Monthly Archives: November 2016

Predict the Next Stock Market Crash

Since 2009, the stock market has pretty much gone straight up.

 

From a low of 676 on March 9, 2009, the S&P 500 stands at 2,090 as of June 21, 2016. That’s a 209% increase over a period of just over 7 years.

 

And yet, things have been a little rocky so far this year.

 

The stock market dropped 9% from 1/1 to 1/20. It dropped another 6% from 2/1 to 2/11. And it fell 2% from 6/9 to 6/15.

 

We’re still near all-time highs, but is it possible that we’re at the top? Am I ready to predict the next stock market crash?

 

Of Course Not

 

I’m guessing you saw this coming, but no I’m not predicting the next big stock market crash.

 

The truth is that I have no idea what the stock market is going to do over the coming months, and neither does anyone else, no matter how loud they yell at you from the TV.

 

While the stock market is an incredibly powerful place to grow your money over the long term, it can be a roller coaster ride in the short term. Big upswings are followed by big downswings, leaving you to watch somewhat helplessly as your account values rise and fall.

 

And there’s just no way to know what’s going to happen next. We may very well be in for a big crash in the near future. Or we may not. But there are a few things to keep in mind no matter what.

 

Focus on the Long Term

 

Short-term drops on the stock market like we’ve experienced this year are the norm. 5% and even 10% drops are not uncommon.

 

Big crashes are also the norm. We experienced them in 2008, 2000, and many other times throughout history.

 

And through all of that, two things have held up:

  1. No one has been able to consistently predict these crashes ahead of time. And remember, if you want to profit, you not only have to get OUT at the right time, but get back IN at the right time as well. Otherwise you’ll miss the recovery.
  2. Over the long-term, the stock market has always gone up. Not every day, every month, or every year. But you have always been rewarded for keeping your money in the market over the long term.

What to Expect Going Forward

 

I can’t predict what the stock market is going to do, but I can give you two more things to keep in mind.

 

First, no matter what happens there will be plenty of ups and downs along the way. Expect that going in.

 

Second, investment advisor Rick Ferri, a man I admire greatly, foresees long-term stock market returns in the 7-8% range and bond returns in the 4-5% range. The exact outcome will almost certainly be different, but the point is that well-informed, reasoned experts still expect returns to be positive going forward.

Planning a Wedding Tips

I’m in the middle of wedding planning right now, and it has opened my eyes to just how incredibly expensive this whole thing can be!

 

I’m a frugal person at heart so the idea of spending a ton of money on one day seems a little silly to me. But it’s hard not to get caught up in all of it, and I’m finding that the costs are adding up quickly.

 

So, how do you have a wedding you love without spending more than you can afford? I’ve been thinking about this as I plan my own wedding. I’m fortunate that my parents have been very generous, and here are a few things I’ve learned along the way.

 

Plan Ahead

 

Yeah, I know. Big surprise that the financial planner is encouraging you to plan ahead. But there are two reasons why it’s helpful to make a plan before making any final decisions.

 

First, it’s amazing how quickly even the little costs add up. There are so many different pieces to a wedding that you can make a lot of seemingly reasonable choices and still end up with a big total bill. By planning ahead, you can see that happen before you’ve actually committed to anything and make decisions accordingly.

 

Second, it’s easier to get good deals when you’re on top of things early. Venues get booked, DJs aren’t available, and prices go up. The longer you wait, the less likely it is you’ll get your first choice and the more likely it is you’ll have to pay extra.

 

The Knot has a fantastic wedding budget calculator that can help you allocate funds across all wedding expense categories.

 

Get Creative

 

Your wedding doesn’t have to be like every other wedding. It can not only be cheaper to do things your way, but it can make for a fun and unique experience.

 

A friend of mine had a fall wedding and served pies instead of a wedding cake. This option was delicious and at least half as expensive; with pie at $2 per slice and wedding cake at $4 or more. Another one enlisted the help of her friends to make their own floral arrangements. I’m making small ornaments for wedding favors, out of paper (not expensive) and supplies I already had on hand.

 

Music, in particular a live band, is another expense that can be reduced, involve friends who have musical talents or crowd source a playlist from all your guests. There are an infinite number of ways you can get creative, save money, and make the wedding yours in the process.

 

Consider Your Guests’ Budgets Too

 

Your friends and family want to come celebrate with you, but for many of them it’s a big financial commitment. Doing what you can to make it easier for them will be much appreciated.

 

I have a friend who had a camping option, as one of the accommodations for her wedding. Not only was the price right, but it was a memorable experience. Suggesting accommodation options to guests with a range of prices is always appreciated.

Merging Finances with Your Partner

I work with a lot of new couples who are in the midst of merging their financial lives for the very first time. In fact, my fiance and I are in the process of doing it ourselves too.

 

It’s not an easy thing to figure out. There are logistics to handle, habits to change, emotions to manage, and often it feels like there is never enough time in the day for any of it.

 

But successfully managing money together is key to creating a happy partnership, so here are four pieces of advice as you go through this process yourself.

 

1. Focus on Joint Goals, Not Joint Accounts

 

It’s tempting to get caught up in the logistics of joining your finances. How do you create joint accounts? Which accounts should you join? What if you want to keep some money for yourself? Does that mean your relationship is in trouble?

 

Ignore all of that. It doesn’t matter. At least not at the start.

 

What really matters are your joint goals. What are you working towards? What is your shared vision for the life you’re building together?

 

Start having conversations about what you each value and want out of life. Listen to each other so you can truly understand what’s important to the other person.

 

Find the goals you already have in common and make those the priorities. And start talking about how you can find middle ground on the others.

 

This communication is the real key to successfully merging your finances. All the rest is just logistics.

 

2. Establish Shared Expenses

 

Now, about those logistics…

 

One easy place to start is with your everyday expenses. Things like cable, internet, electricity, and groceries.

 

Decide which expenses you want to share and how you want to split them up. For example, if one person makes significantly more, maybe they’re responsible for a bigger share of certain expenses. That way each of you is left with some free money at the end of it.

 

3. Create a System

 

There are two main ways you can start sharing those expenses.

 

The first is to create a joint bank account where those bills are paid. Then you each are responsible for transferring money to that account on a regular schedule to cover the bills. This lets you practice managing a joint account without having to join everything.

 

Another option is to put each person in charge of certain bills. For example, one of you could handle the cable bill while the other handles the electricity bill. This kind of system may be easier to get up and running quickly.

 

Also, create a system for long term savings. I know someone who gave half their paycheck to their partner to invest for the long term. This might not be the right move for you, but start by discussing each of your current habits and how you might change those or improve on them as a couple.

 

4. Plan for Extra Money

 

Here’s something my fiance and I have done that’s helped us a lot.

 

In addition to our regular expenses and savings, we each have a number of “wants” that our extra money could go towards. For example, I’d like to get curtains and my fiance wants gardening supplies.

 

So we made a list of these things and put them in priority order. And now any time we have some extra money, we simply refer to this list and put it towards the top item.

 

This makes these decisions easy, limits the opportunity for arguments, and ensures that we’re both able to indulge a little bit.