Financial Samurai

Slicing Through Money's Mysteries

Search Results for: early retirement

How to Become a CERTIFIED FINANCIAL PLANNERTM (CFP®)

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This is a guest post by Paul Williams from Provident Planning. He’s a fee-only financial planner in Lancaster County, PA, and regularly writes about personal finance from a Christian perspective. If you want to become a CFP®, he’d be happy to talk with you.

I was excited when Sam invited me to write a guest post for Financial Samurai on how to become a CERTIFIED FINANCIAL PLANNERTM (CFP®). I’ll finally finish the requirements in Novemeber 2010 and be eligible to call myself a CFP® after I fill out the last bit of paperwork.

Sam mentioned he’d like to become a CFP® after he retires from his job, so he’s curious about what he’d have to do. I’m sure some of you might also be interested in becoming a financial planner if you’ve got a strong interest in personal finance.

This post is going to be about the process of becoming a CFP® rather than deciding if you should even become a CFP®. That’s a very different question and one you should have an answer to before you start the process of becoming a CFP®. It’s certainly not a cheap certification to get (in money or time).

Fulfill three requirements to become a CFP®:

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The Average American Net Worth Is Huge!

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average-net-worth-2014According to The Wall Street Journal, the average net worth per person in America was $182,000 back in 2010. Then came a 2014 Credit Suisse survey highlighting the average net worth in America is a whopping $301,000 (see pic)! Now in 2017, the average net worth for Americans is even higher thanks to a bull market in stocks and real estate.

Originally, I had my doubts about the $182,000 figure, since the median 2007 net worth of all US households is $109,000 based on a Federal Reserve survey. However, could it be that everybody in America can all buy new Porsche 911 Turbos with plenty of money left over if they wanted to? After some thought, I shared the story over social media to see what the community would say, and the negative responses astounded me!

NOBODY BELIEVES IN REALITY

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Is There Ever A Right Time To Upgrade Your Engagement Ring?

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One of my old friends, Peter mentioned the other day that he got engaged.  He’s 37 and she’s 28.  They met about 4 years ago at a bar when he was somewhat inebriated but immediately hit it off.

Peter isn’t exactly the most studly looking guy standing at 5′ 7″ with a belly hanging over his belt, but he’s kind.  They are two months into their engagement and don’t plan to get married until next summer.  All was going well until one night, Peter’s fiance Nancy inquired about when she could upgrade her engagement ring!

YOUNG EXPECTATIONS

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Are The Poor Bringing The Poor & Middle Class Down With Them?

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Governor Schwarzenegger declared that some 200,000 California state workers are to receive minimum wage earnings of $15,000 a year to help shore up the budget deficit. $15,000 is quite a salary cut from the $65,000 a typical state worker earns. A 77% pay decline hurts, but some would argue that our system is already bloated and earning $15,000 a year temporarily is better than earning zero.

Three questions really come out of this unfortunate situation. 1) Why is California in such bad financial shape? 2) Are the poor bringing others who are poor down with them? and 3) Can you live off minimum wage if you had to, and for how long?

THE REASON WHY CALIFORNIA IS IN SUCH BAD FINANCIAL SHAPE

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Millionaires Need Love Too Ya Know: Be Kind To Rich People

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One of my graduate school friends recently found himself out of a job.  It was a tough slog, but at last, he and his co-founders decided to shutdown their startup and start something new.  Nobody is really going to feel sorry for Greg, as he joined Google the year they went public and cashed out on a couple million dollars in stock options over the next 4 years.

His $180,000 a year salary was nothing to sneeze at either, but also nothing too spectacular in the land of $1 million dollar starter homes.  In a nutshell, Greg is the typical Silicon Valley success story who busted his butt to get ahead, networked like no other, and fell victim to a downshift in the economy these past couple years.

There are literally thousands of millionaire 30-somethings in the San Francisco Bay Area who are underemployed or just not working because they haven’t found that great idea, or that premium company fit yet.  Why should they bother wasting a companies’ time and enlist only to quit 6 months to a year later when something better comes along?  That’s not fair to the company and so they do the right thing and wait.

When I asked millionaire Greg about his thoughts on the government extending unemployment insurance to 99 weeks he let out a big “YIHAW!”  You see, Greg has been collecting unemployment insurance for the past 16 weeks via the solvent state of California, and he is worried that Obama will crack down on people like him once Federal care starts kicking in.

A MILLIONAIRE’S TAKE ON COLLECTING UNEMPLOYMENT AS A MILLIONAIRE

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Don’t Have Children If You Can’t Take Care Of Yourself

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In “How To Dramatically Increase Your Job Security For Life,” the article suggests managers are more inclined to fire those workers who have nobody to support but themselves. As a result, one should strategically at least hint at the intention of starting a family to protect oneself from unemploymentville. Clearly I’m being somewhat flippant. My goal is to make people realize that relationships and emotion play enormous roles in shaping work success.

Whether you work for a small family business or a large corporation, hiring and firing is a very personal decision that comes down to one or only a handful of decision makers. By tugging at their souls, and increasing their guilt factor, you’re well on your way to dramatically higher job security for life.

Let’s say you’re not particularly wealthy, nor make a particularly impressive amount of money. You still have loads of student loans and consumer debt to pay off. In essence, you’re the typical American! Shouldn’t you be putting on your air mask before helping others?

Child raising is estimated to cost anywhere between $250,000 to $1 million from birth to after college. If a family can’t even have the discipline to save 20% of their paycheck after contributing to their 401K and IRA, how can one consciously start a family?

$250,000 ISN’T A LOT, YET HOW MANY CAN SAVE THAT MUCH?

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Tax Refunds Are Good For Most People Because Most People Can’t Save

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Bet You Can't Eat Just OneThe average tax refund is $2,800 a year as of 2017, and 74% of Americans get a tax refund. I’ll consider you average for argument’s sake.  At today’s typical savings rate of 1%, you’re missing out on a whopping $12 bucks in interest income! Why $12, and not $24? It’s because you have to calculate the average balance of the year if you saved every $200/month payment diligently starting January 1st i.e. January $200, February $400, March $600 etc.

I’m definitely not a proponent of giving the government more money than they deserve, but missing out on $12 bucks in interest is something I can live with and so should you.

You have to ask yourself whether you have the discipline of saving that extra $200 a month, or using it to pay down debt. Most people are not disciplined enough to pay down debt and avoid buying junk. This is why we have such massive debt problems in the first place!  The government is essentially helping you “go broke to win big” by protecting 75% of American tax payers from blowing $2,400 a year without even knowing it.

A SIMPLE GUIDELINE & SOME COOKIES

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The Best Post on Craigslist And It’s All About Love And Money

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Craigslist is such a fun place to surf and save money.  I’ve sold a lot of junk, found some last-minute tennis partners, and even purchased some cool retro Air Jordans on the site.  There’s a sale everyday on Craigslist, hence why would you ever pay full retail?

You can even get massively entertained in the Personals Section!  No “Woman Seeking Man” post is funnier than the one you are about to read (originally posted circa 2007).  The great thing about the post is that it’s all about personal finance!

Thoughts That Crossed My Mind When Reading:

Can’t live with them, can’t live without them.

Does she really think her first post wasn’t a little over the top?

Wow, she is a woman who knows what she wants!  Sexy.

So this is where gold diggers roam.  Must take notes.

Damn, that guy is funny, but what a prick, no wonder why I didn’t major in finance.

KAPOW, good counter, but why does she have to talk about receding hairlines, that hurts.

Is the counter response someone else?  “She” writes a lot, and needs to type shorter paragraphs.

She has a trader boyfriend already!  What’s she doing seeking more men?!

Hmmm, better find a way to make more than $500K+ a year!

Enjoy and happy first weekend of the decade!

WOMAN SEEKING MAN: “What Am I Doing Wrong?”

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The Samurai Fund – All Hands On Deck!

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With great pleasure, I announce the launch of The Samurai Fund!

Thesis: Through random selection based solely off permutations of reader’s names (personal or site title), we are able to create a long-only mutual fund that will outperform the S&P 500 index!

Fund Details: $1,672,003 billion launch, $100/share NAV, with 17 positions equally weighted.  Concentrated multi-strategy portfolio with defensive names in the alcohol and utility space, as well as higher beta names in technology and health sciences.  Small caps and large cap names included.  S&P 500 start value 1,115 benchmark.

Investment Outlook 2010: The stock market continues to rebound, but at a slower pace.  Inflation and interest rates remain benign, leading to a re-emergence of consumer spending.  Housing stabilizes with 30-year mortgage rates staying below 6.5%.  The government maintains record spending to stimulate the economy and the unemployment rate begins to fall in the second half of the year.  The S&P 500 increases by 10-15% with a blue-sky target of 1,322.

Update 2019: Record highs baby!

Duration & Rules: One year.  The bottom 3 performers will be up for review every quarter. To stay in the fund, one must write a convincing argument as to why we should not cut our losses.  Picks down more than 20% also will be re-evaluated.

Goals: To have fun, learn something about the stock markets, prove a theory that luck plays a big part in performance, and to build better relationships with the community.

Contributors: Please retweet and spread the word to any of the social media sharing sites below.  We need all the support we can get to outperform the professionals!  Contributors are encouraged to provide updates and commentary as the months progress.  If anybody wants to do a portfolio analysis below, please feel free to do so!

*** STOCK PICKS SUMMARY WITH CONTRIBUTORS ***

FINANCIAL SAMURAI

Company (Ticker): Boston Beer Company (SAM)

Market Cap: $668 Million at entry price $46.60.

Commentary: Love Samuel Adams beer, but with no dividend, lofty valuations and minimal earnings growth, it’s hard to see this defensive stock providing alpha to the fund.  People need to drink in good times and bad!

DAVID AT MBA BRIEFS

Company (Ticker): ABM Industries (ABM)

Profile: A building maintenance and facility services company.

Market Cap: $1.09 Billion at entry price $20.65.

Commentary: The stock doesn’t look like it’s going to do anything spectacular in the short term but ABM is predicted to have consistent earnings growth throughout the year and has beat the analyst’s estimate every quarter for the last 4 quarters.

ABM is currently trading at $21.14 and the 1 year target estimate is $25.50. Volume peaked at 700k shares the week before Christmas and then dropped way off, and its trading well above the 50 day and 200 day moving averages, so it’s hard to tell if the stock price is going to continue to rise, trade sideways, or drop this week.

Not exactly a sexy stock but facility services should be fairly recession-proof and should do even better now that we’re supposedly heading into a bull market.

CHARLIE

Company (Ticker): Harman International Industries (HAR)

Market Cap: $2.44 Billion at entry price $35.28.

Profile: Engages in the development, manufacture, and marketing of audio products and electronic systems in the United States and internationally.

Commentary: Don’t know a thing about the company but will be interesting to find out!

CREDIT CARD CHASER

Company (Ticker): Calgon Carbon CP (CCC)

Market Cap: $786 Million at entry price $13.90.

P/E: 20.26X

Earnings Growth 2010: 47.2%

Profile: Manufactures and markets products and services employed for separation, concentration, and purification of liquids and gases (huh?).  Drinking water and wastewater treatment, enviro remediation, and industrial process apps are its customers.

Commentary: Better than average predicted earnings growth for 2010 and trading right around the middle of its 52 week high so it could have some potential. I don’t pick individual stocks but this will be a fun one to watch!

DON AT MONEY REASONS

Company (Ticker): Monsanto Co (MON)

Market Cap: 45.03 Billion at entry price $81.75.

P/E: 21.75

Dividend (yearly): 1.30%

Earnings Growth 2010: 34.7%

Profile: Monsanto Company, together with its subsidiaries, provides agricultural products for farmers in the United States and internationally. It has two segments, Seeds and Genomics, and Agricultural Productivity.

Commentary: Monsanto has been beaten down pretty badly (it was at it’s high, over $145 per share), so it has some room to rise! People need to eat, and MON has some of the best engineered seed available.

FREE FROM BROKE

Company (Ticker): Berkshire Hathaway (BRK-A)

Market Cap: 152.89 Billion at entry price $99,099.

Profile: a holding company owning subsidiaries engaged in a number of business activities. The most important of these are insurance businesses conducted on both a primary basis and a reinsurance basis. Berkshire also owns and operates a number of other businesses engaged in a variety of activities.

Commentary: Can you bet against the Oracle of Omaha? Until recently, Berkshire has done remarkably well year after year, investing in well known companies such as Coke, American Express, and P&G.

STEF AT 151 DAYS OFF

Company (Ticker): Steris Corp (STE)

Market Cap: $1.65 Billion at entry price $27.97.

P/E: 14.56

Dividend: 0.44 (1.60%)

Estimated Growth in 2010: 4.1% (ouch!!)

Profile: Steris Corp develops, manufactures, and markets infection prevention, contamination control, microbial reduction, and surgical support products and services to healthcare, pharmaceutical, scientific, research, industrial, and governmental customers worldwide.

Commentary: With the hysteria of swine flu in the past and Lord knows what kind of mutation it will bring in the future, the company will stand strong in years to come. Medical tech stock tends to be a defensive stock during the bear market and move steadily in a hot market. You would DEFINITELY want it in your portfolio!

DANIEL AT SWEATING THE BIG STUFF

Company (Ticker): Big Lots Inc (BIG)

Market Cap: $2.42 Billion at entry price $28.98.

P/E: 13.88

Earnings Growth: 11.5%

Profile: Big Lots, Inc. operates as a broadline closeout retailer in the United States.

Commentary: As a discount retailer, it does well when the economy struggles. In 2010, as the economy only begins to improve, Big Lots should continue to have success in the discount market.

THRIFTY GAL AT CHASING PROSPERITY

Company (Ticker): PG&E – Pacific Gas and Electric (PCG)

Market Cap: $16.89 Billion at entry price $44.65.

P/E: 11.86X

Earnings Growth 2010: 7.6%

Dividend yield: 3.7%

Profile: PG&E is a public utility company that provides electicity and natural gas to northern and central California.

Commentary: Pop culture reference: villan in ‘Erin Brokovich’

LEAN LIFE COACH

Company (Ticker): Toyota Motors (TM)

Market Cap: $140 Billion at entry price $84.16.

P/E ratio (ttm): Nada – They’ve been losing money for the first time in over 50 years!

P/E ratio (fwd): 25X

EPS Growth: Yahoo lists 1200%? From zero that won’t be too hard!

Profile: One of the largest car companies in the world.

Commentary: Challenged by some quality issues they will likely continue to suffer for a few more months but I believe their commitment to continuous improvement (Kaizen) will help them out of this rut.

The continue to build good cars that have generic styling that appeals to a wide market. They are coming out with some new technology including plug in hybrid and are revamping the Lexus brand to draw in the younger crowds. If you like fast cars check out the Lexus all carbon body LFA!

PATRICK AT CASH MONEY LIFE

Company (Ticker): Compellent Technologies, Inc. (CML)

Market Cap: $704 Million at entry price $22.68.

P/E: 146.90

Earnings Growth 2010 (estimate): 31.0%

Profile: Compellent Technologies, Inc. is a provider of enterprise-class network storage solutions. The Company’s storage center is a Storage Area Network (SAN), that is designed to significantly lower storage and infrastructure capital expenditures, reduce the skill level and number of personnel required to manage information and enable continuous data availability and storage virtualization.

Commentary: Aggressive earnings estimates for a company that has yet to register large profits. I guess my entry will mimic the elements of the S&P that drags down the rest.

LEN PENZO

Company (Ticker): Lenar Corp (LEN)

Market Cap: $2.4 Billion at entry price $12.77.

PE: N/A (divide by zero – never a good sign)

Dividend Yield: 1.2%

Earnings Growth 2010 (est): showing losses

Profile: A leading home-builder in America.

Commentary: As I mentioned earlier, I think housing is on very flimsy stilts. The current anemic upturn (if you can call it that) only propped up due to government subsidies and bailouts so I would never recommend a home builder as a stock pick in 2010. But the rules are the rules, and as such I expect this component of your honorable Samurai fund to weigh it down like an old rusty boat anchor. LOL

EVOLUTION OF WEALTH

Company (Ticker): Edwards Lifesciences (EW)

Market Cap: $5 Billion at entry price $86.85.

P/E: 24X

Earnings Growth 2010: 17%

Profile: Edwards Lifesciences provides products and technologies in treating cardiovascular disease. They are a leading provider in a growing sector.

Commentary: If you believe America will continue to be fat this could be a good investment. Was that mean?

LL AT INVESTOR JUNKIE

Company (Ticker): Lumber Liquidators (LL)

Market Cap: $730 Million at entry price $26.80.

P/E: 24X FY2010 with 40% YoY earnings growth.

Profile: Lumber Liquidators, Inc. operates as a specialty retailer of hardwood flooring in the United States. It offers an assortment of hardwood flooring that includes prefinished premium domestic and exotic hardwoods, engineered hardwoods, unfinished hardwoods, bamboo, cork, and laminates. The company also provides flooring enhancements and installation accessories, including moldings, noise-reducing underlay, and adhesives. It offers its products primarily under Lumber Liquidators and Bellawood brand names.

EVAN AT MY JOURNEY TO MILLIONS

Company (Ticker): Jones Apparel Group (JNY)

Market Cap: $1.4 Billion at entry price $16.06.

Profile: Jones Apparel Group, Inc. is a designer, marketer and wholesaler of branded apparel, footwear and accessories. The Company markets its products to the consumers, through a chain of specialty retail and stores and through the e-commerce Web sites. The Company also markets costume jewelry under the Givenchy brand licensed from Givenchy Corporation, footwear under the Dockers Women brand licensed from Levi Strauss & Co., and apparel under the Rachel Roy brand licensed from Rachel Roy IP Company, LLC. The Company operates in five business segments: wholesale better apparel, wholesale jeanswear, wholesale footwear and accessories, retail, and licensing. The brands of the Company include Jones New York, Nine West, Anne Klein, Gloria Vanderbilt, Kasper, Bandolino, Easy Spirit, Evan-Picone, l.e.i., Energie, Enzo Angiolini, Joan & David, Mootsies Tootsies, Sam & Libby, Napier, Judith Jack, Albert Nipon and Le Suit. On June 20, 2008, the Company completed the acquisition of GRI

Commentary: Look at those brands this company is going to be fine! Not sure its going to be a homerun, but its going UP!

PAUL AT FISCAL GEEK

Company (Ticker): General Electric Co (GE)

Market Cap: $162.5 Billion at entry price $15.13.

P/E: 14.1X

Commentary: With the recent pending sale of NBC Universal to Comcast this might be an interesting stock as GE attempts to get leaner, but really how lean can you make a company that has more than 323,000 full time employees. I suspect GE won’t be outperforming much other than say GM.

MONEVATOR

Company (Ticker): Monster Worldwide (MWW)

Market Cap: $2.2 Billion at entry price $17.40.

P/E: 42X

Earnings Growth: 167% for next year

Profile: Monster.com, a popular job search and placement site.

Commentary: I am picking this stock to keep with the play-on-the-blog-name theme, but I actually am pretty bullish on economic recovery so this recruitment giant isn’t entirely unattractive. I haven’t looked at the accounts or the balance sheet etc, though, and I’m not wildly familiar with US stocks (though I know many of the companies superficially) so I recommend it only for the FS fund, nothing more!

When will the government shutdown end?

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Recommendation To Build Wealth

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After you link all your accounts, use their Retirement Planning calculator that pulls your real data to give you as pure an estimation of your financial future as possible using Monte Carlo simulation algorithms. Definitely run your numbers to see how you’re doing. I’ve been using Personal Capital since 2012 and have seen my net worth skyrocket during this time thanks to better money management.

Personal Capital Retirement Planner

Is your retirement plan on track? Find out for free after you link your accounts.

Updated for 2019. Let the bull market continue with stocks at all-time highs!

Are Credit Cards Weapons Of Mass Financial Destruction?

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Free travel tipsThe answer depends on if your name is Saddam Hussein, although proponents would say no proof was ever found!  You hear so many stories of consumers up to their eyeballs in credit card debt, and I’m just wondering WHY?  Credit card debt is the most expensive debt out there, second only to usurious rates of loan sharks.

Perhaps the reason why is because credit cards are ubiquitous.  According to the US Census Bureau, there were 173 million credit cardholders in the US in 2006, using 1.5 billion credit cards?  That’s right, the ratio is almost 10 credit cards to every one user, with transaction volumes of over $2 trillion a year!  No wonder the US consumer gets in trouble, and why credit cards are such big business!

My view on credit cards is quite simple: Use credit cards only to your advantage, and never let them take advantage of you!  Whenever you see your credit card misbehaving, you should think to yourself “Bad boy!  Bad, BAD!”  I think my wife tells me this sometimes, but I try and tune it out.

Joel is hosting a $500 American Express giveaway, and gosh darnit, I’m entering to give myself a chance to win.  In “You’re Rejected!  How I Use Rejection To Motivate Me Every Single Day,” we discuss how success is a numbers game.  The more you put yourself out there, the higher the chance you have to succeed.  Here’s my attempt to win and use the proceeds to buy toys and clothing for underprivileged children this winter in San Francisco.  The program is called “Toys 4 Tots.”

TWO MISSILES IN MY WALLET

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