Tips to create financial success

Evidence suggests a person's behavior has more effect on financial success than income, and no matter how much money you make, most people wish they earned 10% more.

In the video below, Dan Danford, CFP®, Founder and Chief Executive Officer of Family Investment Center, shares tips to create financial success and how to overcome the three money disorders that impact a person's ability to achieve their financial goals.

It's the psychology, stupid

Dan Danford, CFP® and Founder/Chief Executive Officer at Family Investment Center, was quoted in an article in the Wall Street Journal today. The article, "So, How Does Money Make You Feel?", written by Veronica Dagher, speaks with advisors about why people make bad financial decisions and what they've done to help people avoid these mistakes.

Read the full article.

Financial Therapy Association

One of the interesting observations that comes from almost 30 years of investment experience is that behavior determines success or failure. Truthfully, people tend to focus on fact and figures although that’s a small part of success. This new group is creating a framework to meld financial planning with helpful disciplines of psychology, sociology, and therapy. This is a 10-minute overview by FTA president Dr. Sonya Britt.

How much money would make you feel wealthy?

By Dan Danford

We've often tossed around the word wealthy in our offices, with some of our folks saying we shouldn't use it, because those who are don't like to talk about it, and sometimes, they don't even feel wealthy, even though they may be. And those who aren't wealthy are jealous. It's a tainted word, really, wealthy, and all the various subsets of it - wealth, etc.

So this story caught my eye today, even though it's from a few days ago. CNN Money did an interesting story on how much money it takes for us to feel wealthy, complete with a handy calculator to tell us where we fall for our income and age. It's a fascinating story, and the calculator is particularly intriguing. Plug in your age and annual salary and it will tell you what the median net worth is for your age, and then the median net worth for your salary. Take a look and see where you fall.

And you tell us: how much would it take for YOU to feel wealthy?

http://money.cnn.com/2010/08/09/news/economy/wealth/index.htm

Let it out

By Dan Danford

Every have one of those days when you're just really fed-up? Well, I have, and here's my thoughts on everything that's bugging me. Feels good to put fingers to keyboard and let it all out. Post what's bugging you in the comments section! It's cathartic.

POLITICAL ISSUES

I'm tired of scavengers and do-gooders who make a living off the misery of others.

I'm tired of liberals who bash businesses, then tax the hell out of them.

I'm tired of conservatives who praise entrepreneurs, then tax the hell out of them.

I'm tired of political parties and grandiose agendas.

I'm tired of pharmaceutical manufacturers who use advertising as a competitive weapon.

I'm tired of wealthy movie stars speaking out for the working class.

I'm tired of teachers, preachers, and creatures of every sort that demand more money.

I'm tired of celebrity talk shows.

I'm tired of self-important people who hide their true agenda behind lofty-sounding community service.

I'm tired of quasi-leaders who advocate collaboration as a manipulative technique.

I'm tired of media types who create headlines or stories without true depth or understanding.

I'm tired of public servants who despise the public.

I'm tired of anyone advocating charitable spending, who wouldn't in a million years spend their own money.

PROFESSIONAL ISSUES

I'm tired of ignorance about personal investing and finance.

I'm tired of working hard for anybody who doesn't appreciate it.

I'm tired of CNBC and sensational business journalism.

I'm tired of anyone who can't learn some simple and fundamental rules of economics.

I'm tired of offering quality, value-oriented services to a broad marketplace of folks who choose not to understand.

I'm tired of amateur investors, who lavish (often) bad advice on co-workers, friends, and relatives.

PEOPLE ISSUES

I'm tired of anyone who does the easy thing instead of the right thing.

I'm tired of socially adept, but morally-challenged people.

I'm tired of wealthy or privileged people who have massive entitlement issues.

I'm tired of egocentric personalities who focus totally on themselves or their children.

I'm tired of people who can't read the newspaper or converse intelligently about current events.

I'm tired of manipulation.

I'm tired of arrogance.

I'm tired of users.

Diversify your retirement investments

On Mondays, we answer a question from a reader on the blog. If you have a question for us, post it in the comments section or e-mail us.

QUESTION: I work at a company that is not doing well. Our stock is suffering. Most of my retirement is in company stock. What do I do with it? Should I sell now and do something else? I’m 52 years old. Thanks.

ANSWER FROM DAN DANFORD: This is one of the most frustrating issues I encounter. It seems that everyone understands the value of diversification except with company stock in their retirement plans. I've been working with retirement plans for almost 30 years and this is a recurring problem over and over again. In fact, my first job was with a bank trust department, and that bank failed. Many of my colleagues at the time lost most of their retirement savings because they owned bank stock - exclusively - in their accounts.

Sadly, the time to fix this is two years ago. Who knows what the next two years hold for your company? I pray that our economy has seen the worst from this horrific cycle, but even that's a hopeful guess. Every industry faces certain perils, and how yours will fare in the future is anybody's guess. Whether to hold or sell it too hard to call for me, and I don't carry emotional baggage from working there.

Certainly, put new retirement contributions into other things. I'd suggest an S&P 500index fund and/or a good international stock fund. Put diversification to work for you now, and remember this lesson for the last decades of your work life. And - urgently important - share the lesson you learned with colleagues, family, and friends. Especially your family. Teach your children to diversify so they won't face the same crisis when they are 52. Good luck.

Tax refunds more about psychology than finance

On Mondays, we post a question and answer from a reader. Here's an appropriate question for the week in which some of us write a nice big, fat check to the government.
QUESTION: I usually get a large tax refund every year. I use it to pay off debt or buy something I want. Is that a mistake? Am I letting the government borrow my money for free?

ANSWER: I hear stuff like this all the time. Yes, the government is "using" your money all year long and then sending it back to you at tax time. But, really, would you rather save it yourself and write them a big check each April? My experience is that people hate writing that check and most prefer an annual refund. From a pure financial standpoint, the best case scenario is that your withholding taxes match exactly your tax due. That isn't likely to happen, though, and psychology suggests a refund is more palatable than writing a check. After thirty years in the investment business, I've discovered that psychology trumps math for almost everyone!