When it comes to finances, our attention is often drawn to the exciting aspects such as stock picking, option trading, and investment performance. This fixation can largely be attributed to the influence of media. Whether we tune into CNBC or search on Google, the majority of financial information we encounter revolves around investments. However, in the realm of personal finance, investments represent just one piece of the larger puzzle.
Consider this: Have you ever pondered the actual impact of beating the S&P 500 by a mere 1%? Or how significant it is to make a $200 profit from exercising an option? Honestly, neither of these outcomes brings about substantial change to your financial situation, especially for most millennials who haven't amassed considerable savings yet. Reflect on the following scenario: if you have $50,000 invested and your performance is 1% better than the market, the resulting difference amounts to a meager $500. Furthermore, this calculation doesn't even account for the 10 hours per month spent researching and selecting investments. Does that 1% truly make a significant difference for you?
Instead of devoting a large portion of our time to the "fun stuff" like investment performance, what if we shifted our focus to the aspects that genuinely have a profound impact on our financial future? How would our lives look then?
So, what changes can you make that will truly move the needle in your financial journey? Consider the following strategies:
Invest in yourself to enhance your future income.
- Choose to invest 50% of every bonus or salary increase without succumbing to lifestyle inflation.
- Increase your savings rate (a mere 1% increase from 9% to 10% yields a 10% return).
- Prioritize paying off credit card debt (eliminating high-interest debt can make a significant difference).
- Build an emergency fund to avoid relying on credit card debt during unexpected situations.
- Leave your investments untouched to benefit from compound interest (attempting to time the market rarely works, and you might miss out on significant market growth).
- Automate your savings and investments to ensure consistent progress over time.
- Take full advantage of your employer's 401(k) match to avoid leaving free money on the table.
- Obtain appropriate insurance coverage to avoid being burdened with substantial debts.
- Maximize the benefits provided by your employer.
- Participate in your company's stock incentive program.
- Keep housing costs low to allocate more resources towards valued experiences and increased investments.
- Refinance high-interest student loans or other debts to reduce financial burdens.
- Contribute the maximum amount to your retirement accounts.
- Diversify your income sources.
- Refinance your mortgage to free up funds that can be used to pay off the mortgage faster, invest, or eliminate other debts.
- Consider starting a business to generate additional income streams.
- Create a comprehensive financial plan that aligns with your desired lifestyle.
By implementing these strategies, you can shift your focus towards actions that truly have a substantial impact on your financial well-being and create a path towards the life you envision.
Please remember that past performance is no guarantee of future results. Different types of investments involve varying degrees of risk, and there can be no assurance that the future performance of any specific investment, investment strategy, or product (including the investments and/or investment strategies recommended or undertaken by Flagship Financial Advisors) any non-investment related content, made reference to directly or indirectly in this commentary will be profitable, equal any corresponding indicated historical performance level(s), be suitable for your portfolio or individual situation, or prove successful. Moreover, you should not assume that any discussion or information contained in this commentary serves as the receipt of, or as a substitute for, personalized investment advice from Flagship Financial Advisors. No amount of prior experience or success should not be construed that a certain level of results or satisfaction if Flagship Financial Advisors is engaged, or continues to be engaged, to provide investment advisory services. Flagship Financial Advisors is neither a law firm, nor a certified public accounting firm, and no portion of the commentary content should be construed as legal or accounting advice. A copy of the Flagship Financial Advisors current written disclosure Brochure discussing our advisory services and fees continues to remain available upon request or at www.flagshipfinancialtn.com .