Let's say you get a windfall thanks to your excellent contributions to your employer like
me, or even inherited a chunk of change from your distant uncle, or you found a few grand
in a suitcase on a side of the highway, whatever.
You got some extra bread.
Let's figure out what to do with that extra scratch.
It's not easy to make sense of your finances.
I'm Shahien Nasiripour, and I want to meet people with an obsession to beat the system
and never leave money on the table.
And who better to tell me what to do with my money than a finance expert?
And luckily enough, I've got three of them right here.
Hi Shahien.
So we've got some extra money burning holes in our pockets.
What should we be thinking about?
Do you have toxic credit card debt?
Attack that first.
It's your double-digit interest rates.
It's moving you backwards very quickly.
Please get rid of that.
Don't even think about it.
If you've got a 15% credit card or a 23% credit card, and at the same time you've got a three
or 4% student loan hanging out there, we might be looking at your credit cards first and
think about where those dollars are best spent going forward.
Right now, we're concerned about the highest costing dollar.
Your credit card is a debt that is typically based on money that you've already spent.
Your finished.
It's time to pay off the debt.
You'll hear financial planners often talk about an emergency fund.
Then you'll hear them all say, "Three to six months is what you need."
Three to six months.
Three to six months of your living expenses in cash.
So the most important thing about portfolio construction is understanding which risks
your portfolio is open to.
So if you bought 100% of one individual stock and then that business goes out of business,
you go to zero.
That's go to zero risk.
Volatility, drawdowns, economic events.
This is part of the game.
If you're not equipped to handle the inevitabilities of markets going down and economic cycles
turning over, you better reassess your situation.
So you don't have to be emotionally impacted by these types of events.
Ideally, these will be diversified mutual funds, index funds, diversification, diversification,
diversification.
Make sure that you do have some fixed income in the portfolio even though fixed income
is not going to give you the rate of return that stock market does.
It serves as a temper in your portfolio.
It reduces the volatility.
It's not there to make you rich, but it's there to help you sleep at night.
How much volatility are we talking about when it comes to what allows you to sleep at night?
If your bonus has a sizable tax impact or even takes you into a higher tax bracket,
check to see if your employer has a deferred compensation plan.
The advantage of that is that your compensation, this bonus that you'll receive is not taxed
too, but goes into an account which will only be taxed to you when you begin taking the
funds out.
So you've paid off your debt and built a solid rainy day fund.
Bravo.
Now you're ready to invest.
If you're anything like me and terrified about managing your money, you may want to hire
someone like Douglas, Erica, or Ian.
Let's ask Bloomberg Reporter Suzanne Woolley about what we should be looking for if we're
looking to hire a financial advisor.
Fees, sometimes, we might not pay so much attention to it because sometimes they don't
seem like they're that big.
Over the years, they really can mushroom and eat away at your investment, particularly
if we're going into a slower growth environment.
A lot of people like fee-only planners, and part of that is just because it's so transparent.
You want to know what you're paying.
The real key is just to be very upfront and ask your planner, "What are your fees?
How they structure?"
Whether they are a fiduciary.
This means that they have to sell you the product that is in your best interest.
Maybe it's time for a financial tuneup, and for you, maybe that's saving cash or paying
down debt.
But personal finance is personal, so see what's right for you.