The Future for Financial Planning
Financial professionals take heed—there is a new paradigm in effect for successful and realistic financial planning. Whether you are a financial planner, financial advisor, or a general financial consultant, the global economic and financial mess has created a lot of problems for financial professionals and the people they serve.As people struggle with losing their jobs—or even just the threat of losing their jobs212;combined with an almost overnight evaporation of wealth, financial planning as we know it becomes the least of their worries. In fact, many financial professionals have been laid off or fired as a result.
The question now is what to do about it. Most people would agree that the government,primarily Barnie Frank,Chris Dodd,and Treasury Secretary Paulson and the major financial institutions (Bear Sterns, Lehman Brothers,Merrill Lynch,CitiBank,Freddie Mac,AIG,etc)are at fault here, and were the situation not so severe its attempts to remediate the problems would almost seem comical. None of this is funny of course and is in fact very serious as we the people will be paying for their gross negligence for years to come. Sadly, Congress is filled with economic and financial idiots who have not learned one thing from the history of the Great Depression and are repeating the identical mistakes which will push our country into Great Depression II.
Even in the ramp-up to the current situation, we are all familiar with the problems most Americans had managing their finances. Overburdened with debt and with insufficient income to support it, most people could not control their money because their money controlled them. The financial meltdown has made this situation even more acute. Borrowing to try and maintain pace with their lifestyles, people became even more burdened with debt and often did so with declining incomes as well.
There is however a solution. The new paradigm is for people to obtain the practical hands on financial education they never learned in school so they can take control of their own finances.(Of course, Congress will refuse to participate.Once people learn that the management of their own finances is not complicated, they will automatically gain confidence in their own ability to trust the person who has the greatest interest in their affairs – themselves. When people understand that creating wealth is the combination of business income and investing wisely, they will appreciate the significant contribution online marketing will make especially during these tumultuous times so that their survival is no longer an issue. Instead, people can focus on creating wealth and an abundant future.
We all know the principles of sound fiscal management. People must learn and apply sound financial principles such as living within their means, being debt free,and invest wisely for the future. But when you can barely put food on the table, all of the sound financial advice in the world is moot.
The new paradigm in financial planning, Financial Planning 2.0, is to help people help themselves. Show them how to get the financial education they need and how to earn an income they have perhaps only dreamed about, and the entire financial planning model once again works.
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With your income, there is no reason you shouldn't max out your 401(k). The maximum contribution you can make is currently $15,500. With the company match you described, this should be around 6% (maybe a little bit more- I'm not sure if that includes the signing bonus you described or not.)
I would also opt for an IRA- a Roth IRA is the best, but you won't qualify for one if you make more than $114,000. You can, however, get a regualr IRA and convert it to a Roth IRA in 2010 thanks to some new laws going into effect.
That $35,000 signing bonus has "down payment" written all over it, in my humble opinion! This is a great time to start building some equity. If you live in a super-expensive area and need to beef up your savings first, opt for a high-interest rate money market account. It will be safe for your short-term financial goals, but still keep your money growing. I use ING Direct online, but I hear there are some even better rates. Shop for one you like at http://www.bankrate.com.
Now, about those investment choices- there is good risk (choosing stocks when you are 23) and stupid risk (putting all of your eggs in one basket, going for the trend-of-the-month stock.) If it was me (and I'm 27, so I've put my money where my mouth is here) I would put 80-100% of my money in mutual funds that buy stocks, depending on how nervous you are about stock ownership. The the rest can go in bonds. As you get closer to retirement age, increase the amount in bond funds.
I would also very strongly recommend you choose a low-cost index fund for your stock selection. It's really shocking how much an extra 1% in fees can eat up your returns over time. You're making a great salary, so you're likely going to end up very comfortable, but wouldn't you rather retire 10 years earlier, very, VERY comfortable? The Fidelity Spartan funds and Vanguard index funds are great, low-cost choices. You may not have as much flexibility for your 401(k) but you can pick whatever you want for your IRA. Check out The Little Book of Common-Sense Investing by John Bogle- it's AMAZING! I recommend it to all of my 20-something friends.
as i have always said…it's the women that have all the brains…….good one Kitty x
Try a fee based advisor. Keep in mind that they will charge you what most any other professional might (several hundred bucks).
There are lots of good self help books out there that you might want to read. Tons of websites also.
If you want specific, personal advice from a professional, it'll cost you (obviously).
My $.02 opinion:
Pay off high interest debt
Develop a realistic budget
Roth IRA, 401k (invest these dollars in good stock mutual funds)
life insurance, disability, health & an umbrella policy
estate docs (include a trust provision in your will if you've got kids)
529 accounts for college savings (if applicable)