Author Archives: Edward Brownlee

Contrarian Investing

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“The way to make money is to buy when blood is running in the streets.” ~ John D. Rockefeller

Contrarian investing believes that the worse things seem in the market, the better the investing opportunities are for profit.

Contrarians, as the name implies, try to do the opposite of the crowd. They get excited when an otherwise good company has a sharp but undeserved drop in share price. They swim against the current and assume the market is usually wrong at both its extreme lows and highs. The more prices swing, the more misguided they believe the rest of the market to be. (For more on this, read “Finding Profit In Troubled Stocks.”)

Bad Times Make for Good Buys

Contrarian investors have historically made their best investments during times of market turmoil. In the crash of 1987, the Dow dropped 22% in one day in the U.S. In the 1973-’74 bear market, the market lost 45% in about 22 months. The terrorist attacks of Sept. 11, 2001, also resulted in a major market drop. Those are times when contrarians found their best investments.

The 1973-’74 bear market gave Warren Buffett the opportunity to purchase a stake in the Washington Post Co. at a deep discount (the company could have “sold the [Post’s] assets for not less than $400 million.” Meanwhile, the Post had an $80 million market cap), an investment that has subsequently increased by more than 100 times the purchase price–that’s before dividends are included.

Sir John Templeton, founder of the Templeton Growth Fund, was also a serious contrarian investor, buying into countries and companies when, according to his principle, they hit the “point of maximum pessimism.”

As an example of this strategy, Templeton bought shares of every public European company at the outset of World War II in 1939, including many that were in bankruptcy. He did this with borrowed money. After four years, he sold the shares for a very large profit.

But there are risks to contrarian investing. While successful contrarian investors put big money on the line, swam against the current of common opinion and came out on top, they also did some serious research to ensure the investing herd was indeed wrong.

So, when a stock takes a nosedive, this doesn’t prompt a contrarian investor to put in an immediate buy order, but to find out what has driven the stock down and whether the drop in price is justified.

While successful contrarian investors have their own strategy for valuing potential investments, they all have the one strategy in common–they let the market bring the deals to them, rather than chasing after them.

References:

  1. https://www.forbes.com/2009/02/23/contrarian-markets-boeing-personal-finance_investopedia.html

Social Security Benefits for Children

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In October of 2022, more than 3.8 million children received Social Security benefits because one or both of their parents are disabled, retired, or deceased. These benefit payments to children total more than $2.6 billion every month.

Sadly, many children don’t get the benefits for which they are eligible, writes Devin Carroll.  Most people don’t know about the qualifications and rules for this special benefit, so they don’t know to apply for the children in their lives.

Who Is Eligible for Social Security Benefits for Children?

A child who is your biological child, adopted child, or dependent stepchild  is eligible for children’s benefits if:

  • you become disabled
  • you retire
  • you die
  • and, the child is:
    • unmarried, and
    • under age 18, or
    • 18 or 19 if a full-time student in secondary school through grade 12 (see note below), or
    • 18 or older and disabled with a disability that started before age 22.
      Note: A 2022 report by the Office of the Inspector General found that the Social Security Administration erroneously terminated the benefits of students who turned 18. 

How Much Is The Benefit?

If you become disabled or retire, your qualified child is eligible for up to 50% of your full retirement age benefit.

If you have kids at home, and are thinking about filing for Social Security, filing early before full retirement age (RFA) could make more sense because your children cannot collect a Social Security benefit until you file.

Consider the difference in lifetime benefit amounts for a couple with the following circumstances.

Roger is 62 and his wife is 46. They have two kids at home, ages 8 & 10.  Roger is financially well off enough to stop working and can be flexible on what age he begins to collect Social Security.

If Roger waits until his full retirement age, he’ll get $2,000 per month. If he files now, he’ll only get $1,500 per month.   He ran the numbers and figured out that if he lived to 90, he’d receive an additional $70,000 in benefits for delaying filing until 66 instead of filing at 62.

For most people, this math shows that it makes sense to delay receiving benefits. However, this does not account for the benefits paid to the children. While the children are eligible for benefits based upon Roger’s retirement, the kids cannot get benefits until he files.   Roger’s family would be able to collect thousands of dollars more in lifetime benefits if Roger files early and turns on the benefits for his children.

Here’s how…

If you run Roger’s full retirement age benefit through the family benefit calculator, you’ll arrive at a maximum benefit of approximately $3,500 . If Roger files at 62 he’ll receive $1,500 and each of his children would be eligible for $1,000 in children’s benefits. That additional $2,000 per month ($1,000 for each of the children) is only available if Roger files for Social Security.

Whenever a minor child receives a Social Security benefit, the Social Security Administration pays the benefit to a representative payee or  a parent (or legal guardian) who is responsible for managing the benefits on behalf of the child.

Before a recent law change, all representative payees were required to file an annual report. However, due to a recent change in the law, the SSA no longer requires most parents or guardians to complete an annual Representative Payee Report.

Even though the SSA doesn’t require an annual reporting, they do have the following cautioning language. “All payees are responsible for keeping records of how the payments are spent or saved, and making all records available for review if requested by SSA.”

If you haven’t spent all the money, the SSA will require you to send it back to them when your child turns 18. This is because your child is considered an adult in their eyes and they will begin to deal directly with them.

References:

  1. https://www.socialsecurityintelligence.com/social-security-benefits-for-children/#more-2900

Mindset, Believing and Behavior Matters

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Your mindset is everything. Believe you can and you will! What you believe and think you become. 

Not everyone is going to believe in you and that’s okay. At the end of the day the only thing that really matters is that you believe in yourself. So, it’s essential to believe in yourself and to have faith in your own abilities. “Believe you can and you’re halfway there,” stated Theodore Roosevelt. His words remind us of the power of self-belief.

When we believe in ourselves, we unlock a world of possibilities and potential. It’s easy to get discouraged by the challenges we face, but with a positive mindset and unwavering determination, we can overcome them.

“Champions behave like champions before their champions: they have a winning standard of performance before they are winners,” writes Bill Walls.  Effectively, champions behave and believe they are champions first, and success comes later. They adopt a champion’s mindset.

As in sports, belief and behavior matter with respect to building wealth and achieving financial freedom. Your mindset is everything. When you face challenges with a positive mindset, you open up a world of possibilities. Believe in yourself, have faith in your abilities, stay resilient, and you can accomplish anything.

“Leaders are not made in smooth seas when everything is going well. It’s easy to lead when you are winning. Leaders are made in the storm. No one is born though. Toughness is built in the struggle,” explains Julie Fournier. Neither is building wealth and achieving financial freedom.  Successfully and patiently navigating market volatility and economic turmoil requires a positive mindset, believing wealth and freedom are achievable, and possessing disciplined financial behavioral skills.

“Your mindset is everything. It shapes your thoughts, your actions, and ultimately your life. A positive mindset can help you overcome obstacles and achieve your goals. So, take a deep breath and remind yourself that you are capable of great things!” –  Unknown

What you focus on is what you will find and what you believe you will achieve. Believe in yourself and your abilities, and you’re already halfway to success. Keep pushing forward and never give up!

References:

  1. https://www.psychologytoday.com/us/blog/seeing-what-others-dont/201605/mindsets

The Best Filing Age for Social Security Benefits

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Filing for Social Security benefits at age 62 can offer a greater financial benefit in tax savings and capital accumulation than filing at 70 in the right circumstances, states Devin Carroll, author of “Social Security Basics: 9 Essentials That Everyone Should Know”l

There are several factors or variables you should consider:

  1. You want to make sure your money is going to last throughout your 30 years or more of retirement
  2. You want to make sure your Social Security filing decision is coordinated with your other financial assets and income
  3. You want to know if a Roth conversion would work for you (and how much to convert)
  4. You need a better estimate of a year-by-year retirement income plan
  5. You want to make sure that your retirement income strategy won’t cost you unnecessary local, state and federal income taxes
  6. You want to make sure you understand the right sequence to access your taxable, deferred and Roth retirement accounts

 

Faith

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“Faith is the first factor in a life devoted to service. Without it, nothing is possible. With it, nothing is impossible.” ~ Mary McLeod Bethune.

Faith is the substance or assurance of things we hope for, but have not yet received. Faith (confidence, belief, trust) is also our evidence of that which is not seen—the invisible spiritual things.

Faith comes before a prayer is answered or before an individual has received what he or she has requested from God. If we have received what we asked for, then faith is not needed.

An example of faith was demonstrated by educator Mary McLeod Bethune who was quoted as saying: “I considered cash money as the smallest part of my resources [for starting the school for Negro girls]. I had faith in a loving God, faith in myself, and a desire to serve.”

“Now faith is the substance of things hoped for, the evidence of things not seen.” ~ Hebrews 11:1,

Keys to Building Wealth

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The wise man saves for future days,
Delaying pleasure in frugal ways,
Building wealth with each coin saved,
A future secure, a life well paved.

Achieving financial freedom and building wealth require a combination of the right mindset, focus, self-discipline, patience, gratitude and knowledge. “The freedom to do what you want, when you want, with whom you want, for as long as yo want, is true freedom,” says Morgan Housel, in The Psychology Of Money.

The six keys to building wealth over the long term are mindset, focus, discipline, patience, knowledge and gratitude. A seventh key is health.

It’s effectively about your mindset. Wealth is achieved by habitually investing in yourself first and foremost. Winning at finance and at life is 80 to 90 percent habit/behavior and 10 to 20 percent knowledge/skill. Knowing what to do isn’t the problem; actually doing it is. Most of us know what to do, but we just don’t or won’t do it. If you can control the person in the mirror, you can be fit and wealthy.

Once you adopt the mindset of the individual you aspire to become, there are no limits to what you can achieve.

Once you realize that everything in this life is but a thought, mindset and resulting habits, you are guaranteed to alter your life’s trajectory. “Doing well with money has a little to do with how smart you are and a lot to do with how you behave,” explains Morgan Housel, in The Psychology of Money

Be disciplined enough to delay instant gratification while building wealth. “Rich is the current income. Wealth is income not spent. Wealth is hard because it requires self-control,” concludes Morgan Housel, in The Psychology of Money. The truth is that wealth is what you don’t see. Wealth is the nice cars not purchased. The diamonds not bought.

Careless spending and a conspicuous consumption lifestyle make you a slave to capitalism, while saving and investing in assets builds wealth. “Spending money to show people how much money you have is the fastest way to have less money,” writes Morgan Housel, in The Psychology of Money.

Building wealth requires a long-term perspective and a willingness to make sacrifices in the present for future benefits.

Final key point, getting healthier should be equally as important as building wealth. It is stated repeatedly and for a very good reason that “health is wealth”.

References:

  1. Morgan Housel, The Psychology of Money: Timeless Lessons on Wealth, Greed, and Happiness, September 2020.
  2. https://www.sloww.co/psychology-of-money-book/

Time is Precious

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”We are what we repeatedly do. Excellence then, is not an act, but a habit.” – Aristotle

Brian Tracy*, Chairman and CEO of Brian Tracy International, posted recently the following Facebook post regarding time, mindfulness, and focus:

”If there’s one thing that’s certain in life, it’s that time is precious. We only have so much of it to achieve our goals and fulfill our dreams,” says Tracy. That’s why it’s important to be deliberate about how you spend and invest your time, talent and treasure.

Tracy’s quote “Don’t waste time knocking on doors that won’t open for you” speaks to this idea. It reminds you that not every opportunity will be the right fit for you, and that’s okay. Sometimes, no matter how hard you try, some doors simply won’t open for you.

Instead of wasting time and energy trying to force these doors open, it’s better to focus your efforts toward doors that are more likely to lead to success. This doesn’t mean you should give up at the first sign of resistance, but rather that you should be mindful of when it’s time to move on.

“Your time is limited, so don’t waste it living someone else’s life,” stated Apple founder Steve Jobs. “Don’t be trapped by dogma—which is living with the results of other people’s thinking. Don’t let the noise of others’ opinions drown out your own inner voice. And most important, have the courage to follow your heart and intuition.”

One of the keys to success is to focus on your strengths and pursue opportunities that align with them. When you do this, you are more likely to find doors that are a good fit for you and that will open with greater ease. This can lead to greater fulfillment and success in both your personal and professional lives.

Additionally, success is about taking action. As the famous quote goes, “The act of taking the first step is what separates the winners from the losers.”

Many people have brilliant ideas and big dreams, but few are willing to take the first step toward achieving them, writes Tracy. It’s easy to get bogged down by fear, doubt, or uncertainty. But those who are willing to take action, despite these challenges, are the ones who achieve success.

Focusing on your strengths, pursuing opportunities, and taking the first step can be daunting, but it’s also incredibly liberating. It’s the moment when your idea transforms from a mere thought into a tangible reality. It’s the moment when you gain momentum and start moving toward your goals.

In conclusion, this is a powerful reminder to be mindful of where you invest your time and energy. By focusing on opportunities that align with your values, strengths and passions, you can increase your chances of success and fulfillment. So, it’s important to be smart about where you “knock and keep pushing forward toward the doors that will open” for you, writes Tracy.

“My favorite things in life don’t cost any money. It’s really clear that the most precious resource we all have is time.” ~ Steve Jobs

Source:  https://facebook.com/story.php?story_fbid=pfbid02yGDH61Cd1RKimgr4crwkf2RwQPNWyPvAqS96e4cNzxL8EZXBfPF3SPNBHbwSoZ79l&id=100044268887586&mibextid=qC1gEa

*Brian Tracy is Chairman and CEO of Brian Tracy International, a company specializing in the training and development of individuals and organizations. Brian’s goal is to help you achieve your personal and business goals faster and easier than you ever imagined.

50/15/5 Budget for Saving and Spending

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Key takeaways

  • Consider allocating no more than 50% of take-home pay to essential expenses.
  • Try to save 15% of pretax income (including any employer contributions) for retirement.
  • Save for the unexpected by keeping 5% of take-home pay in short-term savings for unplanned expenses.
  • Budget. The 50/15/5 rule is Fidelity’s simple guideline for saving and spending: Aim to allocate no more than 50% of take-home pay to essential expenses, save 15% of pretax income for retirement savings, and keep 5% of take-home pay for short-term savings.

50/15/5 Budget is an easy plan for managing your saving and spending

50/15/5 Rule Budget are simple guidelines for saving and spending and managing your money. Track your money using 3 categories:

  • Allocate no more than 50% of take-home pay to essential expenses,
  • Save 15% of pretax income for retirement savings, and
  • Keep 5% of take-home pay for short-term savings.

Fidelity Investment’s research found that by sticking to these guideline, there is a good chance of maintaining financial stability now and keeping your current lifestyle in retirement.

Essential expenses: 50%

Some expenses simply aren’t optional—you need to eat and you need a place to live. Consider allocating no more than 50% of take-home pay to “must-have” expenses, such as:

  • Housing—mortgage, rent, property tax, utilities (electricity, etc.), homeowners/renters insurance, and condo/home association fees
  • Food—groceries only; do not include takeout or restaurant meals, unless you really consider them essential, i.e., you never cook and always eat out
  • Health care—health insurance premiums (unless they are made via payroll deduction) and out-of-pocket expenses (e.g., prescriptions, co-payments)
  • Transportation—car loan/lease, gas, car insurance, parking, tolls, maintenance, and commuter fares
  • Child care—day care, tuition, and fees
  • Debt payments and other obligations—credit card payments, student loan payments, child support, alimony, and life insurance
    • Keep it below 50%: Just because some expenses are essential doesn’t mean they’re not flexible. Small changes can add up, such as turning the heat down a few degrees in the winter (and turning your AC up a few degrees in the summer), buying—and stocking up on—groceries when they are on sale, and bringing lunch to work. Also consider driving a more affordable car, carpooling, or taking public transportation.
    • Consider a high-deductible health plan (HDHP), with a health savings account (HSA) to reduce health care costs and get a tax break. If you need to significantly reduce your living expenses, consider a less expensive home or apartment. There are many other ways you can save. Take a look at which essential expenses are most important, and which ones you may be able to cut back on.

Retirement savings: 15%

It’s important to save for your future—no matter how young or old you are. Why? Pension plans are rare. Social Security probably won’t provide all the money a person needs to live the life they want in retirement. In fact, we estimate that about 45% of retirement income will need to come from savings. That’s why we suggest people consider saving 15% of pretax household income for retirement. That includes their contributions and any matching or profit sharing contributions from an employer. Starting early, saving consistently, and investing wisely is important, as is saving in tax-advantaged retirement savings accounts such as a 401(k)s, 403(b)s, or IRAs.

How to get to 15%: If contributing that amount right now is not possible, check to see if your employer has a program that automatically increases contributions annually until a goal is met. Another strategy is to start by contributing at least enough to meet an employer match, and then if you get a raise or annual bonus, add all or part of these funds to your workplace savings plan or individual retirement account until you have reached the annual contribution limit.

Short-term savings: 5%

Everyone can benefit from having an emergency fund. An emergency, like an illness or job loss, is bad enough, but not being prepared financially can only make things worse. A good practice is to have enough put aside in savings to cover 3 to 6 months of essential expenses. You can start with $1,000 or a month’s worth of expenses, and then gradually build up to 3 to 6 months’ worth. Think of emergency fund contributions as a regular bill every month, until there is enough built up.

While emergency funds are meant for more significant events, like job loss, we also suggest saving a percentage of your pay to cover smaller unplanned expenses. Who hasn’t been invited to a wedding—or several? Cracked the screen on a smartphone? Gotten a flat tire? In addition to those, there are certain categories of expenses which are often overlooked; for example, maintenance and repairs of cars, field trips for kids, copays for doctor’s visits, Christmas gifts, and Halloween costumes, to name a few. Setting aside 5% of monthly take-home pay can help with these “one-off” expenses.

It’s good practice to have some money set aside for random expenses so you won’t be tempted to tap into your emergency fund or pay for one of these things by adding to an existing credit card balance. Over time, these balances can be hard to pay off. However, if you pay the entire credit card balance every month and get points or cash back for purchases, using a credit card for one-off expenses may make sense.

How to get to 5%: Having this money automatically taken out of a paycheck and deposited in a separate account just for short-term savings can help a person reach this goal.

50/15/5 Budgeting guidelines serve as a starting point

Our guidelines are intended to serve as a starting point. It is important to evaluate your situation and adjust these guidelines as necessary. If you’re close to the 50/15/5 target spending and saving amounts, good job. And for those staying within the guidelines, any remaining income is theirs to save or spend as they would like.

Some ideas: First, pay down high-interest debt. For other goals, like paying for a child’s college or wedding, you could use the remaining income to save for them. And finally, for those who want to retire early or haven’t been saving diligently, putting it toward retirement savings may make sense.

The good news is that it isn’t about micromanaging every penny. Analyzing current spending and saving based on our 3 categories can give you control—and confidence. Most everyone’s financial situation will change over time. A new job, marriage, children, and other life events may change cash flow. It’s a good idea to revisit spending and saving regularly, particularly after any major life events.

References:

  1. https://www.fidelity.com/viewpoints/personal-finance/spending-and-saving

Healthy Aging: Nicotinamide Riboside

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Blog Post at a Glance

  • The trace nutrient nicotinamide riboside (NR), a precursor of nicotinamide adenine dinucleotide (NAD+) and a form of vitamin B3, may help slow brain aging
  • NR may help to boost levels of NAD+, which typically declines in the brain with age, leading to metabolic and cellular dysfunction
  • The NAD+ precursor niacinamide is also beneficial, but it’s not widely promoted because it costs much less than other NAD+ precursors, including NR
  • Since NAD+ declines with age, boosting it has been described as a fountain of youth for extended lifespan and increased resilience to disease

Nicotinamide Riboside (B3) is often celebrated as a “fountain of youth” and has been linked to many health benefits, including better endurance, improved cardiovascular health, cognitive enhancement, and anti-aging support.

Nicotinamide riboside is naturally produced in our bodies. It’s a chemical compound which acts as a precursor to vitamin B3.

For a long time, nobody really knew about nicotinamide riboside. Its mechanisms were not well-understood and, at first glance, it didn’t look like it profoundly affected the body in any way.

Over the past decade, a number of studies have been performed on nicotinamide riboside, radically changing the way scientists think and feel about this chemical compound.

Nicotinamide riboside has been linked to a number of surprising and powerful benefits. Early research on the chemical has been noteworthy.

Established scientist from Harvard and Cornell University have had much to say about this breakthrough anti-aging fighter that is making 55 year old individuals feel like they are 35 in the gym again.

That research, performed by Dr. David Sinclair of Harvard Medical School, showed that each mouse’s cell age decreased from 2 years to 6 months after being given molecules of Nicotinamide Riboside. In other words, mice that were 2 years old had the cells of 6 month old mice after being administered Nicotinamide Riboside.

So not only does Nicotinamide Riboside reduce the effects of aging, it actually appears to turn back time and make the cells function like they did when they were younger.

One recent nicotinamide riboside study concluded that taking nicotinamide riboside as an oral supplement, “resulted in a remarkable induction of mitochondrial biogenesis and oxidative metabolism, with an increase in mitochondrial mass.”

Mitochondria is directly linked to aging. As our bodies age, our mitochondrial production – and functionality – declines. This leads to a wide range of degenerative diseases and ultimately makes us look and feel older.

By promoting mitochondrial biogenesis, nicotinamide riboside may be able to “kickstart” the body’s anti-aging processes in a way that no other chemical compound can. That means you look, feel, and think younger.

Nicotinamide Riboside (NR) acts as a highly effective NAD+ booster, but it also works as a vitamin B3 (niacin) supplement.

Nicotinamide adenine dinucleotide (NAD+) is a key coenzyme found in all living cells. It is a dinucleotide, which means that it consists of two nucleotides joined through their phosphate groups. One nucleotide contains an adenine base, and the other contains nicotinamide.

NAD+ is essential for life, one of the most versatile molecules in the body, and an important area of focus for aging research.

Since NAD+ declines with age, boosting it has been described as a fountain of youth for extended lifespan and increased resilience to disease.

In 2020, James Clement, author of “The Switch: Ignite Your Metabolism With Intermittent Fasting, Protein Cycling, and Keto,” said NAD+ may be depleted by 50% by the time you’re 60 (compared to in your 20s or 30s), and when you’re 70 you may only have 10% of the amount you did when you were younger.

“And then at 80, there’s almost none,” he said, adding that this will seriously impair your body’s ability to repair broken DNA. “You can see how this huge build-up of damaged DNA in every cell of your body is potentially one of the driving forces of these morbidities that you see with aging, heart disease, cancer [and] Alzheimer’s …“

Nicotinamide riboside is one of the most effective NAD+ precursors to support nucleus and mitochondrial health. That means it boosts cellular energy and reduces the effects of aging by enhancing cellular communication throughout the body and mind.

References:

  1. https://supplementpolice.com/niagen/
  2. https://supplementpolice.com/nicotinamide-riboside/
  3. https://drjosephmercola.com/could-this-vitamin-slow-brain-aging-and-ward-off-alzheimers/