@100MPrince1 Q1). There have been reports families have seen their savings increase as much as 25% during the pandemic. What should individuals and families do with the extra savings?
Andre Prince: Start building or replenish their emergency fund and short-term investment accounts. The three fundamental accounts must be monitored at least monthly. The three fundamental accounts are:
1. An emergency fund [Goal= three months of living expenses];
2. Short-term Investment Account [Goal= 6 months of living expenses];
3. Wealth Building Account [Goal= Financial Independence Number]
Decide upon an amount of money within your budget to fund all three accounts. Then, commit 50% of that amount to fund your emergency account until the Goal is achieved. In the meantime, commit 25% to short-term accounts and 25% to Wealth Building. They should also pay down high-interest credit card debt at the same time until they get to the point where they can pay off the balance each month. In conjunction with having a well-funded emergency account, this prevents them from sinking back into crippling levels of DEBT. Once the emergency account is fully funded, commit 75% of the amount towards a short-term account until fully funded..and 25% toward wealth Building and so on.
Q2). I have heard that Fidelity recommends using the 50/15/5 approach to save and manage house budgets. Can you explain this approach?
Andre Prince: Good financial planning may be summarized in three categories. 1. Rules [Legal dos and don'ts]; 2. Rules of Thumb; 3. Emotional management as it relates to money-making decisions. The 50/15/5 approach is simply another rule of thumb that gains its validation from implementation over an extended period in a generalized fashion. However, my recommendation is to be more specific and craft a plan applicable to your exact situation. Limiting spending to 50% of your take-home pay is an excellent idea if you have planned for this and are in a financial position to do so. However, unfortunately, many families have already committed themselves to financial positions that preclude them from Limiting their spending to 50% of their take-home pay. The same rationale goes for saving 15% pretax income for retirement and 5% towards emergency funds or short-term accounts. But, rules of thumb do not and cannot be strictly applied to every individual or family though the concept of validity in a general sense. I suggest you make your life easier by getting a financial analysis done on your situation. I offer this as a complimentary service to my clients, and they all love how it simplifies things for them. They always leave feeling empowered, knowing what they need to do to get to their desired destination.
Q3). For nearly two years, I have worked from home, and as a result, I have experienced a significant increase in my utilities. How can I recoup these expenses, given that my employer is not allowing us to return to the office until June of 2022 regularly? Can I claim this on my taxes?
Andre Prince: I will not advise on whether you may claim utility expenses on your taxes. Would you please consult your CPA or tax professional? However, your time may be well invested by re-examining your tax withholdings. Most individuals and middle-income families overpay taxes. Consider increasing your contributions to your employer-sponsored 401k, 403b, 457, TSP, OR YOUR TRADITIONAL IRA to reduce your taxable income.
Q4). I have lost my job, and I have maintained some semblance of normalcy in my standard of living because of unemployment. How do you suggest those who have taken a financial hit begin to rebuild their fiscal lives?
Andre Prince: Before getting back into the job market, decide what you want your life to look like emotionally, financially, physically, and otherwise. All power rest within YOU. JUST DECIDE. Once you have decided, develop a clear, concise, mental picture of what you need to do to achieve your Goal and install daily routines in your schedule that support the realization of your Goal. The approach mentioned above provides a mental framework within which to operate; however, the reality is that most people don't earn enough money to create the options and freedom they desire. In the area of rebounding your finance, I would recommend researching legitimate opportunities to increase your income. Some persons may even have to consider a career change to achieve their goals. Though challenging at first, this could be a blessing!!
Q5). What are your thoughts regarding stock buying and selling using companies like Robinhood? Is this the best time for a long-term investment in the stock market?
Andre Prince: There are some issues concerning the Robinhood platform that need to be addressed. The company was recently fined $70M. I'm not discrediting the platform's usefulness here but just raising the awareness that there are some issues to pay attention to before getting heavily involved. However, several other outlets are at your disposal if you are interested in buying and selling stock. If investing long-term, almost anytime is a great time to get involved in the market. The market has always produced positive returns when investing up to 20 year periods or longer.
The better question is how one should go about investing for the long term? This is my area of specialty, and our team has helped numerous clients establish strategies to successfully grow, protect, and distribute investment income in retirement. We then further our assistance by allowing you to diversify strategies to ensure both your income and liquidity desires are met during the entire span of your retirement.
Andre Prince is a financial services entrepreneur based in Maryland with strong background in engineering and mathematics. Raised by his extended family on the small island of St. Vincent and the Grenadines, Andre began his journey to the United States as junior tennis player starting at the age of 10. He quickly showed promise and advanced to become the first junior tennis player from St. Vincent to achieve an International Tennis Federation (ITF) junior world ranking. He represented St. Vincent at the Pan American games in 1999 and the junior Olympic Youth Camp in Sydney Australia in 2000. The next year he start pursuing a Civil Engineering degree at Morgan State University where he was awarded a full tennis scholarship. He also completed a Masters degree in Environmental Engineering at John's Hopkins University in 2008 before starting his transition to the financial services industry in 2009. Andre is passionate about increasing financial awareness among youth and families in general. Today, he helps families across Maryland and seven other states namely New York, New Jersey, Pennsylvania, Virginia, Georgia, California and Florida.
Andre Prince: Start building or replenish their emergency fund and short-term investment accounts. The three fundamental accounts must be monitored at least monthly. The three fundamental accounts are:
1. An emergency fund [Goal= three months of living expenses];
2. Short-term Investment Account [Goal= 6 months of living expenses];
3. Wealth Building Account [Goal= Financial Independence Number]
Decide upon an amount of money within your budget to fund all three accounts. Then, commit 50% of that amount to fund your emergency account until the Goal is achieved. In the meantime, commit 25% to short-term accounts and 25% to Wealth Building. They should also pay down high-interest credit card debt at the same time until they get to the point where they can pay off the balance each month. In conjunction with having a well-funded emergency account, this prevents them from sinking back into crippling levels of DEBT. Once the emergency account is fully funded, commit 75% of the amount towards a short-term account until fully funded..and 25% toward wealth Building and so on.
Q2). I have heard that Fidelity recommends using the 50/15/5 approach to save and manage house budgets. Can you explain this approach?
Andre Prince: Good financial planning may be summarized in three categories. 1. Rules [Legal dos and don'ts]; 2. Rules of Thumb; 3. Emotional management as it relates to money-making decisions. The 50/15/5 approach is simply another rule of thumb that gains its validation from implementation over an extended period in a generalized fashion. However, my recommendation is to be more specific and craft a plan applicable to your exact situation. Limiting spending to 50% of your take-home pay is an excellent idea if you have planned for this and are in a financial position to do so. However, unfortunately, many families have already committed themselves to financial positions that preclude them from Limiting their spending to 50% of their take-home pay. The same rationale goes for saving 15% pretax income for retirement and 5% towards emergency funds or short-term accounts. But, rules of thumb do not and cannot be strictly applied to every individual or family though the concept of validity in a general sense. I suggest you make your life easier by getting a financial analysis done on your situation. I offer this as a complimentary service to my clients, and they all love how it simplifies things for them. They always leave feeling empowered, knowing what they need to do to get to their desired destination.
Q3). For nearly two years, I have worked from home, and as a result, I have experienced a significant increase in my utilities. How can I recoup these expenses, given that my employer is not allowing us to return to the office until June of 2022 regularly? Can I claim this on my taxes?
Andre Prince: I will not advise on whether you may claim utility expenses on your taxes. Would you please consult your CPA or tax professional? However, your time may be well invested by re-examining your tax withholdings. Most individuals and middle-income families overpay taxes. Consider increasing your contributions to your employer-sponsored 401k, 403b, 457, TSP, OR YOUR TRADITIONAL IRA to reduce your taxable income.
Q4). I have lost my job, and I have maintained some semblance of normalcy in my standard of living because of unemployment. How do you suggest those who have taken a financial hit begin to rebuild their fiscal lives?
Andre Prince: Before getting back into the job market, decide what you want your life to look like emotionally, financially, physically, and otherwise. All power rest within YOU. JUST DECIDE. Once you have decided, develop a clear, concise, mental picture of what you need to do to achieve your Goal and install daily routines in your schedule that support the realization of your Goal. The approach mentioned above provides a mental framework within which to operate; however, the reality is that most people don't earn enough money to create the options and freedom they desire. In the area of rebounding your finance, I would recommend researching legitimate opportunities to increase your income. Some persons may even have to consider a career change to achieve their goals. Though challenging at first, this could be a blessing!!
Q5). What are your thoughts regarding stock buying and selling using companies like Robinhood? Is this the best time for a long-term investment in the stock market?
Andre Prince: There are some issues concerning the Robinhood platform that need to be addressed. The company was recently fined $70M. I'm not discrediting the platform's usefulness here but just raising the awareness that there are some issues to pay attention to before getting heavily involved. However, several other outlets are at your disposal if you are interested in buying and selling stock. If investing long-term, almost anytime is a great time to get involved in the market. The market has always produced positive returns when investing up to 20 year periods or longer.
The better question is how one should go about investing for the long term? This is my area of specialty, and our team has helped numerous clients establish strategies to successfully grow, protect, and distribute investment income in retirement. We then further our assistance by allowing you to diversify strategies to ensure both your income and liquidity desires are met during the entire span of your retirement.
Andre Prince is a financial services entrepreneur based in Maryland with strong background in engineering and mathematics. Raised by his extended family on the small island of St. Vincent and the Grenadines, Andre began his journey to the United States as junior tennis player starting at the age of 10. He quickly showed promise and advanced to become the first junior tennis player from St. Vincent to achieve an International Tennis Federation (ITF) junior world ranking. He represented St. Vincent at the Pan American games in 1999 and the junior Olympic Youth Camp in Sydney Australia in 2000. The next year he start pursuing a Civil Engineering degree at Morgan State University where he was awarded a full tennis scholarship. He also completed a Masters degree in Environmental Engineering at John's Hopkins University in 2008 before starting his transition to the financial services industry in 2009. Andre is passionate about increasing financial awareness among youth and families in general. Today, he helps families across Maryland and seven other states namely New York, New Jersey, Pennsylvania, Virginia, Georgia, California and Florida.