Tag: your money

Finance Tip: How do you tip?

Posted on by Karac Avalron

So leaving a tip is actually a big deal in U.S. culture. It is pretty much everywhere you go now, if not on the screen you pay at then there is a jar on the counter. Tipping isn’t a bad thing, many people make ends meet by living off tips. My son delivers pizza as he gets through college, he comes home with 50-150 cash depending on the days he works just in tips. Now that nearly every transaction can be done digitally? You are prompted to tip more.

Quick example: My son who delivers pizza when the order comes in it can come in via phone or online. The customer can leave a tip prior to delivery. Often he’s getting 20% tip on the order before the food has been prepared, or he has delivered it because they ordered it online. Again tipping isn’t a bad thing but 20% up front? This is more and more prevalent and if you are interested in your personal finance +20% cost on your dinning purchases can add up fast. So how do you determine what to tip and when to tip? I have a pretty basic rule of thumb, if someone delivers something to me at home or to a table I am sitting at I will leave a tip. If I have to go obtain the item myself I do not leave a tip. I am not cheap I normally tip 15-25% it really depends on the level of service and the attitude of the person I am tipping.

Will they be asking for Bitcoin tips in 2050?

Really be mindful here because excessive tipping can add up quickly. Are you always dropping your change in the tip cup at Starbucks? Are you prepaying your tip before you receive service? Are you letting the Ipay pay screen steer you towards a higher than average tip? It’s important to reward great service that’s what a tip is for. Sadly, the hospitality industry has chosen to take advantage of the generosity of people who tip and pay staff less.

The theory is staff will “make it up” via tips. I think it should be opposite, I think you should get a tip if you perform a great service and it’s like a small bonus for your hard work. Culturally I don’t see this changing anytime soon in the U.S. but what can change is your personal approach. Remember it’s your money, tipping isn’t mandatory (in most cases) and tipping before you’ve been served isn’t wise, the person might not deserve it.

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Yet Another finance secret finance professional won’t tell you (but I will)

Posted on by Karac Avalron

So another finance piece, as I write this the U.S. is in an official recession. This piece isn’t about recessions, inflation or politics so you can exhale. We are going to reveal another secret though that finance professionals don’t like to admit. So a quick disclaimer, I am a finance professional. I have been working in the finance and accounting field for over 30 years. This blog is not a finance advice blog; this is my own opinion based on my experiences. Any advice you receive regarding finance should be researched thoroughly by you as an investor and verified through multiple sources.

Now that out of the way here is the opening salvo “When things are good, everyone is a genius.” The last decade up until the pandemic really the stock market overall was pretty good. You had good annualized returns and many people made a lot of money. So being a finance professional and advising people to go into the market wasn’t a genius play. Of course if you aren’t fluent in finance you might have perceived it as such. Interest rates were low for a long time so there really wasn’t anywhere else to go with investing except real estate.

But the secret? Everyone is a genius when things are good, what about when things are bad? What about when you are in a bear market (when indices drop 20% in a calendar year)? The secret is, the real finance geniuses were diversified PRIOR to the bear market. Any finance professional could have told you to put your money in an index fund prior to covid and you would have made fantastic gains. The real economic geniuses advised you to diversify with money spread to commodities, bonds/treasuries, real-estate and precious metals (this is a commodity, but not a traditional commodity).

As an example, what if in 2016 your finance professional advised you to have 15% of your portfolio in “Gas & Oil”? That would look pretty good now wouldn’t it? Same with bonds, treasuries, wheat, gold… you get the picture. The secret here Is diversity of investment result in a wider spread of assets which can absorb declines in any particular sector.

Like it or not, the world still runs on Oil based products.

Now that does mean you would have had less in technologies for the same period and not enjoyed that growth. I concede that, but the savvy investor doesn’t play the short term they play the long term and sustained diversified portfolios over the long haul 10-30 years normally perform as well as a strict stock portfolio. Don’t get me wrong here, I personally believe the majority assets you are investing in should be either growth stock mutual funds or blue chip mutual funds.

100% of a portfolio though?  No, you diversify specifically for bear markets and sharp down turns because they always happen. It’s not a matter of if, it’s a matter of when and how long will it last. For calendar year 22 as of 6.30.22 the markets are down 20.3% now this has come up in July, there is no denying that but you’re still down overall. On top of that we have large inflation numbers devaluing the purchase power of your dollar. So what 1.00 would buy last year now buys .92 that’s an 8% decrease (rough estimate). That isn’t equated well in your portfolios return.

Meaning you made 10% on the stock sale but the money you received purchases 8% less than it did meaning the value of that 10% return to you in real time is a net positive of 2%. Again, the secret here is diversity. Always have part of your portfolio assigned to cash, bonds/treasuries, commodities and that will provide you a decent buffer for the next bear market because this will happen again.

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How to create the change you want in society?

Posted on by Karac Avalron

Are you political? Are you an environmentalist? Are you a woman’s rights advocate? A men’s rights advocate? It’s likely that there are some causes you are extremely passionate about. It’s also likely that at times you feel helpless to affect change that impacts the causes you believe in. What if I told you that you hold one of, if not the most potent tool to affect change in the modern world? You probably wouldn’t believe me, particularly when I say “you’re going to do it anyway” you would raise a brow and stare.

What is it? It’s your consumption.

What you spend your resources on is the greatest driver of outcomes in the modern western world. You are going to spend money on things you need and want, imagine if you focused that spending on companies who support the causes you care most about? It is true when people say “follow the money” or “money drives the economy”. Basically large corporations, political parties, celebrities all drive outcomes that usually involve economic benefit to them. The only larger entity in the world then some of these institutions is consumer spending.

How you spend your money drives change.

Imagine if a shoe company made shoes that were made completely out of recycled material. Imagine that that shoe company blew up and got as popular as NIKE. Do you think Jordan would be endorsing their shoes? You think their branding and social messaging would be all over sports? Of course it would, but what would it take to get to that point? Your consumption.

None of this happens if those with disposable income don’t purchase the product. You start, you tell your friends, they follow, bam you have created change. It takes a long time, but as an example, I remember when the first modern electric cars were introduced in the 90’s. Many people laughed at it, then consumers started buying them, there was demand. More companies made cars like this. Now? Electric cars are poised to supplant combustion based vehicles in the next 50 years. If you told someone in 1962 that in 2062 there would be all electric cars they would laugh their butts off.

You want to affect change? Where is your money going? Do the companies you send money too, say Amazon, support the causes you believe in? They don’t? Why are you giving them money then? What is your excuse exactly?

Want to create change in society, your consumption is the quickest most direct way to get the change you want. Do business with companies who support the causes you believe in. In doing this you create the economic conditions supported by supply and demand economics that may result in large cultural changes. Don’t believe me? That’s what they said about Electric cars in the 90’s.

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Top 3 Financial tips for people with Anxiety during the pandemic

Posted on by Karac Avalron

So before I get going the normal disclaimer. If you follow my blog you know I have been in the finance field for nearly 30 years (yikes!). Every finance tip I post here are my opinion, and should you chose to act on these tips you are 100% responsible for the outcome. That said, common sense and simplicity is always the best way to do financial planning. Trust your gut….

  1. Don’t look at your investments: If you have them, don’t look at them right now. The last thing you want to do is react to an extraordinary circumstance. This isn’t a normal environment and these types of events happen multiple times over a life investment cycle. As an example when I was starting my investments we had the first Iraq war and it disrupted the market. Making moves now when there are wide fluctuations in the economy is a bad idea. Hang tight, let the storm pass.
  2. Work on your personal economy with this time off: It’s likely you are home like the rest of us. This is a great time to set aside 15-30 min a week to focus on your finances. Here is what I do, Saturday morning from 10-11 I work on my personal finances. Pay bills, check balances, work on my budget, review my retirement planning. ONCE A WEEK. Please don’t tell me you don’t have the time, make it, even after all this passes. If you do this, consistently, over time you will have a complete grasp on your finances, you will be organized and it’s such a relief when you get to that point.
  3. Plan your comeback: When this pandemic passes, we are all going to have to get back out there in an economy that is a shell of what it was. Politics aside, it’s hard to argue that before the pandemic hit the economy was humming long REALLY well, the number don’t lie. Millions of people have lost their job, maybe you are one of them. You have to be ready to come out of this FAST. Update your resume, identify companies you want to work, keep In touch with your professional network.

In my lifetime I have seen several events like this that have had dramatic impacts on the economy. One of my first memories as a kid was sitting in a gas line with my father. You could only buy gas on certain days of the week, unemployment was high, inflation was through the roof. The market always bounced back and the economy always seems to fix itself. You should take some of this time you have to position yourself for the rebound. Remember this will pass, and before you know it will be 2021.

Whatever you do, take your time, use commonsense and always obtain as much information as you can before making financial decisions.