All posts by Financial Independence Hub

9 top Personal Tips for Long-Term Index Fund Investments

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Photo by Yan Krukau on Pexels

Long-term investments in index funds can secure your financial future, but what strategies do the experts use? In this article, insights from business leaders and Financial Officers shed light on successful investment tactics.

Learn why diversifying across sectors and regions is crucial, and discover the benefits of adopting a set-it-and-forget-it approach.

This post compiles nine valuable tips to help you navigate your investment journey.

 

 

  • Diversify Across Sectors and Regions
  • Start Early and Invest Consistently
  • Maintain Consistency Through Market Fluctuations
  • Stay the Course During Market Downturns
  • Diversify Across Global Markets
  • Avoid Over-Diversifying with Index Funds
  • Automate and Regularly Invest
  • Stick with a Single Index Fund
  • Adopt a Set-It-and-Forget-It Approach

Diversify across Sectors and Regions

When I invest in index funds for the long-run, I like to spread my money across different sectors and regions. This way, I’m not putting all my eggs in one basket, and can buffer against any market downturn. I also regularly rebalance my portfolio to keep everything in the right proportions as the markets move. By consistently adding to my investments, and avoiding the urge to time the market, I’ve found a reliable way to achieve steady growth over time. — Shane McEvoy, MD, Flycast Media

Start Early and Invest Consistently

The approach is simple: Start early and invest consistently, regardless of market conditions. This method, known as dollar-cost averaging, has proven effective based on my analysis of market trends and investment patterns.

Here’s the gist: Choose a broad, low-cost index fund (like one tracking the S&P 500) and invest in it regularly: monthly or quarterly. The key is maintaining this routine even during market turbulence.

This strategy works by removing the stress of timing the market and allowing you to buy more shares when prices dip. Over time, this can lead to significant returns. — Markus Kraus, Founder, Trading Verstehen

Maintain Consistency through Market Fluctuations

One key tip for long-term investments in index funds is consistency. Regularly invest through dollar-cost averaging, regardless of market fluctuations. This strategy reduces the impact of market volatility and allows you to benefit from compounding returns over time. Additionally, stay focused on your long-term goals and avoid reacting to short-term market noise. Patience and discipline are essential when investing in index funds, as they provide steady growth over extended periods. — Jocarl Zaide, Chief Financial Officer, SAFC

Stay the Course during Market Downturns

One personal tip for making long-term investments in index funds is to stay the course and avoid timing the market. Index funds are designed to mirror the performance of entire markets, and over the long term, markets tend to grow despite short-term volatility. Based on my experience, consistently investing — even during market downturns — through a strategy like dollar-cost averaging can help smooth out the effects of market fluctuations and take advantage of buying opportunities when prices are lower.

Patience is key. By keeping a long-term perspective and regularly contributing to your index fund, you allow compound growth to work in your favor. Resist the urge to react to market drops by selling or trying to predict market highs, as this often results in missed gains. The power of index funds lies in their diversification and ability to grow with the broader market over time, making them a reliable choice for long-term wealth-building. — Rose Jimenez, Chief Finance Officer, Culture.org

Diversify across Global Markets

My top recommendation for long-term index-fund investing is to diversify across global markets. While many investors focus solely on domestic indices, incorporating international exposure can significantly enhance your portfolio’s resilience and growth potential. Consider allocating a portion of your investments to index funds tracking developed and emerging markets worldwide. This approach helps spread risk across different economic cycles and currencies, potentially smoothing out returns over time.

On top of that, as the global economy becomes increasingly interconnected, you’ll be better positioned to capture growth opportunities wherever they arise. Remember, diversification doesn’t guarantee profits or protect against losses, but it’s a powerful tool for managing risk. Regularly review and adjust your global allocation based on changing market conditions and your risk tolerance, always keeping your long-term objectives in sight. — Brandon Aversano, CEO, The Alloy Market Continue Reading…

Self care isn’t a bubble bath and a yoga class, it’s multiple streams of income

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By Alain Guillot

Special to Financial Independence Hub

Self care is having multiple streams of income

I see it all over social media, people promoting self care while taking a bubble bath, or attending a yoga class. The problem is that most who need self care, can’t afford it. And those who can afford it, don’t need it.

You’ll see Elon musk, Warren Buffett, Bill Gates, Jeff Bezos, or Mark Zuckerberg promoting the idea of going to the spa and getting a massage and a bubble bath. They don’t need it. They have multiple streams of income and don’t feel the stress of someone who’s struggling to pay the rent.

Traditionally, self-care has been associated with activities that promote mental, emotional, and physical well-being, such as taking a bubble bath or practicing yoga.

Do you know what’s the major cause of stress, anxiety and depression? Lack of money.

Most of the problems we have are money related: housing, car payments, retirement, etc. If we have several streams of income, most of our problems would dissolve.

A bubble bath is nice but several streams of income is nicer

Here is a list of how having several streams of income can be the most important form of self-care: Continue Reading…

A Password Dividend: Living your Dreams on $4,000 a month (US)

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Image courtesy RetireEarlyLifestyle.com

By Billy and Akaisha Kaderli, RetireEarlyLifestyle.com

Special to Financial Independence Hub

Once someone learns that we retired at the age of 38 in 1991 and have been traveling the world ever since, they ask, “How could you afford such a lifestyle? It must cost a fortune for airfare, to live in guesthouses, hotels, apartments and eating out!”

When we tell them that this lifestyle hasn’t cost us anything — in fact, we made money — they’re floored. Remember, it’s a lifestyle, not a vacation.

When we left the conventional working world in January, 1991, the S&P 500 Index was 312.49. Today it is over 5300. That’s an average of roughly a 10% per year return including dividends. See the calculator below.

The S&P 500 Dividends Reinvested Price Calculator

Sure, we had expenses, but our net worth has outpaced both spending and inflation because we created a money machine.

The cost of not retiring

Whenever we’re considering a trip, we ask ourselves, “Can we afford it?” Our answer shocks some: “We can’t afford not to go.”

We’re no spring chickens at 72. We’ve experienced enough in life to know that we will be more disappointed if we don’t try new things than if we make mistakes at the ones we attempt. We’re only getting one shot at this life, and find that our travel list is getting longer, not shorter.

Over the years many of our friends have passed on: some who never got a chance to retire from their jobs, and they had plenty of money. For the last 3 decades we have been spending about $30,000 per year. We have mentioned a few times about loosening the purse strings and this is what we have done.

We have seen dozens of countries, stayed in resort hotels, purchased new computer equipment and digital toys, refreshed our wardrobes countless times, drank fine wine, had maids, gardeners, and ate at some of the most fashionable restaurants in the world. We have hiked, biked, and scuba’d, lived on tropical islands and in million dollar homes, lived with the Maya, met musicians and magicians and generally enlarged our perspective about the world.

After all this traveling, spending and inflation, our net worth is still higher than when we retired.

So how much did this lifestyle really cost us? Continue Reading…

Conducting a Full Financial Audit: A Guide for Small Businesses

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Image courtesy Pexels; Pavel Danilyuk

By Crizel Carbellido

Special to Financial Independence Hub

Business finances are important for any company to pay attention to, but perhaps more so for small- and medium-sized enterprises (SMEs) given their limited capital and their need to make the most out of every single buck.

Errors or miscalculations in an SME’s financial records can potentially lead to disastrous consequences, such as an untimely shortage of funds, inefficient business decisions due to wrong financial forecasts, and — if worse comes to worst — a state of being in the red.

One of the best safeguards against troubles like these is a full financial audit. To that end, here is a quick guide on what financial audits entail, why they’re a must for your small business, and how to prepare for one.

Accounting vs. Auditing

To rookie entrepreneurs who are just getting a handle on their business finances, accounting and auditing may seem like the same thing: and the latter may even seem unnecessary. However, these processes actually serve different purposes.

While accounting is concerned with the regular record-keeping of a business’s financial transactions, auditing is a less frequent procedure meant to check if those records are indeed accurate and error-free. In addition, given that a financial auditor is typically an independent party, their services are invaluable for providing an unbiased look into a business’s finances and giving an entrepreneur a more objective appraisal of their company’s financial standing.

What are the Benefits of a Full Financial Audit?

To those who know the process better, getting a full financial audit yields multiple benefits for small businesses. One is that it helps spot any inconsistencies or errors made during the bookkeeping and accounting process. As mentioned above, identifying and correcting those mistakes are crucial for ensuring that an entrepreneur is basing their business decisions on accurate data.

Having an audited financial statement on hand can be helpful when dealing with various financial institutions, such as some business banking Philippines providers, just in case they happen to need exhaustive documentation about the business’s financial standing. If you’re exploring a banking solution like the Philippines’ Maya Business Deposit or financing through Maya Flexi Loan, it would be a good idea to complete a full financial audit of your SME first.

A financial audit can also be beneficial for cost-cutting measures, as the process will allow you to identify areas where you might be overspending and pinpoint expenses to be streamlined.

Lastly, having your business audited will make it easier for you to spot fraudulent activities from bad actors in your company. That means that you’ll also have better chances of neutralizing them quickly and, overall, improve the integrity of your financial processes.

In turn, this could elevate the reputation and credibility of your business: especially among potential investors, as they can be assured that you’re constantly on top of your finances.

Tips for Overseeing a Smooth Audit

Philippine businesses whose gross annual sales have reached or exceeded a sum of PHP 3 million are required by the Bureau of Internal Revenue (BIR) to submit an audited financial statement (AFS) every year. If your small business happens to meet that threshold, then you’ll need to work with a third-party auditor to conduct a financial audit on your business for full compliance with the country’s laws.

To make sure that the auditing process goes smoothly, have all the pertinent records prepared beforehand. Include your ledgers, financial statements, tax-related documents, and other accounting records. You can lessen the burden of collating all these documents by ensuring that your day-to-day record-keeping is transparent and organized, so that there won’t be a need for a last-minute scramble to locate what’s necessary. Continue Reading…

Podcast & transcript: What Business Owners need to know about Hacking threats

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IT expert Darren Coleman of Coleman Technologies

In this episode of Two Way Traffic wealth management advisor Darren Coleman — who specializes in cross-border financial issues — discussed IT security with his namesake, Darren Coleman. Darren is founder of Coleman Technologies Inc., which handles IT managed services and cyber services. The latter Coleman – he’s been called Canada’s top IT expert – leads a team of technicians based in Langley, BC and Dallas, Texas. He says hacking is a trillion-dollar industry and business owners should take note.

Podcast host Coleman drew parallels between financial services and cybersecurity. He said he looks for gaps in a client’s financial plan, while in cybersecurity Coleman the IT expert looks for gaps or vulnerabilities in multi-factor authentication, threat protection to ensure business resilience, and endpoint protection (cybersecurity software that protects from viruses, malware and ransomware).

The two agreed what’s necessary in both their industries is prevention and managing risk. Another point is that Canada and the US have different tax regimes, and different laws for regulatory compliance.

“The U.S. government can gain access to your data if they want it,” said IT expert Coleman. “We believe the Canadian government can’t, but there are ways they can get it too.”

Their discussion explored …

  • Why clients of wealth management firms are good targets for hackers and what to do in a security breach when asked to pay a ransom.
  • How multi-factor authentication can prevent 99% of email breaches.
  • Why organizations devote too much security attention to senior management and not enough to everyone else.

Here is a link to the podcast …

https://podcasts.apple.com/ca/podcast/the-business-of-hacking/id1494816908?i=1000672496679

Darren Coleman of Raymond James [Darren Coleman or Darren #1 henceforth]

Welcome back to another edition of Two Way Traffic, the cross-border podcast. Today my guest is now, let me see if I pronounced your name correctly. Darren Coleman.

Darren Coleman of Coleman Technologies [Darren C #2 henceforth]

You got it.

Darren Coleman

So you and I are namesakes. You run a firm in Langley, BC called Coleman technologies and do outsourced IT infrastructure. You are a cybersecurity expert. Why don’t you take us through Coleman technologies.

Darren C #2

I am the founder and CEO. Part of my mission is to help protect a million people from hackers, so being here on your podcast supports that cause. I’ve shared my cybersecurity insights on ABC, Forbes, MSB Success Magazine. I’ve spoken at Harvard, and co-authored some books. So that stuff led my company down the road to be an expert within the cybersecurity realm. But more than that, we provide 24/7, direct-detect, flat fee, IT support to our clients. We really just become your IT department.

Are there off-the-shelf tools?

Darren Coleman

Our firm has a huge IT spend every year, but for a lot of medium and small businesses, can they not just get all the tools off the shelf?

Darren C #2

Not really. You can hire an IT professional, but you’re probably going to hire multiple people because they’re going to want to take holidays. You’re going to be looking at double the cost right there. But you can’t just buy antivirus. Antivirus isn’t good enough anymore. You need endpoint protection, threat hunting, content filtering, and audits. There are things the IT professional may be good at, but there are  things you need an expert for. If you’re looking for cybersecurity insurance, the forms are 10 or 12 pages long and require things you might not think about. Continue Reading…