Brainy Chick Finance


The One Habit All Millionaires Have

The One Habit All Millionaires Have

The one habit that all millionaires have is that they are not afraid to take a chance, even if it might cost money.

What allows them to take the risk? They are set up for the fall out.

The One Habit All Millionaires Have

If an opportunity costs money, they are comfortable spending money to see the outcome. For example, every year the financial community comes together during the annual Fincon event. A typically ticket costs just below $200 and a pro pass can be around $500. Now the pro pass seems, to some, very expensive. But to a millionaire, they would determine what that $500 would get them before evaluating the cost.

If they can determine that the opportunity out ways the cost, they will take it. In this example, if the millionaire wants to heavily network, get great information on their hobby or expertise, and meet up with sponsors, the $500 might be a deal during this conference. Plus, in this case, the cost will also become a tax write off. They won’t let the initial cost of the opportunity be the reason they say no.

How they are prepared for the fall out:

Before millionaires take on risk, they protect themselves. Essentially, you want to make sure that your money will continue to work for you and that this one opportunity wont heavily impact your net worth. Each situation is different, but the main things millionaires will already have taken care of (or are in the process of) are:

  • Millionaires have either funded their 401k or the like for the year already or they have automated the process to complete the full contribution by the end of the year. If they are wanting the tax write off and want to put away even more money, they will do it as a Roth and make sure that they contribute to their Roth IRA as well.
  • An emergency can happen at any time and millionaires are prepared for it. Some not only have a rainy day fund (every day to day emergencies) but also an emergency fund that could kick in if they lost their job or a major occurrence happened. More specifically, they continue to fund these accounts even if they are past the minimum. How do they do this? Though automatic and reoccurring deposits. They set it up and forget it.
  • Diversified Portfolio. Chances are most millionaires continue to amass their net worth by keeping part of their income in investments. The easiest is the stock market, whether it is through individual stocks, mutual funds, or robo advisors, like Betterment. Their money will continue to grow even if the opportunity does pan out. Additionally, most millionaires also assess whether the opportunity will help them make more money in the long run. Whether it is an investment in another business or real estate, for examples, they will assess how much additional money they could make or if the investment could help them make more money in the future.
  • Tax Write Offs. Millionaires will minimize the impact through tax write offs. In the previous example, anything geared towards investment or personal finance can be considered a tax write off, so from buying a book or for attending the previously mentioned conference, you can try and recoupe as much of it back through your taxes as possible.

Most millionaires will never let the price be the initial factor that will stop them from saying no to an opportunity. The one habit that all millionaires have is that they are not afraid to take a chance, even if it might cost money.

May 2016 Investment Robo-Advisor Account Report

May Investment Robo Advisor Report

Welcome to the Investment Robo-Advisor Account Report for May 2016!

May Investment Robo Advisor Report

May had a big shocker: Vanguard took the lead for the month in biggest gains, making me $7!

Okay, I know that $7 is not a lot of money, but for not doing anything, I think making $7 is not too shabby. Betterment came in second with a $1 and Wealthfront disappointed with losing $-4.

For the month, I am still feeling pretty good. We are three months into this challenge, and with the three accounts running, I have made $48.73, not bad for investing just $1500.

Overall Earnings

For overall earnings, my investments continue to make me money, with Betterment leading the pack still at $24.59. They have the highest return still, with +4.8%.

This Month

For this month, we see our first negative change, with Wealthfront losing $4 from the previous month. Across all three accounts, we are still in the positive, but changes are to be expected. I am really surprised about Vanguard’s triumphant return.

It will be interesting to see if Vanguard can hold its lead, and if so, for how long. The robo advisers should be continually re-evaluating itself and the market to make the most money. We are really looking at (if Vanguard can hold strong) if investing in index funds versus a robo advisor is more successful. Only time will tell.

Why Robo Advisors

I chose to investigate robo advisors versus traditional investment vehicles to which how much my money will grow in each one. For a year, I will invest $500 into a Betterment (robo advisor) account, Wealthfront (robo advisor) account, and into an index fund, Vanguard, and watch to see which one does better.

I have found thus far, that the robo advisors continue to have the better interface, easier to understand graphics and ease of investing.

Get Involved

If you are just tuning in, I am investing $500 into three different investment accounts to see which one grows. Why might you ask? Well, for those new to investing or those who want to start but are not sure where to begin or, you might have some money and want to grow your wealth, but aren’t sure which is best for you, I wanted to test out some great options.

Anyone can sign up for these robo advisor accounts and, personally, it was very easy to set up the account with both Betterment and Wealthfront. I recommend investing a few dollars and see what happens!

Want to join the challenge? Feel free to add a comment below on how your accounts are doing! Here is what I did to set up each of my investment accounts:

How I Set Up My Betterment Investment Account

How I Set Up My Wealthfront Investment Account

Invest or Payoff My Car Loan?

Invest or Payoff My Car Loan

I had an interesting conversation with my Dad the other day about my car loan. He said I should invest the insurance money rather than pay off my loan.

I was surprised but his advice did make sense.

Our first reaction is to pay off debt, right? No one wants to have frequent payments to someone. People want to be able to own their items outright. Especially with a new car or new-to-you car, having a car payment can be burdensome. Not to mention the cost of gas, insurance, maintenance, etc.

Let me take you back a moment. Last month, my 5 year old blue car, got rear ended. Pretty shitty circumstance, and of course, there was enough damage to it, that the car ended up being totaled.

Well there starts the hunt for a new car. My previous car was paid off after about a year and I wanted to be in the same situation with my new car. (I know it is not recommended to buy a new car with depreciation and all, but I had an offer for a hybrid that I could not refuse). Fast forward to my negotiations with the dealership and they said that if I wanted the discount, I had to finance. I knew this was a ploy to finance with them, but I had a good chunk of money saved up and the money coming from the insurance agency that I could pay off the car very quickly. Plus the bonus: my loan would have a .90% financing. Truly unheard of. A few things to consider: I have good credit (800+) and I had paid off my previous car which showed good credit history. The total amount I would be paying in interest is $1,023.87.

My new car’s sticker price was $36,260, a little more than I wanted to spend, but like I
mentioned before, it was a hybrid, so worth the extra penny or two. AND, not too shabby when the average cost of a new car today is on average, $32,086.

I justified the price and the loan was not a bad offer at all. With the $12,000 check from the insurance companies, my first instinct is to put it all towards the car. At first, the logic is reasonable. I will then only have to pay off $24,000. The argument is: can I get more returns by investing the insurance money than what I would have to pay for the loan at .90%?Invest or Payoff My Car Loan

Assuming you can get more than a percent worth of gains in the stock market, which the average return is 6-7%, should I invest? Should I pay off the loan ASAP to not pay as much interest? Will my psyche take a hit now that I have a car loan?

What do you think I should do?

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