|
Greetings!
The results are finally back and thankfully I passed the CFP® test. I sure didn't want to spend the rest of the summer studying the material. Plus, since I told so many people I was taking the darn thing I didn't want to have to report that I failed it. Three years of classes and two months of last-minute cramming finally done. I am a happy man.
I must say, of all the tests I have taken, (MSP, Loyola, TSU and FINRA) this one was by far the most difficult. About 47% of the people who took this year's test failed, so I feel very fortunate to get this behind me. Two full days and about 300 questions-many of which used the financial calculator were absolutely mind numbing. Heck, driving home from the test-site my brain was so fried, I had trouble deciding which exit to take, A or B; I kept looking for the "All of the Above" Ramp.
The CFP Board has some more requirements (paperwork) before I can use the certification mark behind my name--but the paperwork is in the mail and hopefully it'll be on the next newsletter.
For those who have never heard of a CFP®, here's a statement about the certification right off their website* "The mission of Certified Financial Planner Board of Standards, Inc. (CFP Board) is to benefit the public by granting the CFP® certification and upholding it as the recognized standard of excellence for personal financial planning."
I want to thank everyone who wished me luck. I also wanted to thank publicly Bob Gerhardt, a founder of Chesapeake Investment Advisors. The CFP® certification is not a necessity in this business and many people don't even know what the initials mean-but Bob knew and he never failed to ask, "Hey Marty, how's the studying coming along."
Marty
* www.CFP.net
|
|
|
An emergency fund is a pile of money that has no other purpose than to sit in a liquid and safe account waiting for something bad to happen. Liquid means you can get to the money without delay or cost and safe means FDIC insured.
Just how high the pile of money needs to be is open for debate; but there is a rule of thumb. Three months of fixed expenses if you're a couple and both partners earn a paycheck in a fairly secure profession or, six months of fixed expenses if you are single or have just one source of income or one of the sources is shaky. A fixed expense is an expense that doesn't go away without a serious consequence.
The future is merely a set of unknown events that will happen in our lives-most events we hope are happy and good, but some are bad, and some are very bad. The emergency fund helps us deal with bad events and goes a long way toward preventing them from going up the scale to very bad.
A recent survey published by Wells Fargo & Co. found that 25% of U.S. Homeowners have no savings.[i] Zero! I would think that is a little like walking a tightrope with no net. If you don't have one already, start building your net.
[i] https://www.wellsfargo.com/press/2009/20090519_savings_survey
|
|
Quote from Benjamin Graham's The Intelligent Investor
Benjamin Graham's book, The Intelligent Investor has been described by Warren Buffett as "By far the best book on investing ever written." I agree (but then I always agree with the oracle.)
I'm in the middle of my second reading of Graham's gem and even for an enthusiastic investor, it's a slow read. I always have it handy and I do about a chapter a week. Last week I came across the following passage and thought; Wow! That just about sums it up. Here's the passage, hope you enjoy.
"In our first edition (1949) we found it necessary at this point to insert a long exposition of the case for including a substantial common-stock component in all investment portfolios. Common stocks were generally viewed as highly speculative and therefore unsafe; they had declined fairly substantially from the high levels of 1946, but instead of attracting investors to them because of their reasonable prices, this fall had had the opposite effect of undermining confidence in equity securities. We have commented on the converse situation that has developed in the ensuing 20 years, whereby the big advance in stock prices made them appear safe and profitable investments at record high levels which might actually carry with them a considerable degree of risk."
In other words, when stocks are cheap investors are fearful & when they are expensive they are fearless. It should be the opposite.
|
|
|
|
|
| Concept of the Week:
Let's Talk (more) about a Budget Part II
OK, so for the last few weeks you have been writing down all your expenditures-now let's sort them into two categories; Fixed & Variable. Fixed are recurring bills, those bills you couldn't get rid of if you wanted to-Mortgage, Gas & Electric, telephone, car payments etc.
Under variable list the non-recurring bills-and things that you could actually do without-restaurants will be the biggest one, but others like drinks at the club, or new clothing, shoes purchases etc. (In your spreadsheet it would help to sort them in ascending order.)
Now that we know how much you spend, figure out exactly how much money you bring in; list all of your sources of take-home income. If your income varies take an average from a period of about six months.
So we should have two lists, Expenditures (separated into Fixed and Variable) and Income. That should be enough for this week-just make sure your lists are comprehensive. We'll pick this up next edition.
|
| Book I am reading now: The Osama bin Laden I Know.
by
Peter Bergen Ambrose Simon & Schuster--2006
|
| Lastly, I have an office for rent in our Chestertown Location--the office right above mine--beginning in August--fully furnished, about 12' x 18', $400 per month--utilities included. | |
