Thursday, September 22, 2016

Postdoc Appreciation Week: Financial Planning with Fidelity Investments

We were joined by Dan Shea from Fidelity Investments to learn more about budgeting and financial planning!






Financial planning with Fidelity Investments

Topics to be discussed:
  • Track your expenses.
  • Know what is a discretionary vs essential spending.
  • Monitor your spending behavior.
  • Tough to save if you don't know what you're saving for!!
Essential expenses:
  • Mortgage
  • Food
  • Health care
Examples of discretionary expenses:
  • Travel
  • Cable TV
Make paying high-interest credit cards a priority:
  • If you have credit cards with an 8-9% interest rate it's bad, so try to pay them as soon as possible.
  • Create a budget.
  • Avoid getting a high interest now because it compounds - you end up paying more in the future.
  • If you have more than one credit card with a high-interest rate, you can consolidate them but then make sure they get paid during the timeline that was determined for it.
  • Example: if you have a credit card with a 10% interest rate versus a card with a 15% interest rate then pay the one with the 15% interest rate first!
  • Key to your credit report is how long you've had your credit cards.
How much to use the credit card?
  • Doesn't matter how much you use the credit card, as long as you pay them. Try to pay them off each month.
  • Use only 16% of what's available of your credit. For example: if you have a $10,000 dollar credit you don't want to have more than $1,600 in balance.
  • Too many cards could hurt your credit.
  • Monitor your savings! 
  • "Don't keep all your eggs in one basket" - particularly important with investments.
    • Good tools:
      •  In the Fidelity Investments website to keep track of your accounts (free to set up!) - you can buy stocks through that tool.
      • Google Wallet
      • Some other tools charge $20/month to use.
How to create and manage your budget:
  • Money for essentials, unplanned emergencies and goals.
  • 50% of your take home income should go to essential spending.
Essential spending:
  • ~50% of take-home pay.
Essential savings:
  • Save 15% of pre-tax (not take-home) income.
Roth-IRA:
  • Lowers your taxable income. The younger you are and the lower your bracket is, the more sense it makes to have a Roth-IRA.
Short-term savings:
  • Save 5% of your income.
Emergency funds:
  • "Because the unexpected happens".
  • Should save 3-6 months of essential expenses!
  • Maybe start a separate bank of money account and put in a certain amount every month ($20 or so) after you've paid your bad debt and covered your essential expenses.
Retirement:
  • Start saving for retirement as soon as possible! Up to 8% pre-tax income every month.
  • You don't want to compromise your retirement savings. Compounding is key!
  • 403(b) retirement plan - can you merge your 403(b) from your old institution into a new one like Tufts? Yes (Rollover)!
  • If you take out a loan on your retirement plan, you have to pay taxes on it.
Mutual funds versus stocks

Investing:
  • Fidelity Investments is in campus twice a month on campus. 
    • October is booked, but for after October is cool - financial advice for free!!
**Pay off high debt first!**
  • Paying debt in full saves you a lot of interest.
  • The benefit of paying your debt:
    • The higher your FICO score the lower your APR is.
Credit score:
  • Student loans can actually help your score, but whether you're good at making payments to your loan every month is what influences your standing.
Know what you're spending on and distinguish between good debt versus bad debt.
  • Good debt: i.e. mortgage
  • Bad debt: credit cards
If making $65,000 or less, we can write down the student loan debt for tax breaks?

Housing:
  • Housing payment should be no more than 28% of your gross income.
  • The City of Boston offers a class on home owning for $25.
The order on how to use your money:
  1. Saving for emergency expenses
  2. Saving for retirement
  3. Pay/pay-off high-interest cards
  4. Pay student loans





3 comments:

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  2. Financial Planning with Fidelity Investments is a useful tactic to get quality results. I was a Canadian and returning to Canada; I needed any expert who could do cross border tax management for me. So, my cousin recommended me Cardinal Point Wealth, believe it or not, my taxes have been managed efficiently.

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