Be Wealthy & Smart

Learn how much money you need to invest in stocks. I worked in the mutual fund industry for most of my career. That's where professional money managers manage a pool of stocks, bonds or a combination on behalf of investors. The investor pays a commission or fee or both for it. One of the reasons mutual funds became so popular in the last 50 years, was not only because of professional management, ease of purchase, good relative performance and diversification was because they had a low minimum initial investment. Prior to mutual funds, you had to buy shares of stock and that could be expensive. Mutual funds had a $500 or $1,000 minimum and to buy 100 shares, called a round lot, of stocks was 100 x $30 = $3,000 for one stock, which offered no diversification. All your eggs were in one basket. Today we have more choices of where to invest money - ETF's are the biggest change. We can invest in unmanaged, diversified baskets of stocks, bonds or both. Instead of having a professional manager, it's a static group of stocks, for example. Could buy a biotech ETF with just biotech companies in it. ETFs are priced like a share of stock, so they require very little money to purchase. But what about if you want to buy shares of stock in a company? How much do you need to have to invest in a single stock or a few stocks? According to my mentor, William J. O'Neill, "You can begin with as little as $500 or $1,000 and add to it as you earn and save more money." O'Neil started investing at age 21 with a 5 share purchase of Proctor & Gamble stock! You can buy shares of one or two companies with $1,000, don't try to buy 10. If you have $10,000, you can buy 3 or 4 good quality stocks. Use my suggestions and only buy companies whose earnings are increasing at an increasing rate. Pay attention to earnings! Don't buy a stock because you like their products! That's only one touch point to consider. IMO, buying individual stocks is a great hobby and valuable skill to learn. But be careful, if you don't know what you're doing, it's easy to lose all your money. If you take the time to learn and study, you can make great returns. For example, if you bought Facebook (FB) just 3 years ago, a $5,000 investment would have grown to $12,000 or 240%! That's not an isolated incident. Action plan: 1. Read "How to Make Money in Stocks" - link is on my Resource page. 2. Get your IBD weekly and start studying what they recommend - the IDB 50. (No, I do not receive compensation for recommending this). 3. Start paying attention to who is beating expectations. If you haven't listened to my podcast about Apple (#125), do that because you'll find out what happens to a stock that misses it's targets. It's companies that BEAT expectations that win, companies that don't lose big.

Learn how to choose a Financial Adviser and what questions to ask for investment advice. Interview with best selling author of Rich as a King, Doug Goldstein. Places to check up on Financial Advisers: Finra.org/brokercheck CFP.net Sec.gov/investor/brokers.htm Doug's book: Rich as a King Doug's website: RichAsAKing.com

Learn 2 ways you can make money during a stock and/or bond market decline: inverse ETFs and Puts. Listener question: Hi Linda, I've been listening to you and I'm concerned about the stock and bond markets. How do you recommend I protect my account? Christy There are 2 ways you can make money during a stock and/or bond market decline: Inverse ETF's and Puts. Inverse ETF's are Exchange Traded Funds that make money (go up) when the market declines. You are buying futures, and this was not possible a decade ag????. It was something only professional traders could do. You have to be very careful, it's not something to buy and hold. You want to trade and be in and out of these. They can move against you quickly. There are about 75 inverse ETF's providing protection on US equites, government and corporate debt, foreign markets and commodities. One of the most popular inverse ETFs is ProShares Short S & P 500 (SH). If the market dropped about 10%, it would go up about 8%. At the time of this recording, the S & P is up 1% and SH is down 1.9%. The other thing you can do is buy puts. Puts are a bet on the direction of the market. If you think a stock or index is going to decline, you can buy a put, where you risk a limited amount for a specified period of time, typically 30 days???. They are based on time and price. If a stock goes below a specified price you are "in the money". Part of the price is determined by the time you are holding the option. As it gets closer to expiration, it loses value. You limit your risk to the amount invested. Can expire worthless. Both of these are difficult to get right because you have to know when to buy and when to sell. Timing in a bear market is tricky. Markets tend to go down a lot faster than they go up. They also tend to rebound sharply, so it's moving in the opposite direction and can cause large changes in the price if you hold too long. The timing is very tricky on either strategy so be very careful when trying to implement them. The other thing you can do is simply wait in cash. By waiting in cash you can wait for a downturn and dollar cost average (that is invest in regular intervals) to buy back in. That will give you a lower average cost basis and allow you to get in at a low price. Bernard Baruch used to say, "Buy when there is blood running in the streets." I say, "Buy when the news is at it's gloomiest. When no one wants to buy, that is the time you'll get the best price." With the stock market in its 7th year of expansion, it's reasonable to take measures against a market decline. Use these strategies judiciously - again, I caution you NOT to buy and hold or worse, buy and forget you own an inverse ETF. They are volatile and can move against you quite easily. Personally, I'm sitting out of stocks and investing in alternatives that are not correlated with the stock market. That way, I can take my time and wait for the right opportunity to get back in. Cycles tell us another big tsunami could be headed our way, so IMO it's a good time to sit out.

Learn are a few of the important terms you need to know as an investor. 1. What is a stock? Shares in a company. A way to raise capital. It creates wealth. Increases in value if growing earnings. Risk is limited to amount invested. Example of Tory Burch - wants to open boutiques worldwide and sells stock in an IPO - Initial Public Offering - to do it and raise capital for boutiques, inventory, etc. 2. What is a bond? An IOU; debt from a corporation, government or municipality. Supposed to be less risky than stocks. Considered more conservative investments. Moves inversely to interest rates. Cycles in interest rates run about 30 years. 3. What is asset allocation? The percentage allocated to stocks and bonds, a virtual pie chart. The most important factor in Modern Portfolio Theory; a finding by Henry Markowitz, Nobel Prize Winner. Asset allocation is where the majority of returns come from. A rising tide lifts all boats. It's not from stock picking or timing the market. It's from the choices you make about where to invest. In theory, should have more stocks when younger and more bonds when older Used to be 100 - (your age) = % in stocks, ex. 100 - 20 = 80% stocks. That's harder to do today since bonds may have a headwind of rising rates, which means lower bond valuations. Asset allocation today requires some creativity how you receive income and reduce risk in your portfolio. 4. What is a dividend? Net profits paid on stock shares or can be kept as retained earnings. The yield on a stock. Usually paid quarterly, but can be a one-time dividend or a regular dividend. It's not guaranteed. Check the track record. Can reinvest dividends or take in cash. High growth companies typically reinvest rather than pay dividends, so dividend paying companies tend to be large, established companies. 5. What is the S & P 500 Index? Standard and Poor's 500 largest companies in US. Many people don't realize it's a market-value-weighted index - a stock market index whose components are weighted according to the total market value of their outstanding shares. The larger the company, the more weight it has in the index. If you want all the companies to be equally weighted, that's a different index fund, but they do exist. An index is a form of measurement - compare competing large cap funds to it's performance. Every manager is paid to outperform an index. Large cap US funds are typically measured against the S & P and how it's performed. 6. What is the Dow Jones Industrial Average? Also called "the Dow", it is an index made up of 30 industrial companies. Invented by Charles Dow back in 1896. An industrial company used to be more steel, railroads, cotton, tobacco, oil, etc. now includes technology companies like Microsoft. It also has companies like Walt Disney, Exxon, GE, Coca Cola, Proctor & Gamble and Apple. Here's some trivia for you: what is the only company in the Dow that is original to the index? General Electric. When people say "the market is up today" they typically mean the Dow. Small number of companies, not as indicative of the broad market. It also is market weighted, so the largest companies carry more weight in the performance of the Dow. 7. What is Nasdaq? Nasdaq stands for the National Association of Securities Dealers automated quotes. Started out as an electronic market in 1971 vs. an open outcry, auction market that the NYSE is. That is humans vs. computers for trading. It began with smaller companies, but now is better known as a technology index because companies like Microsoft and Intel went public there then rather than migrating to NYSE, they stayed in NASDAQ, probably due to electronic nature and seeing the future being more electronic than with human specialists. The term "Nasdaq" is used to refer to the Nasdaq Composite, which has over 3,000 companies that are part of the Nasdaq and includes the world's foremost technology and biotech giants such as Apple, Google, Microsoft, Oracle, Amazon, Intel and Amgen. 8. What is MSCI EAFE Index? The index founded in 1969 includes a selection of stocks from 21 developed markets, but excludes those from the U.S. and Canada. MSCI EAFE stands for Morgan Stanley Capital Index, Europe Australia Far East. Ranks the largest companies outside of the US and Canada. Outside of US only - international or foreign stocks. 9. What are Emerging Markets? Emerging markets are developing economies, many of which are experiencing rapid growth and industrialization. These countries possess securities markets that are progressing toward, but have not yet reached, the standards of developed nations. They are international stock markets that are not as well developed or mature as developed countries. They are loosely defined as having completed certain reforms and economic development programs to open up their economies and emerge onto the global scene and are considered to be fast growing. You tend to hear about the BRICS - Brazil, Russia, India, China, South Africa. 10. What are REITs? Real Estate Investment Trusts A company that owns or finances income producing real estate. A diversified group of real estate and mortgage companies. Commercial real estate, apartment complexes, retail buildings, hospitals, hotels, shopping malls, timber land, etc. Provide income streams in a dividend Must pay out all taxable income as dividends to shareholders. These are a few of the important terms you need to know as an investor. Don't let jargon get between you and your wealth building. Your action step is to research one of these terms even more and find out all the details about it. Whether that's the S & P 500, REITs or dividend paying stocks, take some time to do your own research.

Learn about billionaire Carl Icahn, how he made his money, what stocks he owns and his outlook on the stock and bond market. Carl Icahn is an 80 year old investor worth $20 billion and one of the 50 wealthiest people in the world. He owns 90% of Icahn Enterprises, an investment fund, the symbol is IEP. He's a shareholder activist, one of the original corporate raiders and greenmailers. That means he buys stock in companies and causes contention with management about why their stock is undervalued, to the point that they pay him to get rid of him. He's famous for trying to takeover companies and they either succumb to his management suggestions or pay him to go away. Attempted to takeover Nabisco and was paid $600 million by Philip Morris to go away. Carl Icahn gained fame in the 1980's by taking over and attempting to take over some large companies like Texaco, TWA and American Airlines. He was successful taking over TWA. It went bankrupt and eventually re-emerged. More recently he's been contentious with managements of Netflix, Dell, Family Dollar, Ebay and Apple. With Apple, he wanted them to pay out retained earnings in the form of a dividend and to buy back stock. He has since divested himself of all his Apple stock in the 4th quarter of 2015, which used to be his largest holding. He says it was due to being worried about Apple and things going on in China. I was at the airport last fall and in the CNBC store waiting for my flight. On the TV was Carl Icahn talking about why he expected a big decline in junk bonds and the stock market. He's been very vocal to caution investors, particularly bond investors, because he believes there's trouble ahead. Judging by how he's invested, I'd say he thinks it's soon. His company is short credit default swaps and broad market index swap derivatives, which means he is betting that junk bonds (low rated corporate bonds) and stock market indexes will go down. He says he's more confident about markets dropping 20% than increasing by 20%. His company is 149% net short (due to leverage). Icahn Enterprises has a phenomenal long-term track record, but the last 2 years have been poor. Last year they were down 18% and they are down 12.8% in the 1st quarter of this year. Some of the companies he currently owns includes: Paypal, AIG, Herbalife, and Freeport-McMoran. He is one of the all-time greatest investors - don't rule him out. I always pay attention to what the billionaires are doing because they typically follow cycles, which I do too. It gives you some ability to see what's coming, because cycles repeat at regular intervals. This is something billionaires know, but most investors don't. It's changed my investing perspective in the past few years and something that has allowed our VIP Experience to be up 25% YTD when the S & P is only up 1%. Like Mr. Icahn, I also am expecting some declines in the stock market and have positioned my clients in assets other than stocks.

Listener Questions - How to Get a Spouse on the Same Page; Broker/Dealers And now for listener questions... From Jacob: Hi Linda! I just wanted to thank you. I have listened to your first 20 podcasts and I am a believer. I am a hairstylist, and I give quality service for a dollar store price, and I have been pretty unsuccessful. Your podcasts have been helpful for helping me understand why. I'm developing a brand and your information has been so helpful. The next thing I do today is to give you a 5 star rating on iTunes. Thank you thank you thank you! I also want to know, how to get a spouse on board with becoming wealthy? My personal mentoring clients have struggled with this. 1. The first thing I do is explain the difference between how women and men invest. Men comfortable with risk, women like security. You're already at odds! He wants to grow the money, she wants to protect the money. A woman's #1 fear is being homeless. So the nest - your home - is important. BTW, I believe that's why women usually want to keep the home after a divorce, which is not always a good thing to do. 2. Get on a common page with what you want. Couples often don't discuss their long term goals. Are you wanting a second home? To retire at the beach? To play golf? Ski? Agree on what you can agree on and work on compromising on the things you can't agree on. 3. Spender vs. saver One spouse is free with money, one is more careful. Set your priorities for your money. Put retirement high up - go to podcast #122 & #123, "Prioritize your money" and "Spending, saving and investing for retirement." 4. Agree to move homes infrequently. Make a long term plan for your home. Don't buy a condo downtown and then move to the suburbs to have a child, unless you can stay there 20 years. 5. Have a date night. David Bach suggested it in the book, Smart Women Finish Rich. Discuss your goals for money. Get on the same page! 6. Allow for "dream" items. She may want an expensive handbag. He may want an expensive Italian bike. Put gift budgets for 3 holidays (birthday, anniversary and Christmas or Hanukkah) together. Keep one eye on spending today and one eye on tomorrow. Next question... From Celine: Linda, thank you so much for sharing your knowledge and experience about wealth, I find your podcast very educational and easy to follow for people with different backgrounds. so thank you and please keep up the great work! I wanted to ask if you could recommend the best 2-3 banks/brokers/investment services where to open an IRA? I know you don't endorse products or companies but I hope it's ok to ask if you can advise on what you've seen working best for IRAs. Thanks so much! IRA is like an envelope and you put investments inside. My 3 favorite brokerage firms: Fidelity Schwab Scottrade vs. Vanguard investment company. May limit your investment choices. Next question... Linda - your introductory jingle is horrible! Please get something more age appropriate and gender neutral. Ha ha! It's intentional. It's for your positivity and as an affirmation to have a rich life. The idea is to have you repeating the words over and over as a mantra. Repetition creates new neuropathways in your brain and changes your subconscious beliefs. It's intentional for your wealthy mindset. The singer/songwriter of LIFE, Beckah Shae, gave me permission to use it and I love it. I hope you do too - eventually!

First, let's see if you qualify for a Traditonal or Roth IRA. Annual contributions to both accounts are the same in 2016 as in 2015 -- up to $5,500 per person, or $6,500 for individuals who are 50 or older. You may earn too much to fund a Roth, because they're available only to individuals whose modified adjusted gross income doesn't exceed a maximum of $132,000 in 2016. For married couples filing a joint tax return, eligibility requirements end at $194,000. With a traditional IRA, you may be able to claim a full income-tax deduction for your contributions, as long as you don't have access to a retirement plan at work, such as a 401(k). Single filers who do have access to such a plan can take a full deduction if they earn $61,000 or less, or a partial deduction up to $71,000 in 2016. The income limits are trickier for married couples filing jointly. If you have access to a plan, the limits are $98,000 to $118,000; if your spouse has access to a plan but you do not, the limits are $184,000 to $194,000 for joint filers. Remember: If your employer does not offer a retirement plan, you can get the full tax deduction for traditional IRA contributions regardless of your income. Roth over Traditional IRA Why I like Roths over Trad IRAs is your money is tax-free forever. In a Roth IRA, you don't have to take mandatory withdrawals at age 70-1/2 and you can keep contributing to it. Roth IRA's a definitely the way to go, if you qualify. I was at a party and met 2 retired doctors recently who are close to age 70. When they found out I'm a financial expert, they both told me about their unhappiness with Required Minimum Distributions starting at age 70-1/2. These are required withdrawals you must make from a Traditional IRA and are based on your life expectancy. If you don't take out the required Min Distr. from a traditional IRA, there is a 50% penalty. They will be forced to take money out and likely pay tax on it, whether they want the withdrawal or not. It's a forced liquidation so the govt can collect taxes. Had they had the opportunity to invest in a Roth IRA, they wouldn't have to do Required minimum distributions, which will likely cause them to pay tax and maybe put them into a higher tax bracket. What they could have done is take distributions between age 59-1/2 and 70-1/2 to avoid any penalties. (There is a 10% penalty if you wd money prior to age 59-1/2), but you can also avoid it if you qualify for one of 9 exemptions: They include death (for withdrawal by a beneficiary), disability and qualified college bills like tuition, fees, books, supplies, room and board. Other reasons include a first time home purchase, unemployed and have medical insurance premiums, medical expenses, call to active duty in the military, IRS levy, and substantially equal periodic payments until you're 59-1/2. I'm not going to go into the nuances of each one of these, but I'll put it in the show notes on my website if you think one or more may apply to you. Go here for all the details on the exemptions: www.investopedia.com/articles/retirement/02/111202.asp If you don't take tax efficient withdrawal now, the Traditional IRA will keep growing and you could have a lot of tax later when you have to take RMD's at 70-1/2. With a Roth, you don't have RMD's at any age, you can leve beneficiaries a large, tax free account and you'll be in control of your account w/o income tax concerns. You can move money from a Traditional to a Roth, but that will trigger tax on the pre-tax amount, which are the contributions that were tax deductible and any investment earnings that followed. But all Roth IRA distributions will be untaxed after 5 years and age 59-1/2.

Learn 9 things to consider before investing in a crowdfunded company, how small investors can be venture capitalists and the 2 classifications to buy shares. 2 Classifications: 1) $100k of income and $100k of net worth. Can invest up to 10% of lesser of income or net worth, up to $100k maximum. For example, $100k income, $500k net worth, could invest ($500k x 10% = $50k). 2) Under $100k income and $100k net worth. Can invest up to 5% of lesser of income or net worth, whichever is less. Compare that to $2k and choose larger number. So if you make $50k and have $150k net worth. 5% of $50k = $2,500 vs. 5% or $150k = $7,500. Lesser is $2,500 and is more than $2k so $2,500 investment is allowed. See more details at www.ZacksInvest.com for a crowdfunding portal. 9 Reasons to consider before investing in a crowdfunded company: 1) No liquidity 2) High risk of loss 3) Early stage companies are not fully tested in the marketplace 4) Long-term commitment 5) Questionable accuracy of information 6) Investing in a product or a company? 7) Is there a wide moat? 8) Dilution 9) How specialized?

Listener QuestionsChristy has 2 questions:Linda,I love your show and I've been binge-listening to old episodes.I've always been really afraid of investing and intimidated byanything related to finances. Your show is shifting my perspectiveand helping me take charge of my future with confidence. Thankyou!I have two questions. 1. What other resources (besides yourshow, and mailing list) would you recommend to someone who istrying to learn about this world with no prior knowledge. I want tolearn as much as I can as fast as I can, and there is no end to theamount of books and podcasts, and blogs about the market,investing, business and economics, where is the beginning?Thank you, Christy. I'm so glad the show is giving youconfidence and shifting your thinking! That's why I'm here! I thinkmany financial experts make investing too difficult and technicaland it just doesn't have to be that way. I also believe thatthere's a mental connection to wealth and your thinking isparamount, so I include mindset, belief, and positivity into wealthbuilding because from my experience that's also important.Everything I share with you is from my experience of wealthbuilding and not what I GUESS will work, but what I KNOW works.If you're hungry for more knowledge, then I suggest you startwith the financial books I recommend. Go to lindapjones.com/booksand get the list of 7 fantastic financial books I recommend foryour must-read library. All these authors have a similarperspective on money and investing like I do and I highly recommendthem.Part 2 of her question is:2. I've started investing in Silver Eagles. I'mPlanning on holding on to them for the foreseeable future. But ifand when I do want to sell, what is the most practical way?Thank you for all you do!As you know, I like silver Eagles for many reasons - theirincredible growth potential, low initial investment and protectionfrom problems with the dollar due to excess government debt and thecurrent cycle we're in. Good for you for investing in them!When you want to sell, the dealer you bought the silver fromwill likely buy them back from you at the "spot" silver price -what the pure metal sells for per ounce on the commodity exchange,plus commission and a profit. It's usually about a $3 extra charge,but it varies depending on the market and the dealer.I usually get asked where can you buy silver?

Learn what rewards are available with credit cards, are they worth it, which are best and why it might be something you shouldn't do. Websites mentioned to track points: Mint.com and AwardWallet.com A credit card enthusiast tells you how to use credit card reward programs to your advantage and pitfalls to avoid. Main cards discussed are Chase, Discover, Amex as well as airline cards. Points for airline miles, hotels, groceries, gifts and cash back.