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Steve Answers Listeners’ Financial Questions

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Steve Pomeranz does financial question and answer

I encourage my listeners to write in with questions.  My mission is to protect and educate and so I always offer free 15 minute consultations to discuss any financial questions you have.  Often, people write in with questions, some complicated, some simple, so I decided to go through some of my favorites today.  I urge you to write in at any time by going to onthemoneyradio.org and clicking on Contact.  (You’re already halfway there!)  Ask us any financial question you may have and we will get back to you.  That is my guarantee.

Let’s begin.

Here’s one I received just the other day, which I found to be quite interesting:

Financial Question:

A lot of women I talk to in their 50’s and 60’s these days are planning to live together when the time comes to really start cutting personal expenses – when we have to try to live on our often somewhat modest savings, investments and social security.

How does a financial advisor help women who don’t own a lot, have a lot in savings or otherwise have access to wealth beyond their week to week existence?

Financial Answer:

A Financial Advisor can come in very handy in your situation. Helping you to shape a reasonable budget while making sure its realistic and won’t contain any nasty surprises in the future.

He or she can help you look at the future and guide you on how to set up your estate in the most fair and tax efficient manner

They can help you look at your insurance and perhaps save you money by getting rid of un-needed policies or restructuring the ones you already have.

This is just the tip of the iceberg of arenas an experienced Financial Planner can help you with.

As with the hiring of any professional, do your homework until you find one that will work best for you and charges fees within your financial capabilities. However, don’t be penny-wise and pound-foolish. Price is what you pay…value is what you get.

You know, I often take time out of my schedule to answer complicated questions.  But some can be fun.  Even though the question might not fall EXACTLY into my area of expertise, I will still respond to the best of my ability.  Here’s one I had a lot of fun with:

Financial Question:

Help on selling art as a first timer?

Hello,  I’m finishing up on an art piece, with the intention of selling copies; however I’ve never sold my art before (I should also mention I’m still in high school, and know little to nothing about selling/buying processes).

Are there set guidelines in selling/making a profit in the art field? How I should price my copies, physical (or digital?) – I don’t want to embarrassingly undersell myself, moreover set a misguiding precedent in prices.

Any sites you recommend to provide the ordering/printing/shipping and handling process.

Financial Answer:

I have limited experience in the art market, but I would counsel you that when you are starting out, be less concerned about price and more concerned about getting into the market and finding a good mentor. Also, just meeting other artists will be extremely helpful. I’m sure there are plenty of resources on-line and there are good sites which curate and sell art works. www.artsy.net and www.saatchiart.com are two that come to mind.

Good Luck and when you get your art on-line, send me the link, I’d love to see it.

HIS RESPONSE:  Hi Mr.Pomeranz,

My utmost thanks for replying!

I should mention that very fitting to this situation, I’m currently taking a Business and Entrepreneurial course as one of my classes. Moreover, I also talked with my teacher about this, to which I got some helpful pointers (Breaking even with profit over production cost, establishing a precedent in price based on the amount of hours put in, etc.). However those things are leaning towards a market introduction, and as you said in your reply, focusing on finding a mentor should be my modus operandi. To which I raise a question of rookie curiosity…How impactful will a mentor be, and in what way?

Also, the arts are pretty heavily focused at my school, and in my residential region (Miami) – so it shouldn’t be that tough to find others with more words of advice 🙂

Thanks again!

Another topic which is always one of great interest and one I’ve recently begun to cover in my seminars is the smart way to invest for income.  And with the market gyrating a lot this year I have starting to get questions like the following:

As many of you know, my educational workshop is coming up Tuesday, October 13th at the Renaissance Hotel in Boca Raton.  And in addition to my discussion about the Roadmap to Retirement, Due to current market conditions I’ll be going over what to expect, how to handle a market fall and what you should expect from your adviser.

Alright, on to question 5.

Financial Question:

I have been a saver my whole life, investing in CD’s, Money Markets, Fixed Annuities and the like. But these days, the yields are so low, I can’t get enough income to live on. So last year I decided to go into the stock market and researched some brokers and advisors to help me and once I found one, I decided to take the plunge.

Well, I guess my timing was bad because the market has gone up and down but I haven’t made any real money and this year, I’m actually losing money.

Should I get out of the market now and go back to my boring CD’s which, while paying me nothing, allow to sleep better at night?

Signed

Very confused.

Financial Answer:

Very Confused,

I have seen a lot of this lately and am so glad you asked the question.

There is a very big difference in how you make money in CD’s and Money Markets versus the way you make money in Stocks. There are really only two kinds of investment. Either you lend money or you own things. CD’s, Money Markets and Bonds are in the “lend-things” category. When you lend money you usually receive a fixed rate of return which you receive until the loan matures. When you invest in a CD, you are essentially loaning money to the bank.

Investing in Stocks or Real Estate is in the “owning-things” category. If you own an apartment and rent it out, you may receive some rental income which is part of your return, but another part of the return is the hope that you can sell it in the future for more than you paid. This is called capital appreciation. It’s the same for stocks. You receive a dividend and hope the stocks will gain value in the years ahead.

Historically, the money earned from owning things has been much greater than lending money.

However there is a price to pay when you own things and that price is the fact that what you own may go up or down in price on a daily or yearly basis.

So to sum up my answer: As a saver you have been lending money which you realized last year was not a good investment. You FELT safe but you received next to nothing in return. Whether you were really as safe as you felt is debatable.

Investing into stocks on the other hand makes you more nervous and makes you feel less safe but stocks give you the potential to make a higher return. Like much in life, there are trade-offs. The investing trade-off is the potential for a higher return with greater volatility versus a low return with very low volatility.

Bottom line: If your well diversified, if you’re willing to give it at least 5 years and you can close your eyes to the daily fluctuation of the money invested, moving some of your savings into a portfolio containing stocks will probably be a very good move.

If you can’t stomach the fluctuation go back to your CD’s but know that whatever return you get will not keep pace with inflation; and that while you may feel safe, you will find yourself falling behind the rising cost of living.

This could cause you to outlive your money. And let’s face it, running out of money is the greatest risk of all.

That sums up my Q & A today, I hope you got something out of it and I hope you join the conversation soon.  Again, click contact and ask us anything.  Suggest guests you want us to interview, topics you’d like us to cover, financial concerns and questions.  I’m here to educate and protect at no cost to you.