances, unreimbursed medical expenses and education minus any penalty. Nevertheless, earnings which are withdrawn will be taxed as income if your age is below 59 ½ years. Only qualified taxpayers can avail of a Roth IRA; that is, if you join corporate retirement plans and are disqualified from deductible payments to the conventional IRA.

401(k): Employers provide this retirement savings vehicle, whose name is taken from the section of the Internal Revenue Code which allows it. This plan has the tax advantages and the potential benefit of corporate matching (as mentioned above), making the 401(k) a potential choice for many people.

403(b): This is the nonprofit version of a 401(k) plan. Local and state governments also provide a 457 plan.

Keogh: A specialized form of IRA that serves simultaneously as a pension plan for a self-employed individual, who has the capacity to pay substantially higher contributions permitted for an IRA.

Simplified Employee Pension (SEP) plan: This is a special type of Keogh-individual retirement plan designed to allow small businesses to provide retirement plans (for their employees) that are slightly easier to manage compared to conventional pension plans. Either the employer or the employees can participate in a SEP.

Investing in stocks

Stocks deserve a closer look as they have been known in the past to offer higher returns compared to bonds and other vehicles. As mentioned, the investor becomes a part-owner of a company. Since it was started by Dutch mutual stock corporations in the 16th century, the present-day stock market allows business-owners to raise capital to run their enterprises with the money provided by investors. This scheme makes the investor a stakeholder or a virtual co-owner of the business itself. As a token of that ownership, the stock certificate is given to the investor to serve as specialized financial "security," or financial instrument attesting to or securing an investor’s claim on the assets and income of a business concern.

Common stock

The most common type of stock is, as expected, the common stock. The common stock provides an ideal vehicle for most individuals, since anyone can participate – whether you are young, old, discriminating or easy-go-lucky. There is practically no restriction imposed against anyone who wants to buy a common stock. Nevertheless, the common stock does not merely consist of a document but an actual part-ownership of an existing business operated by real people. Through buying stocks, you participate in a very satisfying process of producing wealth which is unmatched by any other means, except probably by a fortunate turn of events, such as inheriting the wealth of a departed relative you have never met or striking a substantial oil deposit in your backyard.

In short, shareholders are part "owners" of a company’s assets and its generated income. As the business grows with more acquisition of more assets and enhanced income-production, the worth of the company also increases. This results in the increase of the total value of the business as well as in the proportional value of the stock in that business.

As stakeholders and part-owners of the company, shareholders are given the right to vote or elect the members of the board of directors. This board serves as a set of officers who supervise the primary decisions made by the company managers. These directors are the main players in the corporations throughout the world and possess great power, as a result. For instance, boards can choose to allow a company to invest in itself, pay dividends to investors, buy other businesses or assets, or repurchase stocks from its investors. Although the top managers of a company (those who operate the business from day-to-day) can provide some advice or guidelines to the board, the final decision belongs to the board members. Oftentimes, the board also has the power to hire and fire the company managers.

All is not perfect even in owning stock in a company that is doing well at any given time, as running a business has certain risks. Obviously, being part-owner or a company means sharing in the potential risks latent in any business operation. If the business does not make a positive income, the shares of stock will decrease in value. In case the business folds up, the stock will then become worthless.

Different types of stock

Sometimes, companies can opt to focus the voting privilege of a company to cover only a particular type of stock, limiting the majority of shares to only a select group of investors. As an example, a family business seeking to raise capital by selling equity might create a second type of a stock which they already control and has, for instance, 10 votes for each share, while they release to others another type of stock that allows only a single vote per share.

This, for many people, is not an acceptable deal; and so, many investors usually avoid companies having such multiple types of voting stock. Media companies often have this form of structure which had its inception in 1987.

That is why you hear of Class A and Class B shares, because of this selective classification of stocks.

What happens from now on?

That is about all you need to know for now about the fundamental classes of investment options available to you. You can start impressing some of your friends and relatives about your newfound knowledge on stocks. Use the basic terminology as well as the essential principles of becoming a shareholder of a company to tell them how they can also join in the experience of investing. Most of all, tell them of the potential rewards you and they can expect from buying stocks while reminding them of the greater risks they will encounter compared to merely keeping their money in a bank. In the end, what you will decide to do with your new knowledge will be up to you.

We encourage you to take avail of our newsletter services for a month for free. Our contributors may have diverse views on many issues; but this fact helps to provide you with a wide selection of insights and perspectives on how to succeed in investing. We have a disclosure policy which allows us to be fully transparent in all transactions.

Learning How to Invest (Part 1)

What is investing all about? How do you start?

If you have decided to enter the world of investing, learning how to invest must now dominate your time and focus. Two steps will help you on your way.

Initially, you need to rebuild your financial outlook to prepare yourself in investing. After that, learn the technique of investing, for example, how to open a brokerage or a mutual fund account. These basic steps will launch your course to a meaningful and productive investment life.

Defining investing

In essence, investing involves spending your time, effort and resources to attain a higher objective. For instance, you spend weekends with a social group to do charitable work, use your talent in the arts to create works of beauty and value or apply your profession in your job or your business to earn a living. In the same way that you do these things hoping to gain valuable rewards, you likewise invest your money in a bond, mutual fund or stock with the goal of achieving material benefits in the future.

Specifically, investing requires putting your money into what is called a "security" -- a term which refers to anything that is "secured" by other assets. Bonds, stocks, certificates of deposit and mutual funds are some forms of securities you can choose to invest in.

You can select from various methods of investing -- some of which you may be familiar with from watching TV or browsing the Internet. You see a neatly-dressed, overly optimistic lad who stares at you onscreen, seated on a porch in Malibu Beach and fully hyped as to how amazingly easy it is to make big bucks in no time at all! Amusing, it all seems. For if it was really that easy, everyone would have learned the technique to such foolproof method. Unfortunately, only those promoting such wealth-building schemes seem to make money – and at the expense of many disappointed gullible takers.

So, here is the better option for you: Instead of spending $25 on the hardcover EZ Secrets to Untold Billions book and $500 for the EZ Seminar, invest it in yourself once you have gained the fundamental secrets to investing here.

Eradicate your debts now

Now that you are eager to go ahead and start investing once you learn how to, you certainly would want to know the next step. But rein in your enthusiasm for a while. Hold your horses while you check if you are really ready to take the ride of your life in investing. Now that you see the possibilities opened to you through the magic of compounded returns, you have to protect yourself from the same trap which you could be unwittingly locked in. Do away with high-interest debts that you may have at the present.

By the exact same law of compounding rates that will make your investments increase, you can rapidly incur hundreds of dollars in debt over time from a dollar. Having such an enormous debt as you invest would negate all your efforts in investing and saving your money. You will be better off as you are paying off your debt first, than risking your money and exposing yourself to greater danger. Hence, it is wiser to get rid of any high-interest debt first before you consider investing, although some low-interest or tax-advantageous debts can be tolerated.

Make each dollar you invest work for you; this is a mantra you can trust to protect you. This is because each dollar you keep from the hands of full-service brokers or financial professionals will build more wealth for you, as you will soon see.

Reward yourself first of all

To succeed as an investor, you must make investing an integral part of every day. That may sound difficult or tedious; but not really. You must realize that the act of buying something, say a cappuccino, will influence your daily finances as much as acquiring a home-equity loan to cover your credit-card payments.

That is not to say that you must act like a miser who cannot get a good night’s rest over a missing penny in her books. If you reward or pay yourself first, you need not worry so much.

Since you already spend valuable cash for such essential things as gas, water, electricity, credit cards, cable TV, phones and wifi access regularly, why not be the first to get your own precious money – be on top of that list! Keep a certain amount of cash as saving or self-investment each time you get your monthly or weekly check; and go on along as merrily as you can while that money grows over time.

We recommend that you stash away as much as you can; with at least 10% of your annual salary of your gross pay as a reasonable target. Without neglecting your liabilities, you may surprise yourself how much you can save over time. Unless you do it, you will never find out. Of course, the higher the target you set for yourself, the more savings you will create. Save a little; it will come in handy when you need it. The only future you can look forward to is that one you secure for yourself today.

Make good use of online banking and brokerage-service providers. You can set up regular automatic money transfers from your checking account to your savings account (or vice-versa) or from any investing instrument you prefer. Discover how you can live on a lot less than what you spend now; start with discarding some luxuries or any unnecessary trips to the mall or the bar. You will notice a significant difference within a month or two. If you think the sacrifice is not worth the money you saved; then spend it on a trip to a dream destination and see how saving can alter your life in radical ways.

It is never too late to start saving. If you have practically nothing left after all the bills payment, try to reduce the amount you set aside regularly. Maybe the timing is not right for you yet if you find out you cannot afford to squeeze in even a piggy bank. No worries; wait till you are in a position to do so.

Active and passive methods of investing

There are two primary methods of stock investing: active and passive management; and they differ on how stocks are chosen, not on how you choose your verbs. Active investing involves selecting stocks yourself or you can ask your brokers or fund managers to pick the stocks, bonds, and other forms of investments. Passive investing requires you to let your holdings follow an index which a third party makes.

In general, stock investing means active investing. Although it seems preferable over passive investing, active investing does not always turn out to be better. Over the long-term duration, most actively-managed stock mutual funds have not reached the level of the S&P 500 Index, the dominant standard for index funds.

Because of that, some investors choose an alternative to "active" investing. A lot of people prefer passive investing as they are satisfied with a return close to that of a major stock index. You may choose to follow other indexes, such as the Russell 2000 for small-cap stocks, the Wilshire 5000 for the broad market as a whole, and other global indexes.

Speculating versus investing

Perhaps, you may have heard of a close friend who struck it rich with options. Or you may have had moments of lucky streaks in the past where you won a sizeable amount of cash from a raffle or lottery. Why should you then enter into a long and slow process of investing your money which can only bring you a double-digit gain and not bundles of cash right away? Investing demands years of patience before you can finally reap the good harvest. What if you cannot wait that long?

Life does not always bring sunshine and roses when you want it to. We all know that. You will not become a celebrated investor like Warren Buffet if you match the performance of the S&P 500. Neither will losing your savings on some speculative gamble make you a hit overnight nor being in a bankruptcy court after you lose all your other assets later on.

If high-stakes gambling is the thrill you seek, plus all the appurtenant live shows and glittering lights, you are no different from those stock market gamblers who lose their money on apparently legitimate pursuits. We live by the axiom that investors "gamble" each time they put money in a venture they do not understand.

It happens to so many people. They overhear a story from their doctor’s plumber talking about a company named Sweet Pipes at a garden show. "This stock will fly like a rocket in a few months," he whispers. If you rush home and tell your broker to buy 200 shares, you might as well be in Las Vegas!

What business is Sweet Pipes engaged in? Tobacco or garments? Have you any information about its main competitor Bronze Arches? How much did it make last quarter? You need to know a lot more about the company before you toss your precious money to it. Ample study and evaluation can save you a lot of money and anguish.

Speculating, in the end, is a sure way of losing the potential value of your dollar to build lasting wealth for you. It leads you to think of the great gain you can achieve right now while failing to do so, more often than not. On the other hand, your patience in investing can assure you of attaining your goals eventually.

Do you need a financial adviser?

Mann und Frau bei einem Beratungsgespräch

If you’re looking to invest, buy a financial product or plan for the longer term, whether or not you need financial advice will depend on a number of factors such as what product you are looking for, how complicated your finances and personal circumstances are and your short and long-term goals.

·         What services do financial advisers offer?
·         Types of financial adviser
·         What are the benefits of getting advice?
·         So when do you need financial advice?
·         Find a financial adviser
·         What services do financial advisers offer?

Professional financial advisers carry out a ‘fact find’ where they ask you detailed questions about your circumstances, your goals and how you feel about taking risks with your money. Then they recommend financial products that are suitable and affordable for you.

Types of financial adviser

Financial advisers offer services ranging from general financial planning and investment advice, to more specialist advice, such as the suitability of a particular product such as a pension.

In the case of investment products, some advisers are ‘independent’ – meaning they offer advice on the full range of investment products from the market, while others offer a ‘restricted’ service meaning that the range of products or providers they will look at is limited.

What are the benefits of getting advice?

If you buy based on financial advice and a recommendation, you should get a product that meets your needs and is suitable for your particular circumstances.

Depending on the type of adviser you use, you may also have access to a wider range of choices than you’d be able to assess realistically on your own. You also have more protection if things go wrong if you buy based on advice – see below.

The difference between advice and ‘non-advised’ sales

Many banks, building societies and specialist brokers will talk you through your different options and leave it up to you to decide which product to take. In this case you are buying based on ‘information’ and have fewer rights to claim compensation if the product turns out to be unsuitable.

By contrast, if you end up with an unsuitable product after getting advice and a recommendation you could have a case for ‘mis-selling’ – though this doesn’t protect you against making losses if the market goes up or down.

What do you pay for financial advice?

The rules on fees for financial advice changed from 31 December 2012. If you are looking for general financial planning advice or for advice on buying particular investments you will pay a fee. Advisers must be clear upfront about what their fees are and agree with you in advance how you will pay them.

Before these changes, many financial advisers didn’t charge, but instead received a commission which was deducted from the customer’s initial or ongoing investment payments.

The changes were introduced to help make the cost of financial advice clearer and so that you can be sure the advice you receive will not be influenced by how much the adviser could earn from the investment.

Mortgages and most insurance products are not affected. However, some mortgage brokers may still charge upfront fees for advice, while others receive a flat rate introducer’s fee from the product provider. Receiving mortgage advice directly through your lender is usually free.

Is it cheaper to buy without advice?

You won’t have to pay an advice charge if you go direct. But you should weigh up the cost saving against potentially buying an unsuitable product or one which gives poor returns.

Advice can help you buy a better product than one you choose yourself. An adviser will also have the expertise and knowledge to find better options, as some products are only available if you go through an adviser.

So when do you need financial advice?

The answer partly depends on the product and partly on other factors.

Cash savings products

If you’re looking to put money into savings accounts, cash ISAs or fixed rate savings bonds it’s easy to DIY using comparison sites and tables. Because of the low risk you don’t need to get financial advice and you can buy directly from providers very easily.


If you’re thinking of investing in shares, unit trusts and other investments, you can go DIY but it will be more risky because these products are harder to understand than savings. There’s also a risk that you might lose money or buy a product that’s not suitable for you because you don’t understand it. So you really need to do your homework.

Ask yourself these questions:

·         Do you have the time to do the research?
·         Do you have much experience, knowledge or skills when it comes to investing?
·         Can you afford to lose any money?
·         If things go wrong, are you comfortable taking responsibility for any bad investing decisions?

If the answer to any of these is ‘No’ then seeking financial advice may be your best option. When trying to decide, also bear in mind the cost of fees against the financial and emotional cost of getting it wrong if you buy without advice.

Insurance or mortgages

Some insurance products and mortgages can be purchased using price comparison websites, or bought directly from suppliers.

However, there are also plenty of specialist brokers who will talk you through a range of options and may be able to get you a better deal. It’s up to you whether you buy with or without advice.


If your employer offers a workplace pension they may also offer you access to advice or provide guidance about joining their scheme. You should take up this offer if available.

If you’re looking to invest in a personal pension, to boost your existing pension or to merge different pots from existing pensions it’s usually best to get advice unless you really understand how these products work.

Pensions are long-term investments so you need to be sure you understand the types of fund you’re investing in, the risks and the suitability for your particular situation.

Find a financial adviser

If you think that financial advice is for you, read our guide below to understand more about independent versus restricted advisers and to link to organizations that will help you find an adviser in your area.

The 10 Best Ways to Buy Tech Stocks

Semiconductors, software and IT services.

By: Kyle Woodley

U.S. News & World Report ranks the best exchange-traded funds for tech lovers.

Semiconductors, software and IT services.

The heart of the technology sector's earnings season typically brings with it a lot of big swings, even in the bluest of blue-chip tech stocks. But you can avoid the volatility from quarterly tech earnings season by getting some of your exposure in a more well-rounded way: via exchange-traded funds, which let you invest in the sector as a whole, or in specific industries such as Internet companies or semiconductor makers. Here's the top 10 tech ETFs as of this writing, as ranked by U.S. News & World Report.

1. Vanguard Information Technology ETF (VGT)

The dirt-cheap VGT is also a strong performer, beating out the S&P 500 in total returns at 143.46 percent to 136.74 percent since inception in late January 2014, and it's no slouch at $9 billion in assets under management. Still, the XLK has the overall performance advantage, with 148.72 percent gains in that time. VGT is similarly constructed, though telecoms like AT&T and Verizon Communications (VZ) are utterly absent. If you're driven by paying the absolute least for broad tech exposure, you'll want to lean toward VGT.

2. Technology Select Sector SPDR ETF (XLK)

The XLK is the gold standard for tech funds – both the well-recognized and the largest with nearly $14 billion in assets under management. The XLK is a collection of all the tech favorites – Apple, Microsoft and Facebook, though it also features AT&T (T) in its top five holdings. The XLK also is one of the cheapest tech ETFs out there, and it even has a performance edge over the lifetime of the top-ranked fund out there, which we'll look at next.

3. Guggenheim S&P 500 Equal Weight Technology ETF (RYT)

The RYT is, as the name would suggest, an equal-weight fund that invests in the Standard & Poor's 500 index's tech stocks -- 68 blue-chip names. Thanks to the equal weighting methodology, no stock makes up more than 1.7 percent of the holdings. RYT has a heavy bent toward IT services and semiconductors, each at nearly a quarter of the fund. One note with the last of our equal-weighting funds – the methodology provided better diversification, but in the tech sector, not always (or even often) better returns.

4. iShares U.S. Technology (IYW)

The IYW would seem to be pretty spread out given that it has 140 holdings within America's tech sector. However, this fund is extremely concentrated at the top, with the top five companies representing more than half of the IYW's weight. Apple alone is a massive 17 percent of the fund, and Microsoft and Alphabet (GOOG, GOOGL) each take up 12 percent. This is a great fund when all is going well for technology's most blue-chip stocks, but when the chips are down … watch out.

5. iShares Exponential Technologies ET (XT)

The iShares' XT ETF aims to be at the forefront of the tech sector's prevailing trends, using what it calls a "unique evaluation process to identify companies developing and/or leveraging promising technologies." As a result, XT is invested in things such as 3D printing via 3D Systems Corp. (DDD) and Indian IT outsourcing via Wipro (WIT). This is another equal-weighted fund, with no stock making up more than 1 percent of the fund. Nearly 30 percent of the fund is invested in health care technology.

6. iShares North American Tech ETF (IGM)

The IGM is another broad-based tech fund, with this one focusing on roughly 275 North American tech companies. This is a traditional cap-weighted fund, so 30 percent of the fund is concentrated in its top 10 holdings, led by MSFT, AAPL and FB. However, investors are treated to a decent industry spread, with double-digit portions of the fund invested in five areas, including Internet software, storage and semiconductors. Internet retail comes close at nearly 9 percent of the fund.

7. Fidelity MSCI Information Technology Index (FTEC)

The FTEC is a broad-based ETF, focusing on mostly large-capitalization, growth-oriented stocks within the tech sector. Thus, you get consumer-facing hardware companies like Apple, software companies like Microsoft, Internet companies like Facebook (FB) and even payment tech companies such as Visa (V). While the FTEC is diversified in that it holds nearly 400 companies, this still is a top-heavy fund, with the top five companies weighted at nearly 45 percent, including a 13 percent-plus weighting for Apple – a common theme among many big tech ETFs

8. Market Vectors Semiconductor ETF (SMH)

The SMH also invests in the tech sector's semiconductor subsection. This is a very niche ETF of just 26 holdings currently, all involved in the production or other aspects of the chip business. Top holdings Intel Corp. (INTC) and Taiwan Semiconductor Manufacturing Co. (TSM) make up more than a quarter of the fund, but SMH offers some geographic diversification – a little more than 30 percent of the fund is invested in stocks from Taiwan, the Netherlands, Singapore, the U.K. and Bermuda.

9. SPDR S&P Semiconductor ETF (XSD)

The XSD is a diversified, balanced fund of semiconductor companies, almost all of which are in the U.S. What is notable is its equal-weighting methodology – XSD weighs each of its 40 holdings the same at each rebalancing so no one stock has an outsized effect on the ETF. However, weights do fluctuate in between rebalancing depending on performance, so currently; top holdings are Inphi Corp. (IPHI), Nvidia Corp. (NVDA) and Advanced Micro Devices (AMD).

10. iShares Global Tech (IXN)

You would imagine that the iShares Global Tech ETF took a worldwide view of the technology sphere, and you'd be less than a quarter correct. Less than 25 percent of the fund is invested in domiciled outside of the U.S.  with Japan leading the way at 5.1 percent. With heavily weighted top holdings such as Apple (AAPL, 12.5 percent) and Microsoft Corp. (MSFT, 8.9 percent) this fund shares a lot in common with most other broad tech funds.

How to Find a Financial Advisor

Although the use of financial planners is growing, most Americans still tend to take a do-it-yourself approach to building a portfolio and saving for retirement.

Forty percent of respondents in a 2015 survey by the Certified Financial Planner Board of Standards say they utilized financial advisors, an increase from 28 percent in 2010. And while most people are handling their own finances, there are distinct advantages to hiring a professional.

A financial advisor can give investors the discipline to resist investing or divesting reactively, says Angela Coleman, fiduciary investment advisor at Unified Trust Co., headquartered in Kentucky. "We take the emotion out of it," Coleman says.

With the Internet, the world is awash with financial advice, and professional financial advisors can act as a filter, says Andrew Barnett, relationship director at Global Financial Private Capital in Sarasota, Florida.

Financial advisors are a good option for helping clients assess their risk tolerance and then build a portfolio that actually meets what they want, says Drew Horter, founder and president of Horter Investment Management in Cincinnati. He says many people who want to be conservative with their money actually have portfolios that are riskier than they'd like.

Kimberly Foss, founder and president of Empyrion Wealth Management and author of "Wealthy by Design: A 5-Step Plan for Financial Security," recommends interviewing two or three advisors and having one to two meetings with each because this is a relationship that will last "hopefully for the rest of your life," she says.

There are hundreds of thousands of personal financial advisors in America — 249,400 in 2014 according to the Bureau of Labor Statistics — so how should retail investors pick an advisor, whether they are independent or work with a large brokerage, a regional bank or an insurance company?

Consider the fiduciary standard. Barnett advises people to seek advisors who are fiduciaries, which means they are legally responsible to put the clients' best interest in mind before their own.

Non-fiduciary advisors are required only to sell clients what they think is suitable for them. "Dealing with a fiduciary, I think, is critical," Coleman says.

The Department of Labor recently approved a new rule that would require all financial professionals who offer investment advice for retirement accounts to follow the fiduciary standard. But while that rule covers investments in IRAs and 401(k)s, it doesn't impact advisors who are recommending investments for a taxable brokerage account.

Know the pay structure and fees. Coleman recommends that people not pick advisors that are paid solely on commission. An alternative is fee-based advice, where clients are charged a set percentage of assets under management, she says.

Clients with fewer assets to manage may want to choose a fee-based advisor that charges by the hour or a flat annual fee, Coleman says.

Barnett notes that there are now more products such as annuities or real estate investment trusts available as fee-based products.

Opinions vary, but advisor fees could be anywhere from 1 to 2 percent of assets under management. If you have a lot with a financial advisor, that extra percent could be a tidy sum.

This fee is separate from other fees, such as those that come with mutual funds that are disclosed in the prospectus, so it's important to ask advisors if they can break down all the costs of investing, which can include trading, custodial, accounting and sales fees, Barnett says.

Do your homework. Investors should also check into an advisor's background, Coleman says. Know what certifications the advisor holds, and ask advisors for a list of current clients as references.

If an advisor won't provide references, that is a sign of a problem, she says.

In addition to references, investors should ask for an advisor's performance track record, Foss says.

Because a client may have a financial advisor for decades, it's important to find someone they like and trust.

Sometimes that can be accomplished by getting to know the advisor, Coleman says, "Find someone you've got a good rapport with."

Do you need financial therapy?

Pensive young businesswoman sitting on a stone bench at sunset

Whether it’s anxiety about paying the bills, guilt at spending, or feelings of inadequacy over our income, polls frequently show money to be a leading source of worry, and one of the main causes of rows between couples. Even the rich aren’t immune, according to Capgemini’s annual World Wealth Report, with top concerns for millionaires in 2015 ranging from how they will maintain their lifestyle to whether their offspring will mismanage their inheritances.

So how do we make peace with our bank statements and instead spend the wee hours calmly contemplating whether that car alarm will ever stop? The answer, at least according to some, lies not in spreadsheets and interest calculators, but in financial therapy. A burgeoning field in the US, where the five-year-old Financial Therapy Association counts more than 250 members, financial therapy combines traditional financial advice with a more touchy-feely psychological exploration of what is driving a client’s behaviour towards money.

It doesn’t come cheaply, of course, but financial therapists say we should think twice before rolling our eyes: they claim our emotional issues around money could be the exact reason we don’t have more cash to pay our bills.

They say the way we treat money is influenced less by logic and more by deep-seated beliefs that we are often unaware we hold. We may grow up watching our parents struggle with money and subconsciously develop negative, fearful emotions towards it, for example.

Low self-esteem can lead to the self-fulfilling prophecy that we will never make enough to be comfortable. “The obstacles that keep us from having more and being more are rooted in the emotional, psychological and spiritual conditions that have shaped our thoughts,” writes US financial expert Suze Orman in The Road to Wealth: A Comprehensive Guide to Your Money. “In other words, what we have begins with what we think.”

Financial therapists aim to identify and tackle a client’s psychological “blocks” about money through a mixture of established therapy techniques, such as asking them to recall early memories or write down word associations, and classic financial planning tools such as balance sheets and cash flows.

Practitioners tend to come from backgrounds that include psychology, marriage or family therapy, mental health, social work and financial planning, and what they offer depends on their training. A psychologist won’t necessarily be able to advise on Isas, for instance.

The practice has yet to make it to Britain – although Kristy Archuleta, president of the Financial Therapy Association, believes it is only a matter of time – but financial coaches such as Simonne Gnessen tread similar ground. The co-author of Sheconomics and founder of Brighton’s Wise Monkey Financial Coaching, Gnessen came to coaching via a course in neurolinguistic programming.
A petite woman with natural warmth, she had learned from her earlier, 10-year career as a financial adviser that traditional advice often doesn’t go far enough. “The financial industry tends to work on the basis that people are functional with money,” she says, with a wry smile. “You earn, you save a proportion, you always have the future in mind. In my experience, that isn’t the case and most of us are actually a bit dysfunctional.”

Financial coaching addresses the reasons we don’t always treat money in the way we should, identifying unhelpful patterns of behaviour and challenging attitudes we may have unknowingly developed over the years. Gnessen’s clients’ concerns range from debt to retirement, worries about providing for family to feelings of guilt about “undeserved” inheritances.

The reality of someone’s financial situation often has little bearing on their feelings about it, she says. “I’ve sat down with clients who will never run out of money in their lifetimes – and have the bank statements to prove it – yet I’ve had to reassure them again and again that they’re not going to end up destitute. The main issue from my point of view is whether someone’s money behaviour is supporting or hindering them – and if it’s hindering them, how can we change that?”

Sitting opposite Gnessen in her peaceful mews house office, I tentatively begin to describe my own feelings towards money. It’s possibly the first time I’ve ever discussed the subject from an emotional perspective and as we talk, I realise my attitudes are far from neutral, mainly oscillating between anxiety and an ill-advised recklessness.

Gnessen says she can understand the recklessness – it’s a time-honoured release from the exertion of self-control – but is curious about where the anxiety stems from. The idea someone wouldn’t be at least a little anxious about money is new to me, perhaps highlighting just how deep-seated the attitude is. When pressed, I identify debt, the precarious nature of freelance work and the prohibitive cost of living, but it strikes me that it’s something I’ve felt since the days when I only had my weekly pocket money to manage.

I think of money as an abstract concept, yet it’s inherently bound up with negative feelings. Although we start to unpick the reasons for this, I’m less interested in where the attitude has come from than how it’s holding me back and what I can do to overcome it.
Gnessen believes my worry about money is leading to some poor decisions in how I manage it. The debt I’ve accrued over years of renting in expensive cities and living slightly beyond my modest means is, at under £10,000, far from insurmountable, but it causes me grief. The solution is clearly to pay it off, but it’s not quite happening and Gnessen thinks this is related to my negative feelings about the situation.

I make hefty monthly repayments because they make me feel better initially (I’m tackling this problem!) but on an unpredictable freelance income they often end up leading to cashflow problems and more borrowing further down the line; cue more worry.
She suggests that instead of reacting to the anxiety the debt causes me by trying to pay it off quickly, I should instead focus on a more sustainable goal such as not accruing any new debt. I could then use the money “saved” by making more manageable repayments to build up an emergency pot I can draw on when times are tight, rather than resorting to more borrowing. The point, Gnessen says, is to balance the see-saw of emotions that accompanies the cycle of debt and repayment and encourage calmer, more rational financial behaviour.

Gnessen also thinks I have become too comfortable (in a miserable sort of way) with being in debt and am, inadvertently, ensuring I stay there. She points to the fact I have never allowed my borrowing to escalate beyond a certain level, but have frequently paid it down and then allowed it to climb back up again.

She asks me to imagine myself in a new situation and tell her what having money could do for me. I can only come up with not having to worry about it, which seems pretty good but apparently isn’t positive enough. Positive goals are known to be more motivating than negative ones, Gnessen says.

I’m not wholly convinced by this – wouldn’t there be a lot of rich daydreamers if that were the case? – and I struggle with the idea that worry isn’t also a good motivator. If we didn’t worry about paying bills and keeping a roof over our heads, I’m not sure many of us would go to work at all. Still, I concede that my perceived “reward” for getting out of debt is perhaps not enough of a reward and promise to work on finding a more meaningful alternative.

Talking about money with a stranger feels both exposing and liberating. It’s a subject that provokes strong emotions but we rarely discuss it even with our closest friends. Perhaps financial therapy just offers a much-needed platform to discuss these feelings with someone who won’t judge us. But I think it’s more practical than that.

For me, the soul-searching is interesting but becomes genuinely useful when it identifies patterns of unhelpful behavior. Given our tendency to repeat mistakes in other areas of our lives, I think most of us could benefit from a closer examination of our attitudes to money.

Financial coaching with Simone Gnessen starts from £185 for a two-hour session.

Become a Client of Sparks Corporation Singapore Management Services

Achieve your Financial Goals

Becoming a client of Sparks Corporation is quite easy and is financially rewarding. We appreciate our clients’ great desire to achieve their investment objectives according to their unique circumstances. For this purpose, we endeavor to obtain a comprehensive understanding of your financial requirements and what you hope to gain by committing to an investment strategy with our company.

Without an in-depth and broad vision of your expectations, we cannot build an effective partnership of your dreams and our experiences.

Discretionary and Non-Discretionary Management

We offer two Unique Account Structures which are managed in various ways:

Discretionary portfolio management includes a fee-based service requiring minimal input into the investment decision-making procedure. We will provide you with a list of strategies, each fitted to your specific goals in mind. Through counsel and discussion with your wealth advisor, you will choose a plan that suits your personal convenience.

We commonly accept applications with minimum investment capabilities of $30,000. Our services are fee-based and directly connected to a multi-leveled fee schedule based on the level of investment.

Non-discretionary management includes a transaction and commission-based model designed to incorporate but not limited to variables of asset class, introduction, preliminary guidance and level of capital invested.

Clients making use of our non-discretionary services are encouraged to discuss this choice in detail with his or her wealth advisor before applying for assistance.