Don't Put All of Your Eggs In One Basket!

Hey everybody,

At a conference that Andrea and I attended not too long ago one of the speakers mentioned that he had recently read an article, originally from Time Magazine, which detailed the importance of not relying solely on 401(k)'s (or RRSP's for us Canadians) when thinking of retirement income.

There was a time when the relationship between employee and employer was much more dependant. Employee's could rely on the company that they worked for to take care of them and in return, employer's could rely on the loyalty of the employees working for them. I am speaking of the defined pension plan system.

Sadly, as we slowly watch one company after another eliminate their defined pension plans , the trend has been to replace those plans with some kind of matching contribution plan. Basically, the employee pays into a 401(k)/RRSP of his/her choosing and his/her employer matches that contribution, usually up to a certain level.

The major reason for this shift is that these days, with so many jobs being outsourced, companies are looking for places to cut operating costs. Unfortunately the easiest way for them to do this is by reducing employee wages, cutting employee perks (like the defined pension plans), or by cutting positions entirely.

The large misconception is that the system we have fallen back on, namely the joint contribution plan, was intended to REPLACE the defined pension plan. The truth is, contributing to these tax savings vehicles was only EVER intended to provide supplementary income for people during their retirement.

So the rule of thumb for anyone who has ever only been funneling money into a 401(k)/RRSP up to this point is that they may want to strongly consider diversifying into other avenues as well. Remember, don't put all of your eggs in one basket!

I have listed a link to the Time Magazine artible below, if you have a few minutes it makes for a solid read, cheers!

Why It's Time to Retire the 401(k)

Pay Yourself First

Hey everyone,

We all know that putting money aside to invest for the future is important, but many of us have a hard time going out of our way every month to actually call our financial institutions and go through this process. The internet has made things slightly easier, now we can move money to various investment accounts with the click of a button. Still, even with the very best of intentions, many of us are neglecting what should really be a monthly habit.

Have you heard of the concept 'Pay Yourself First'? If we take a look at things from an employee perspective, a full work day typically consists of eight hours. Imagine, if you will, taking the wage equivalent of one of those eight hours and investing it for the future? This concept basically means that you set up a pre-authorized withdrawl for a month's worth of those accumulated wages and, on a date of your choosing, your financial institution, broker, or investment company will move them to your investment account of choice.

while this concept seems simple in nature, many people do not practice it, always saying, "I'll just save a whole bunch of money and contribute a lump sum later sometime." The problem with this is that your money does not earn inerest while that 'lump sum' is accumulating and also, unfortunately, you can not retire on good intenstion alone.

Most people would agree that setting aside one hour's worth of their work day's wage is manageable, but over fifteen years that one hour a day can turn into a significant benefit for you to supplement your retirment income. With people living longer and longer these days it is imperative that we do what we can to make our retirement funds last as long as possible. So remember, pay yourself first!

I'm Back!

Hey Everyone,

After a long break of not posting to this blog, I have returned to resume my mission of helping individuals have a better understanding of money, business, and all the little things in between. I have been spending a lot of time working on my own business over the last while and have learned much in the process; some of which I hope to impart to those who are kind enough to take their hard earned free time to review this blog every once and a while.

Today I would like to share a refreshing article that I read on the subject of owning one's own business, written by Michael T. Robinson, from CareerPlanner.com. I found it to be a really great overview of some of the key features that anyone thinking of starting his/her own business may want to consider. Just click on the link below to proceed to the article and ENJOY!

The Benefits of Owning Your Own Business