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- Expect the sh-- to hit the fan. Sooner or later, it happens. One can be better prepared if keeping 10% of investment funds in safe reserves and investing half and half in dividend paying common stocks and in yield bearing bonds.
- A good retirement costs money, so planning ahead is richly rewarding: begin long before ceasing that career to set aside enough savings; assume a conservative level of return on your investments, like maybe just 5%; live on the income from your nest egg, not the principal; figure out what is needed for the regular monthly budget, including preparation for emergencies, and only splurge on a healthy excess over that amount; if this means shrinking the size of one's dreams down to reality, adapt.
- Be real: do not spend more than you have!
- Don't depend on costly gimmicks like reverse mortgages.
- Assume that very smart people are trying to find ways to fool you out of your hard-earned dollars. They are. Frequently we can sense the shady characters if we listen to our intuition. The old adage applies: if it sounds too good to be true, chances are it is bogus. Stay away.
- Figure that at some point, and possibly more than once, life will throw you a financial curve ball. There will be a 2008 near meltdown, so stocks tumble, or you'll lose your job and have trouble getting a new one, or there will be a long-term, devastating medical crisis, etc. The specifics are not so vital to know ahead, yet we are better off realizing these things can and probably will happen, so let us limit our monetary risk and follow the Boy Scout motto: "Be prepared."
- Inevitably there will be deals to be negotiated and made: know what you are potentially getting into; if it does not feel right or you are in over your head, walk away. Be a straight talker yourself, telling it like it is, not seeking to manipulate to gain advantage. You'll sleep better at night and have fewer hassles with other people's lawyers. On the other hand, he or she who is willing to make a deal can often come out ahead. For example, does your real estate broker get a 7% commission? Offer 6%. Maybe you'll work out a compromise at 6.5% and save a few thousand dollars in the process.
- Life is an adventure, no doubt, and there are risks worth taking. Do not be so into security that your money never has a chance to grow. Yet take only carefully considered risks, with backup protections in case things go wrong. For instance, do not just look at how much dough you can make but also at how long it will take to earn it back if this falls through or turns sour.
- Mistakes will happen. A stock will unexpectedly plummet in price. The dream home you bought turns out to be in a quickly deteriorating neighborhood. Consider these as educational experiences, and add to your inventory of lessons learned.
- Do not, however, settle for seeing oneself as a victim. New opportunities can be there for the taking at any age. Let's keep our eyes open for them. We may be amazed at what we find if we stay "hungry."
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